An electricity price area is a zone throughout which the electricity is traded at the samespotprice on a
power exchange. An electricity price area is decided by
transmission system operator and can be a whole country, or parts of it.[1]
EPADs and price area risk
The electricity price usually differs from the system price from one price area to another, e.g. when there are constraints in the transmission grid. A special
contract for difference called Electricity Price Area Differentials or EPAD allows members on the
power exchange to
hedge against this
market risk called area price risk.[2]