The existing electricity bidding zones configuration in Central Europe is currently affecting the efficient use of the infrastructure, the incentives to invest in both transmission and generation, and the liquidity of forward markets, according to the ACER report on the influence of existing bidding zones on electricity markets published today by the Agency. The impact is particularly relevant in the central part of Europe (Austria, Benelux, Czech Republic, Denmark, France, Germany, Hungary, Italy, Poland, Slovakia, Slovenia and Switzerland), where the completion of the Electricity Target Model (in particular in the Eastern region) is being hampered, partly by disagreements about what an adequate bidding zones configuration should be. The report is based on the Agency’s assessment and stakeholders’ feedback received during the public consultation on the influence of existing bidding zones on electricity markets launched in July 2013. It analyses the main effects of bidding zone configuration on the electricity markets of the central part of Europe. ACER main findings The report finds that the existing bidding zone configuration in central Europe is currently affecting:
- The efficient dispatch of generation and social welfare, which are both effected by preventive congestion management (cross-zonal capacity calculation and allocation) and curative congestion management (remedial actions);
- The distribution of social welfare due to the potential discrimination of market participants located at different geographical points in the network;
- The incentives to invest in both transmission and generation; and
- The liquidity, possibly in day-ahead but in particular in forward markets, where larger bidding zones provide more hedging opportunities than small bidding zones creating non-level playing field.