ACER has decided on alternative electricity bidding zone configurations
What is it about?
The EU Agency for the Cooperation of Energy Regulators (ACER) has reached a decision on alternative electricity bidding zone configurations. Transmission System Operators (TSOs) have 12 months to conduct the bidding zone review and to recommend whether to keep or amend the existing bidding zones.
What are bidding zones and why are their alternative configurations relevant?
A bidding zone is the largest geographical area within which market participants are able to exchange energy without capacity allocation. Currently, bidding zones in Europe are mostly defined by national borders. However, the existing European electricity target model requires defining bidding zones based on network congestions. Hence, alternative bidding zone configurations based on this principle need to be examined.
What are the Decision’s main highlights?
ACER’s Decision is based on stakeholder input (via a stakeholder consultation in 2021), as well as on the extensive information provided by TSOs. This information included alternative configurations previously submitted to ACER, the outcome of locational marginal pricing simulations (in accordance with the bidding zone review methodology approved in November 2020) and additional feedback received by TSOs.
In its Decision, ACER proposes alternative bidding zone configurations for five Member States.
- In Continental Europe, alternative configurations are proposed for Germany (4 alternatives), France (1), Italy (1) and the Netherlands (1).
- In the Nordic area, 4 alternative configurations are proposed for Sweden.
Following ACER’s Decision, TSOs have 12 months to conduct the bidding zone review and provide a recommendation on whether to keep or amend the existing bidding zones. Member States will then decide whether or not to change the bidding zones accordingly.
What are the benefits?
Better defined bidding zone configurations (i.e. whose borders are based on long-term, structural congestions) can bring several benefits including:
- increased opportunities for cross-zonal trade,
- more efficient network investments, and
- cost-efficient integration of new technologies.
Read more on the ACER's Decision 11-2022.