A major element of the design of the European electricity market is the delineation of bidding zones, which are, as defined by the Regulation (EU) 543/2013, the largest geographical area within which market participants can exchange energy without capacity allocation. As part of the Clean Energy for all Europeans package, the entry into force of Article 14(3) of Regulation (EU) 2019/943 of the European Parliament and the Council on the internal market for electricity, triggered a bidding zone review (BZR) process.
The ENTSO-E Report on the Locational Marginal Pricing (LMP) Study of the BZR Methodology provides insights into the methodology, assumptions and results of the LMP analysis for the Continental Europe and Ireland, and Nordic Bidding Zone Review Regions (BZRRs) in line with Article 11 of Annex I of the ACER Decision No. 29/2020, “on the methodology and assumptions that are to be used in the bidding zone review process and for the alternative bidding zone configurations to be considered.”
It is the first time that a nodal simulation study of this size and level of complexity has been performed in Europe. TSOs of the Continental Europe and Ireland BZRR carried out a LMP simulation with a model that includes around 25,000 active generators, 22,000 lines, 25,000 active nodes and 25,000 critical network elements and contingencies and solves a security constrained economic dispatch problem for 168 days for the region. TSOs of the Nordic BZRR carried out a similar LMP simulation to the grid including all 220 and 400 kV nodes in Norway, Sweden, Finland, and Eastern Denmark. For the Nordic BZRR, the simulations included the hours of the whole target year with three different climate years considered.
The report provides information on:
- the assumptions applicable to all the BZRRs that performed LMP calculations,
- the market and grid assumptions, the simulation chain and the results of the LMP calculations as performed for the following BZRRs: Continental Europe and Ireland, and
- the market and grid assumptions, the simulation chain and the results of the LMP calculations as performed for the BZRR Nordics.
Disclaimer: The information provided in the report shall not in any circumstances be interpreted as a price forecast by TSOs. The results should be solely understood as a simulation result of the LMP Study according to the BZR Methodology and serve only for the purposes of BZR Study.
Related newsitem: The BZR and LMP Study teams already provided a high-level overview of the LMP Study during the 21st April ENTSO-E BZR Stakeholders’ Workshop.