Bidding Zones of the European Power System: Benefits of a Multi-Dimensional Approach to the Evaluation of Possible Delineations

As the coupling of wholesale electricity markets is emerging as a major challenge for energy transition, reviewing bidding zone delineation is considered a serious avenue to address congestion in the European transmission grid. Scenarios have emerged in both the industry and the academia to propose amendments in the current configuration, without reaching a consensus on the need for reform. In this paper, we discuss the benefits of a more holistic approach to zone configuration assessments. Through a literature review and international examples, we discuss the interrelation of system operation, market efficiency, and investment dynamics.