|Bidding zones review - new regulatory risk?|
|Monday, 05 August 2013 10:00|
Do the review of existing bidding zones increase the electricity generators' costs and risks?
Bidding Zone means the largest geographical area within which Market Participants are able to exchange energy without Capacity Allocation.
The above definition refers to the notion of "Allocation/Capacity Allocation", which in turn means "the attribution of Cross Zonal Capacity", where the latter denotes "the capability of the Interconnected System to accommodate energy transfer between Bidding Zones" (Cross Zonal Capacity It can be expressed either as a Coordinated Net Transmission Capacity value or Flow Based Parameters, and takes into account Operational Security Constraints) - see definitions proposed in the draft Network Code on Capacity Allocation and Congestion Management (CACM).
Pursuant to CACM Bidding Zones are defined to ensure efficient congestion management and overall market efficiency.
Bidding Zones as currently drafted in the Network Code on Capacity Allocation and Congestion Management will be consistent across different market timeframes and will be relatively stable across time, while reflecting changing network conditions.
Draft Network Code on Capacity Allocation and Congestion Management envisiones, however, that Bidding Zones can be subsequently modified by splitting, merging or adjusting the zone borders.
It is noteworthy, the Bidding Zones' configuration may have impacts on investments in generation and consumption.
In case the review process leads to a Biding Zones' new configuration, some generators may be called to participate to the capacity allocation and congestion management process with previously unforeseen costs and risks.
The issue of Bidding Zones' determination will gain in importance with the ACER's Consultation document 31 July 2013 titled: 'The influence of existing bidding zones on electricity markets' (PC_2013_E_04).
The consultation is undertaken in the context of the joint initiative of ACER and ENTSO-E for the early implementation of the Network Code on Capacity Allocation and Congestion Management (CACM) with respect to the review of bidding zones.