ENTSO-E: Bidding Zone Review for the 2025 Target Year

Presenting the crucial findings of the Bidding Zone Review (BZR) conducted by the European Network of Transmission System Operators for Electricity (ENTSO-E) for the 2025 target year, the objective of the review is to assess the current configuration of electricity bidding zones across Europe and evaluate potential alternative configurations to ensure the efficient functioning of electricity markets, maintain operational security, and support the integration of renewable energy sources

The BZR is a two-stage process. In the first stage, the methodology, assumptions, and alternative bidding zone (BZ) configurations were defined, culminating in ACER Decision No. 29/2020 (BZR Methodology) and ACER Decision No. 11/2022, which determined the configurations to be assessed. The second stage, documented in this report, involves a comprehensive assessment of the current BZ configurations and the alternatives using a simulation-based methodology supported by extensive economic and technical criteria.

The study focuses on two BZ Review Regions (BZRRs), both in which the BID3 model was used uniquely for the adavnced, granualar and complex optimisation simulations:

Central Europe (CE):

In the CE region, the BID3 set-up was tightly integrated within the VAMOS (Varied Market-Model Operation System) simulation platform used for automating and orchestrating the modelling chain:

    • Base Case Creation: Simulating a market dispatch for the full EU using zonal demand, generation, renewable energy sources, and fuel prices. This provided initial inputs for the flow-based capacity calculation.
    • Market Coupling Simulations: Using the FB parameters and cNTC (coordinated Net Transfer Capacity) values derived in the capacity calculation step.Outputs from BID3 included zonal dispatch results, cross-zonal power flows, and socio-economic welfare impacts across configurations

Nordic region:

  • In the Nordic region, BID3 was used for full-year, pan-European simulations incorporating three climate years (1989, 1995, and 2009). These simulations accounted for renewable generation profiles, hydro inflows, and demand variations. The BID3 model underwent some custom developments to support the study, including the integration of advanced functions for flow-based market coupling (FBMC) and remedial action optimization (RAO), specifically tailored for the Nordic CCR, thus allowing to:
  • Advanced hybrid coupling for HVDC links.
  • A four-step modelling chain: Capacity Calculation, Day-Ahead (DA) Market Dispatch, Operational Security Analysis (OSA), and RAO.
  • FB modelling was applied only within the Nordic CCR, while cross-border capacities with non-Nordic BZs were handled via the NTC approach

For each region, transmission system operators (TSOs) conducted detailed analyses including flow-based market coupling simulations, redispatch modelling, and an evaluation against 22 predefined criteria encompassing economic efficiency, operational security, market liquidity, environmental impact, and transition costs.

The assessment draws on scenario data and assumptions primarily based on the ENTSO-E Mid-Term Adequacy Forecast (MAF) 2020 and the Ten-Year Network Development Plan (TYNDP) 2020, reflecting system conditions for the 2025 target year. Additionally, three distinct climate years were used to ensure robustness and represent climatic variability.

This report constitutes the joint proposal of the TSOs participating in the bidding zone study for each region and is submitted to the competent national authorities for consideration. The recommendations aim to inform decisions on whether to amend or maintain current bidding zone configurations in pursuit of an efficient, secure, and sustainable European electricity market.

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