Statement on the Electricity Bidding Zone Review (BZR) Methodology

Brussels, 25 August 2020 | Following referral on 7 July 2020 by all NRAs, ACER became competent to decide on the Bidding Zone Review (BZR) methodology i.e. the Proposal for the methodology and assumptions that are to be used in the bidding zone review process and for the alternative bidding zone configurations, pursuant to Article 14(5) of Regulation (EU) 2019/943 (BZR proposal). We welcome the fact that ACER are now assessing and deciding on key aspects of the proposed methodology, and fully support efforts to ensure a meaningful and effective review. The announcement that ACER will consider stakeholder feedback to its consultation held earlier this year is very positive. In this statement, we highlight some of the key elements that should be considered more clearly in the proposed methodology.

Full consideration of the forward and balancing markets, in addition to the short-term physical market
To begin with, we fully support the objective to ensure that market delimitations, i.e. bidding zones, reflect significant structural long-term grid constraints and achieve a BZ configuration that best fulfils all of the CACM objectives. A key aspect of the CACM market efficiency objective is to ensure that the bidding zone configuration, appropriately supported by remedial actions as relevant, maximises cross zonal capacity for SDAC and SIDC within strict security constraints and without moving internal bottlenecks to the cross-zonal borders.

However, any reconfiguration should avoid being made solely based on considerations linked to the short-term physical market, e.g. day ahead and intraday, and power (grid) system efficiency. The assessment of the configuration impact on market efficiency, competition, liquidity and overall welfare must also consider in particular effects on forward markets, but also on real-time balancing mechanisms.
The overall assessment – covering those multiple timeframes – needs to be made based on a range of appropriate measurement criteria, as well as a clear recognition of the crucial interplay between these short and long term markets in order to secure overall market and power system efficiency. Furthermore, a common pan-European approach to core aspects of the methodology is essential, given the nature of the coupled European electricity market in the day-ahead (SDAC) and intraday (SIDC) timeframes, and the increasingly integrated balancing market.

Please download the full paper below.