Better markets: increasing arguments for redefining bidding zones in Europe
University of Paris-Dauphine
Vincent Rious, Vice-President, discussed the costs and benefits of redefining bidding zones in Europe (making them smaller or bigger than one country).
If smaller bidding zones allow a more efficient management of network congestion and improve locational investment signals, it may also incur cost, with increased local market power, reduced liquidity and hedging, IT and transition costs and risks with regard to robustness of definition of zones.
Even if sources of costs are numerous, he shows that it is not straightforward that there is no net benefit.