The German Energiewende has led to grid congestion in Germany, which is currently primarily handled by means of redispatch and countertrade. The new report evaluates to what extent bidding zones may be used as an alternative measure to address and handle grid congestion, and how the introduction of bidding zones may impact market prices, trade, and redispatch costs and volumes.
We find that a bidding zone delimitation would contribute to a reduction in redispatch costs. Even though it may be difficult (or even impossible) to find an ”optimal” bidding zone configuration, we find that a configuration that reflects major existing imbalances yields significant reductions in redispatch costs.
