Evaluation of Risks for Electricity Generation Companies through Reconfiguration of Bidding Zones in Extended Central Western Europe

Caroline Deilen, Tim Felling, Robin Leisen, and Christoph Weber

The Energy Journal, 2019, vol. Volume 40, issue The New Era of Energy Transition

Abstract: In Central Western Europe, a reconfiguration of bidding zones for electricity is frequently discussed as a way to improve congestion management. The current EU guideline on Capacity Allocation and Congestion Management even envisages reviews of the bidding zone configuration (BZC) in regular intervals of three years. Such a change of BZCs gives rise to additional regulatory risk for generation companies. Their expected net present value depends on local prices, which are directly influenced by the BZC. The paper at hand develops a methodology to investigate the impact of this regulatory risk. Therefore the risk of bidding zone changes is modeled using a partly-meshed scenario tree. The risk factors reflected therein are uncertainties in grid developments, in combination with other risks such as changing coal and gas spreads, demand, or renewable infeed variations. Results are compared to the current BZC in Europe and to a nodal setup.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.iaee.org/en/publications/ejarticle.aspx?id=3304 (text/html)
Access to full text is restricted to IAEE members and subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aen:journl:ej40-si1-leisen

Ordering information: This journal article can be ordered from
http://www.iaee.org/en/publications/ejsearch.aspx

Access Statistics for this article

More articles in The Energy Journal from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().