Optimized bidding area delimitations and their impact on electricity markets and congestion management

The delimitation of bidding areas and the overall European congestion management have been heavily discussed in the recent years. Although main evaluation criteria are defined in the network code on congestion management, the question of adequate or optimized bidding area delimitations remains open. Thus, this paper presents an approach for an optimized delimitation of bidding areas based on a clustering of security-constraint nodal prices. Relevant evaluation criteria, like the level of generation and redispatch costs or the level of network security, are derived via a multi-step optimization approach. Results show, that optimized bidding area delimitations differ significantly from the current ones. However, these optimized delimitations yield only small cost savings compared to the current bidding area delimitation.