Performance Assessment of Electricity Market Zones Reconfiguration: the Italian Case

From January 2021, the configuration of the electricity market zones in Italy has changed, which prompts us to question whether modifying the existing bidding zone structure would effectively contribute to achieving the goals of enhancing competition and efficiency in the market mechanism. To assess the influence of different Italian zonal configurations on the market performance, we have devised a set of evaluation indicators that encompass various aspects. These indicators are conceived to allow the comparison among different market dispatch mechanisms such as the "pure economic dispatch" and the "network constrained dispatch with nodal representation", as well as the "network constrained dispatch with zonal representation". By comparing the two Italian bidding zone configurations existing in 2020 and 2021, respectively, the performance of such configurations is analysed and compared. The calculation results reveal that the implemented reconfiguration has yielded increased social surplus and reduced congestion costs. In contrast to that of 2020, the configuration implemented in 2021 enables enhanced market efficiency and increased market liquidity, particularly during the summer.