Analysis and evaluation of pricing and compensation strategies in new bidding zone configurations

Tesis Energía y Ambiente (maestría) - Instituto Tecnológico de Buenos Aires, Buenos Aires - Karlsruher Institut für Technologie, Karlsruhe, 2025
"In light of the Bidding Zone Review conducted by European TSOs, the debate surrounding a potential split of the German bidding zone has regained momentum. Although no final decision has been made, it is essential to consider the potential implications for German market participants in the event of such a reconfiguration. Numerous stakeholders have voiced their positions, both in favor of and against a division of the bidding zone.

While energy economists have publicly advocated for zonal pricing, industry associations and labor unions have expressed concern about possible negative effects on economic competitiveness and employment. These differing perspectives underscore the controversial nature of the discussion and the challenges involved in reaching a common position, highlighting the importance of assessing potential pricing and compensation mechanisms prior to any formal decision.

To prevent inefficiencies as well as mitigate potential negative effects and market distortions associated with the introduction of bidding zones in Germany, a robust mechanism is required. Such a mechanism should establish clear principles for price formation and take into account appropriate compensation measures for consumers, producers and storage operators. This thesis aims to propose and evaluate corresponding design options within this context".