EU power market reform toward locational pricing: Rewarding flexible consumers for resolving transmission constraints

Abstract

El artículo analiza la reforma del mercado eléctrico europeo hacia un sistema de precios nodales o con mayor granularidad geográfica, con el fin de responder a la creciente congestión de las redes de transmisión derivada de la expansión de las energías renovables y la electrificación. Los autores argumentan que el actual diseño basado en precios zonales no proporciona señales locacionales adecuadas para incentivar la flexibilidad del lado de la demanda ni para gestionar eficazmente las restricciones de red. A partir de la experiencia internacional y debates técnicos en Europa, el estudio evalúa distintas opciones de reforma, incluyendo la reducción del tamaño de las zonas de precio y la transición progresiva hacia precios nodales, incluso mediante regiones piloto. Se concluye que una reforma estructural permitiría reducir costes de redispatch, mejorar la eficiencia del sistema y fortalecer la integración del mercado eléctrico europeo.

The ongoing expansion of wind and solar electricity generation alongside increasing electrification is leading to a considerable strain on transmission capacities and grid bottlenecks in the EU. Coping with this challenge requires increasing system flexibility, e.g. by exploiting the potential for demand-side flexibility. However, in the current market design, demand-side flexibility responds to zonal price signals rather than local needs. As a result, demand-side flexibility may exacerbate rather than reduce congestion. More local price signals are therefore required. This paper assesses possible reform steps and their viability from the perspective of different market participants and the regulators. It reflects insights from European and international workshops and literature. With respect to reconfiguration of the pricing zones, both a moderate increase of granularity and high increase of granularity preceded by various reform steps are considered. As an alternative, a shift to nodal pricing is assessed. It is proposed that such a reform could be pursued, either by parallel reform steps in tandem across all EU countries, or as a sequential phase-in, preceded by nodal pricing implementation in pilot regions based on a regulatory sandbox approach.