In this paper,the trade-off between inefficient transmission forward markets (in nodal pricing regimes) and the inefficiency induced by hiding transmission constraints from the market (in zonal pricing regimes) is analyzed. First, a simple two node model formalizing the general trade-off is...

The EU member states have declared to strongly increase the share of Renewable Energy Sources in the next decades. Given a large deployment of wind and solar capacities as well as limited cost-efficient storage technologies, this has two major impacts on electricity systems. First, the...

The European electricity market design is based on zonal markets with uniform prices. Locational price signals within these zones - necessary to ensure long-term efficiency - are not provided. Specifically, if intra-zonal congestion occurs due to missing grid expansion, the market design is...