The Bidding Zone Review (BZR) (https://www.entsoe.eu/network_codes/bzr/) is a process implemented within the European electricity market framework to assess and optimize the geographical boundaries of bidding zones. Recommendations by the European Commission are expected soon and they can have ample consequences in particular on the German electricity market. An integral part of the BZR was a locational marginal pricing study. Based on this study, four alternative configurations were proposed for the German-Luxembourgish bidding zone. These configurations were identified by solving a clustering problem and shall be stable and robust over time.
In a recently published paper (https://www.sciencedirect.com/science/article/pii/S0306261925000455), we show that independent of the clustering features and algorithms used, the proposed configurations are not stable over time, suggesting that the proposed zones are too large to achieve the intended goals.
If instead nodal prices were to be implemented, redispatch costs could be reduced substantially (see https://arxiv.org/abs/2403.09265). Nodal prices might have other issues (https://synergie-projekt.de/aus-synergie/regulatorische-handlungsempfehlungen/missverstandnisse-des-nodal-pricings), but it is important not to rule solutions and understand the trade-offs.