Transitioning to a Zonal Market: Benefits and Challenges

This chapter discusses the potential benefits and challenges of transitioning from a national energy market to a zonal market, including signals for transmission building, flexibility in the intraday market, difficulties in modeling locational marginal pricing, complications in optimizing infrastructure and transmission rights, potential risks and wealth transfers for investors, the need for locational hedges and energy trading products, and the importance of addressing trading risks and access rights in market design decisions.