## 5 Conclusions and Policy Implications  
This study quantified the impact and policy implications of transitioning to zonal and nodal pricing in the electricity market, considering South Korea as a case study. We modeled the power system at various levels of granularity, yielding a detailed 4579-node representation and constructed a comprehensive set of seven pricing schemes that reflected the changes in market-clearing models and pricing mechanisms. Our primary objective was to evaluate the impact of these schemes on large power systems, propose an appropriate pricing transition pathway, identify potential conflicts of interest for a Transco, and evaluate the financial impact on market participants and the associated social risks. Our findings suggest the following policy implications:  
1. Our research indicates that, under the current SMP-based uniform pricing, the schemes causing the least market impact were SMP-based zonal pricing with two bidding zones and ELMP, a specific type of nodal pricing. These results are expected to provide critical guidance for the development of an appropriate pricing transition pathway that aims to implement more granular price signals, while minimizing market disruption. However, on a market-wide level, a price reduction of 4.8-7.0% appears inevitable. 2. We found no evidence to support a significant transition to a 5-zonal pricing system. Owing to the minimal transmission congestion within the non-capital region, the price differences between zones in this region ranged 0.81-1.46 KRW/kWh. Consequently, all the elements were similar to a ZMP-based zonal pricing with two bidding zones. Moreover, the implementation of a 5-zonal pricing system may necessitate system reduction techniques, and risk-producing power flows that are inconsistent with actual system operations. \begin{table}
\begin{tabular}{c c c c} \hline \hline \multicolumn{2}{c}{**Pricing Scheme (KRW Billion)**} & \multicolumn{1}{c}{**Nodal (LMP)**} & \multicolumn{1}{c}{**Nodal (ELMP)**} \\ \hline \multirow{2}{*}{Base Case} & Generation Cost & 40,863 & 40,863 \\ \cline{2-4}  & Purchase Cost & 81,739 & 88,795 \\ \hline \multirow{4}{*}{KY} & Generation Cost & 40,510 & 40,510 \\  & & (\(-\)0.86\%) & (\(-\)0.86\%) \\ \cline{2-4}  & Purchase Cost & 83,914 & 87,799 \\  & & (+2.66\%) & (\(-\)1.12\%) \\ \hline \multirow{4}{*}{CC} & Generation Cost & 39,596 & 39,596 \\  & & (\(-\)3.10\%) & (\(-\)3.10\%) \\ \cline{2-4}  & Purchase Cost & 75,449 & 81,976 \\  & & (\(-\)7.70\%) & (\(-\)7.68\%) \\ \hline \multirow{4}{*}{JL} & Generation Cost & 40,702 & 40,702 \\  & & (\(-\)0.39\%) & (\(-\)0.39\%) \\ \cline{2-4}  & Purchase Cost & 81,736 & 87,527 \\  & & (\(-\)0.00\%) & (\(-\)1.43\%) \\ \hline \multirow{4}{*}{KW} & Generation Cost & 40,755 & 40,755 \\  & & (\(-\)0.26\%) & (\(-\)0.26\%) \\ \cline{2-4}  & Purchase Cost & 81,037 & 88,560 \\  & & (\(-\)0.86\%) & (\(-\)0.26\%) \\ \hline \multirow{4}{*}{YN} & Generation Cost & 40,632 & 40,632 \\  & & (\(-\)0.57\%) & (\(-\)0.57\%) \\ \cline{1-1} \cline{2-4}  & Purchase Cost & 82,510 & 93,886 \\ \cline{1-1}  & & (+0.94\%) & (+5.73\%) \\ \hline \hline \end{tabular}
\end{table} 
Table 13: Generation and power purchase cost sensitivity to generation and transmission constraint relaxation in nodal pricing. When transitioning to nodal pricing, 71.1-91.7% of generators were likely to experience a decrease in their received market prices under both LMP and ELMP mechanisms compared to the current pricing scheme. Moreover, across all the proposed zonal and nodal pricing schemes, market price reductions were found to be significantly concentrated among generators in non-capital regions. This finding suggests that the transition to more granular pricing schemes, while potentially leading to overall price reductions, would likely have an unevenly distributed impact. Here, non-capital generators are expected to bear a disproportionate share of the downside risk. Consequently, to address these policy implications, Korea's electricity market requires mid- to long-term preparation in the following areas:  
1.