Germany: Southern and western states want to preserve a single electricity price zone and oppose splitting the bidding zone

Six leaders of German federal states have spoken out against splitting Germany’s single bidding zone, which they say would drive up electricity prices for German industry and reduce liquidity. Northern states called for Germany’s bidding zone to be split last year, as the expansion of renewable energy has left them facing higher network charges than the rest of Germany.

Splitting Germany’s single bidding zone has long been a sensitive issue in the country. While such a move would increase electricity prices for a large part of German industry, it would help address bottlenecks in Germany’s transmission system and reduce the costs of stabilising it, which exceed one billion euros a year and reached a record 2.3 billion euros the year before last. Over the longer term, it would also create an incentive to balance electricity generation and consumption across different parts of Germany.