Germany gears up for EU fight over electricity bidding zones

(EurActiv, 25 May 2023) Talks on Germany’s future electricity market are heating up as all parties await a key analysis from grid operators amid looming threats from Brussels to split up the country’s wholesale market bidding zone.

Currently, all Germans pay the same price for electricity, whether they live in the wind-powered north or the coal-dependent industrial south.

But pressure for change is building up. While France also applies a single electricity tariff to household consumers, other large European countries like Italy or Sweden price electricity depending on location.

Smaller electricity pricing zones are considered more efficient economically because they reflect local conditions, such as the availability of power generation capacity or grid infrastructure.

For instance, Germany’s energy-hungry Bavaria, which is historically opposed to wind farms and high-voltage power lines on its territory, is reliant on wind power transmitted from the country’s north. This causes grid congestion and transfer losses, the cost of which is borne by all German electricity consumers.

Germany’s position at the centre of Europe has also prompted scrutiny at the EU level as the country’s undersized grid creates tensions with neighbouring EU member states.

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EurActiv, 25 May 2023: Germany gears up for EU fight over electricity bidding zones