Power Zone Split: A Cash-Saving Proposal Under Fire
Efficient Allocation of Electrical Energy Costs Through Network Segmentation Ensures Affordability - Proposals Already Proposed by the Commission
The European Network of Transmission System Operators (ENTSO-E) has suggested splitting the German power price zone into multiple segments to optimize economic efficiency, sparking controversy in regions like Bavaria.
Pushing for a Zone Split
According to ENTSO-E, dividing the current German and Luxembourg power price zone into five smaller zones could save up to €339 million annually, primarily due to reduced redispatch costs. However, the report points out large uncertainties and potential downsides, including higher prices for some consumers.
A Hotly Disputed Proposition
Critics, such as Bavarian Economics and Energy Minister Hubert Aiwanger and CSU parliamentary group leader Klaus Holetschek, argue that a split would harm Germany's economy, particularly by raising electricity prices and giving businesses in Bavaria — the Free State — a competitive disadvantage.
Minister-President Markus Söder, BIHK, and the greens also express dissent, with Söder holding firm that the current unified power price zone shall remain. They caution that such changes would cause uncertainty, potentially hurting the economy.
The Relentless Energy Revolution
The debate stems from the energy transition, which has created power supply imbalances: industrial hubs in the south demand more power than produced locally, while the north produces excess energy. Proponents of a geographical market split believe it could lower power prices in the north and increase them in the south.
Time Ticking
EU regulation stipulates that Germany has six months to respond to this study. The coalition agreement of the SPD and Union designates a unified power bidding zone as a priority.
Countering the Call for Division
Network expansion, rather than splitting, is Aiwanger's preferred solution for addressing bottlenecks. The head of Bavarian Industry Association, Manfred Goessl, warns that artificially dividing the power zone could increase energy costs in Bavaria and southern Germany, exacerbating the economic crisis.
WindEurope, the Association of Municipal Enterprises, and several industry bodies also oppose the proposed split, arguing that split pricing zones could harm the investment climate and energy transition.
At a Glance: The Case for Splitting
- Improved Grid Management
- Annual Economic Benefits of Up to €339 Million
- More Accurate Price Signals
- Lower Electricity Costs in Renewables-Rich Regions
The Counter-Argument Against Splitting
- Rising Prices in Southern Regions
- Government Opposition
- Complexity and Transition Challenges
- Impact on Supply Security and Neighboring Countries
- In response to the proposal by ENTSO-E to split the German and Luxembourg power price zone, Bavarian Economics and Energy Minister Hubert Aiwanger, along with Klaus Holetschek, CSU parliamentary group leader, argue that such a move could increase electricity prices and give businesses in Bavaria, the Free State, a competitive disadvantage.
- Despite potential annual economic benefits of up to €339 million, as suggested by ENTSO-E, critics point out that splitting the power price zone may lead to higher prices for some consumers, particularly in southern regions, causing concern among government officials and industry leaders like Markus Söder, BIHK, and the greens.
- Proponents of expanding the grid network, such as Bavarian Economics and Energy Minister Hubert Aiwanger, counter the call for a power zone split by suggesting that network expansion is a more effective solution for addressing bottlenecks and potential price disparities without incurring the complexities and transition challenges associated with splitting the power zone.
