Germany’s government has rejected a recommendation to split its single electricity price zone, publishing instead an action plan to address grid bottlenecks, reports energy news agency Clean Energy Wire. The economy ministry argued that the expected economic gains of splitting would be lower than the costs of reconfiguring the bidding zone. Instead, it plans to expand and reinforce its transmission grid in the coming years.
To address existing grid bottlenecks between now and the end of the 2030s, Germany will:
- Speed up grid building and permitting procedures, for example by implementing the EU RED III directive, cutting requirements for environmental assessments, and creating preferential areas for expansion;
- Better utilise existing grid capacity, for example by monitoring weather conditions in real time and increasing use when temperatures are low;
- Adapt national redispatch frameworks to support cross-border redispatch cooperation;
- Improve grid congestion management to integrate small, decentralised generation and flexibility potentials, for example by introducing location-targeted funding programmes;
- Potentially, introduce dynamic grid fees for large-scale battery storage systems to improve their ‘grid-friendly’ integration.
ENTSO recommendation
Earlier this year, European transmission grid association ENTSO-E recommended that Germany split its single bidding zone into a maximum of five areas as a way of addressing congestion in electricity lines. This would mean electricity market actors could no longer trade electricity across the country under a uniform exchange price.
High renewable generation capacity in Germany’s windy north and high industrial demand in the south, combined with insufficient transmission grid capacity between the two, means that the country’s TSOs have had to increasingly carry out expensive balancing measures to ensure grid stability. This increases prices, for Germany and its neighbours, and has led economists, researchers and EU partners to call on Germany to split its price zone. Germany had six months to submit its position: however, the coalition government has already agreed to stick to a single electricity price zone.
