Decentralisation requires regionally different power prices - think tank

Germany needs regional power markets and a legislation overhaul to cope with its increasingly decentralised electricity system, and replace the current “chaos” in grid fees, levies and taxes, according to think tank Agora Energiewende.*
“We need to all-out abolish the current components based on decentralisation and create a new, clear system,” said the think tank’s head Patrick Graichen. Power should be differentiated into three categories, depending on the distance between production and consumption. Taxes and levies should reflect whether it was used  “directly on-site”, in a “power region,” or “trans-regional.”
Production and consumption would have to be balanced out regionally to avoid grid congestions, instead of using costly re-dispatch measures. “This new system would create regional power markets and lead to different power price zones within Germany,” said Graichen.
The study also argues that producers of electricity for their own use, which are currently often exempt from taxes and levies, should pay more to cover the costs of transforming the country’s energy system.

Read the press release in German here and find the analysis in German here.

For background read the CLEW factsheet Re-dispatch costs in the German power grid and the CLEW dossier The power market and the energy transition.

*Like the Clean Energy Wire, Agora Energiewende is a project funded by Stiftung Mercator and the European Climate Foundation.