Grid operators consider splitting Germany's single power market zone

Transmission system operators (TSO) in Germany are considering splitting the country's single power market bidding zone into different zones as the first step of a planned EU-wide review intended to increase cross-border power trade and the economic efficiency of electricity flows, writes energy market media Montel. Germany and Luxembourg currently form a single bidding zone – a trading area with a uniform market price on electricity. The German government has previously opposed splitting this single bidding zone as power prices would likely become lower in northern Germany where wind power production is high, while power prices in the south would rise. This situation, however, causes bottlenecks in the country's transmission grid, leading excess power to flow into neighbouring countries and cause destabilizing loop-flows, blockages at the borders, and problems for the further integration of power markets. In 2016, this led the EU to threaten a split of the single German bidding zone.
Germany's four TSOs have now laid out three alternative configurations for bidding zones. The first proposes splitting the current Germany/Luxembourg zone into a northern and southern bidding zone along the borders of Bavaria and Baden-Württemberg. The second proposes creating a north-eastern and south-western bidding zone, splitting along the borders of Bavaria, Hesse and North Rhine-Westphalia. The third would extend on the second option by adding a split along the border of Schleswig-Holstein. EU legislation prescribes a minimum cross-border trading requirement of 70 percent of capacity levels. The proposed splits "could potentially help" achieving this requirement, said the TSOs, although only for a "transition period" while planned power grid expansions to improve congestions are in place, wrote Montel. 

The European Commission is pushing for a single European energy market. This demands a better-connected system, which could result in cheaper power and a more stable grid. At the centre of Europe, neighbouring eight other EU states, Germany’s role is key. But its power grid and cross-border connections aren’t up to the job yet.