Southern and western states oppose splitting Germany’s power price zone

Six German state leaders have spoken out against splitting the country’s power price zone because of geographically uneven wind power capacities. Northern states had called for splitting Germany’s power price zone based on renewables capacity, as the region’s many wind farms produce a large share of the country's cheap renewable electricity but the states currently pay more in grid fees than, for example, Bavaria, where the expansion of wind power and grids has been historically sluggish. “A uniform electricity price zone is the central expression of a unified German economic area,” the leaders of Baden-Württemberg, Bavaria, Hesse, North Rhine-Westphalia, Rhineland-Palatinate and Saarland wrote in a joint statement. “Weakening the economically strong states of the south and the west cannot be in the interest of the federal government or of the northern German states.” The leaders of the south-western states also called for an accelerated expansion of the electricity transmission grids, a rapid ramp-up of the hydrogen economy including the building of H2-ready gas-fired power plants, better framework conditions for storage facilities, and an industry power price.

Consumers in the south are keen to buy cheap wind power from northern Germany, but congestion in the grid means the grid operators often have to take expensive re-dispatch measures to supply the power, and the lack of connections has also led to issues in neighbouring countries. Poland and the Czech Republic, for example, have installed so called phase-shifters at their borders with Germany to prevent loop flows of northern German power meant for Bavaria flooding their networks. The politically sensitive idea of splitting Germany into different power price zones has been debated for years, with the EU Agency for the Cooperation of Energy Regulators (ACER) making most recent proposals last year. The joint zone of Germany and Austria was split in 2018, and the European Commission could demand that Germany split its zone. The split could make sense from an economic point of view, according to economist Achim Wambach of research institute ZEW. However, the expansion of electricity grid capacity would be a simpler solution, Wambach said. Germany’s northern coastal states have massively increased their wind power production capacity in recent years, but insufficient grid capacity often means turbines are turned off. Industrial centres in the southern states, on the other hand, have mostly sourced electricity from nuclear and coal plants and bet on gas plants to replace these. Crucial power transmission lines connecting north and south Germany have been held up for years, often due to local opposition.