Southern German industry groups warn splitting up country’s power price zone will damage economy

Industry groups in southern Germany have banded together to reject a possible split of the country’s uniform power pricing zone, arguing that this would damage the national economy, news agency dpa reported in an article published in the Süddeutsche Zeitung. Groups hailing from the states Bavaria, Baden-Wurttemberg, Rhineland-Palatinate, and Saarland, as well as two grid operators Amprion and TransnetBW, called on the government to work against plans by the EU to split the country’s power pricing zone. Manfred Gößl of the Bavarian Chamber for Industry and Commerce (BIHK) said the economic powerhouse state’s industry would face higher costs and a deterioration of production conditions if the split was implemented. “This would damage the German economy as a whole,” Gößl argued. He added that the current assessment procedure by the EU to adapt power pricing zones to a changing energy system did not adequately consider grid expansion, which according to the industry lobbyist should solve energy bottlenecks in the German grid by the end of 2028. Angelika Niebler, EU parliament member for Bavaria’s ruling party Christian Social Union (CSU), warned that the price zone split would “throw back the energy transition” and create more resistance to grid expansion.

Power prices in Germany currently do not factor in where electricity has been produced and all operators offering their output to the market at a given point in time receive the same remuneration. However, due to a slower expansion of renewables in southern Germany, compounded by the closure of the country’s last nuclear plants in 2023, electricity production in the region often does not meet demand. In northern Germany, on the other hand, an abundance of wind power often means that more electricity is produced than local customers need. Grid operators in these cases need to intervene with costly re-dispatch measures to avoid grid disturbances, either by deploying additional plant capacity in the south or by throttling down renewables in the north. Splitting the country into a northern and a southern zone would therefore likely result in much higher prices in the south.