Bavaria rejects German grid regulator’s plans for different power price zones

The government of Bavaria has rejected a proposal by Germany’s Federal Network Agency (BNetzA) to reform the country’s electricity price system to relieve cost pressure for regions with a high share of renewable energy sources. Splitting up Germany into different power price zones would be “a big mistake,” said Markus Söder, conservative CSU state premier of the southern economic powerhouse state. A reform that reduces costs for regions with a high share of renewables, especially wind turbines in northern Germany, would result in “applying the axe to Germany as an industry location and threatening southern Germany’s role as the economic heartland” of the country, Söder argued in an interview with the Süddeutsche Zeitung. The state premier faces a state election on 8 October where he hopes to keep his party the dominant political force in Bavaria.

BNetzA head Klaus Müller had told newspaper Neue Osnabrücker Zeitung that the current system puts a burden on regions with a higher share of renewable energy, as they tend to pay higher fees to grid operators for connecting scattered wind turbines and solar PV arrays with the electricity grid and operating it. That means that consumers in southern German states with less renewable capacity often pay lower prices for electricity. Parliament would need to work on a law reform that replaces this “historically grown” system with one where the BNetzA has direct control over the grid fees paid by consumers in each region of the country, which would also benefit the southern German regions providing a lot of renewable power capacity. “Obviously, we should be rewarding renewables expansion,” Müller said.

Germany’s states have been arguing over a grid fee reform for months. While northern state leaders have repeatedly criticised the current system for effectively penalising their renewable energy expansion efforts, southern state leaders generally reject the idea of splitting the country into different prize zones arguing that this would undermine the integrity of the country’s economy. The country should instead aim for an accelerated expansion of the electricity transmission grids to transport renewable power to the south and better framework conditions for storage facilities and hydrogen production. The EU and neighbouring countries have also called on Germany to split its price zone, as the lagging grid expansion in the country has led to costly problems, such as so-called "loop flows". The EU Agency for the Cooperation of Energy Regulators (ACER) in 2022 endorsed a split-up of Germany’s power price zone to encourage interregional trade and enable more cost-efficient investments in clean technologies.