On Monday 28 April, the European Network of Transmission System Operators for Electricity (ENTSO-E) published its long-awaited report on the analysis of zonal electricity pricing, inviting Germany and Luxembourg to consider splitting into five bidding zones (BZ) to “maximise economic efficiency”.
Divided into two proposals, the report focuses on the Central Europe and Nordic regions and assesses 14 alternative configurations on the basis of 22 criteria grouped into four categories (network security, market efficiency, stability and robustness of the zones, and the energy transition).
For the Nordic region, the transmission system operators have assessed that “none of the studied alternative BZ configurations provide a higher economic efficiency”, with a negative change in economic efficiency for the configurations ranging from €2 million to €35 million compared to the status quo, for the target year 2025.
The Nordic TSOs therefore propose to maintain the current configuration of the pricing zone in Sweden.
For Central Europe, however, the report shows a higher economic efficiency for all allocation Germany-Luxembourg split configurations (ranging from €251 million to €339 million for the target year 2025). Of the various configurations, splitting Germany and Luxembourg into five bidding zones would perform the highest in terms of economic efficiency.
However, ENTSO-E urges caution, pointing out that this result stems from the BZR methodology defined by ACER, does not take important additional aspects into account and “should therefore not be considered in isolation”.
The Dutch configuration also shows a slight positive effect on economic efficiency (€9 million for the 2025 target year), while the alternative French and Italian configurations show a negative effect, according to the study.
The association representing the interests of the German energy and water industry, BDEW, reacted by saying that the division of the German pricing zone would offer only “very small short-term savings”, “lead to enormous uncertainties for the industry” and “considerably darken the investment climate for renewable energies”.
It is up to the Member States concerned to decide whether to maintain or amend the zones. BDEW expects the German federal government to “continue to argue strongly in favour of maintaining the uniform bidding zone for electricity”.
To see the ENTSO-E report: https://aeur.eu/f/gkz (Original version in French by Pauline Denys)