Following their mini-party conference in late June, the Greens intend to divide Germany into multiple electricity price zones. Consequently, electricity is to become cheaper in areas where large amounts of wind or solar energy are generated. This move is prompted by grid bottlenecks between generation regions in the north and east and major consumption centers in the south and west. To date, the uniform wholesale electricity price has barely reflected these bottlenecks. Households, industry, grid operators, storage operators, and renewable energy producers would therefore be affected.
Electricity price zones set to replace uniform pricing
Germany currently shares a common bidding zone with Luxembourg. Consequently, a uniform electricity price applies in the wholesale market. This price does not distinguish between regions with a surplus of electricity and those facing grid constraints. While this simplifies trading, it masks physical bottlenecks in the power grid.
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When wind power from the north fails to reach the south, grid operators intervene. They curtail generation facilities and procure replacement power elsewhere. This results in redispatch costs that are ultimately passed on within the electricity system. Consequently, the Green Party advocates for linking prices more closely to actual grid conditions.
Analysis identifies five zones as yielding the greatest benefit
The European review of bidding zones provides a key reference point in this regard. ENTSO-E compared various configurations for Germany and Luxembourg. The model featuring five bidding zones achieved the highest calculated efficiency gain, amounting to €339 million for the target year 2025.
However, this figure appears substantial only at first glance; relative to total system costs, the impact remains limited. Furthermore, transmission system operators warn of declining market liquidity and additional costs, while also pointing to outdated data and long lead times.
Electricity Price Zones Create Winners and Losers
The planned electricity price zones could have widely varying regional impacts. Wholesale prices would likely fall in the windy north, whereas they could rise in southern industrial regions. This is precisely why southern German states and parts of the business community oppose such a division.
Nevertheless, Schleswig-Holstein is pushing the debate forward. An analysis by Fraunhofer examined a joint zone comprising Schleswig-Holstein, Hamburg, and Western Denmark. The model aims to reduce curtailment and attract flexible consumers. It could also make electrolyzers more economically viable.
According to Fraunhofer, adding three gigawatts of electrolysis capacity would significantly reduce instances of negative electricity prices. At the same time, it would create stronger incentives to consume electricity close to where it is generated. This aligns with the Green Party’s goal of locating storage facilities, hydrogen plants, and new industries closer to renewable energy sources. However, the proposal remains contentious for existing industrial sites, as higher wholesale prices could place a burden on businesses in the south and west.
Author: Blackout News
Sources: Bündnis 90 Die Grünen (28.06.26) – Handelsblatt (29.06.26) – Taz (29.06.26) – Fraunhofer Institute (11.06.26)