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Bidding Zone Split – Study on price impacts of a potential bidding zone split in Germany into two zones (North-South)
As more and more renewables are connected to the grid, the challenges to integrate the growing volumes into the market become apparent. Particular under pressure are markets, where supply and demand centres fall apart regionally, and the required grid expansion seems to lack behind under existing rules. Germany with its large wind potential in the North and industry clusters in the South and West is exactly such a candidate, and therefore chosen by the EU-authority ACER to thoroughly assess whether a split of its bidding zones can mitigate the issue. By 2026, this process could turn out to bring Germany a fundamental reform of its power market design.
At enervis, we have assessed how the power prices following a bidding zone split into a Northern and a Southern zone could look like. Zonal prices were estimated with our enervis power market model and compared against a reference scenario with a single price zone.
Relevant factors are the regional distribution of power supply and demand as well as projects and timelines of new transmission lines to enable cross-zonal trade. The reform would bring far-reaching consequences for a wide range of market players.
Contents of the study
- Modelling of the two electricity price zones until 2060 with the enervis fundamental model
- Documentation of relevant assumptions, such as zonal supply, demand and transmission capacity
- Results (on yearly basis from 2027 to 2060) and explanations on:
- base electricity price
- capture prices wind onshore, offshore and PV
- development of price spreads for the use of storage assets
- number of hours with negative prices
- sensitivity of grid expansion in line with NEP
The study is available in English and German.
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