Germany should contemplate dividing its electricity market into distinct five price zones to more accurately represent varying regional costs, according to a report by the European Network of Transmission System Operators for Electricity (ENTSO-E).
The current unified power market zone, inclusive of Luxembourg, faces grid congestion and disparities in renewable energy distribution, prompting the recommendation.
ENTSO-E’s examination of different scenarios for segmenting Germany’s market indicated that all options could be economically advantageous.
A division into five bidding zones could be the most economically efficient strategy, estimated to cost between €251m ($285.5m) and €339m for 2025.
This segmentation could potentially reduce prices in the northern regions, where renewable energy is plentiful, but might increase costs in southern areas,where industrial consumption is higher, according to a Reuters report.
The debate over the need for German market segmentation has affected cross-border infrastructure projects.
Sweden, which has split its electricity market into four zones, has stated that it will withhold approval for a new power cable to Germany unless the latter restructures its market.
EU member states have a six-month window to deliberate on ENTSO-E’s findings, after which the European Commission may propose amendments to the bidding zones if a consensus is not reached.
Contrary to ENTSO-E’s recommendations, Germany’s newly formed coalition government has expressed opposition to the market split, fearing it could lead to price hikes in the south, affecting industrial activity.
Supporting the government’s position, Germany’s primary transmission operators – 50hertz, Amprion, TenneT and TransnetBW – have criticised the report for its reliance on outdated data and minimal projected benefits when compared to the overall system costs.
They warned that a market division could diminish market liquidity and escalate expenses.
In April 2025, Germany’s energy grid regulator, the Bundesnetzagentur, proposed a plan that could lead to savings of €1.5bn ($1.71bn) for power customers from 2026 to 2028 by removing payments to small conventional power generation units
“Germany advised to split power market to reflect regional cost differences” was originally created and published by Power Technology, a GlobalData owned brand.
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