Interior Design
Interior Design
Jan 15, 2017

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    By Kate Abnett

    BRUSSELS, April 28 (Reuters) - Germany should consider
    splitting its electricity market into up to five price zones to better
    reflect the different costs across the country, Europe's
    association of power grid operators (ENTSO-E)
    said in a report on Monday.

    WHY IT'S IMPORTANT

    Germany is a single large power market zone, with a unified wholesale price.
    Luxembourg is also part of Germany's electricity bidding zone.



    However, congestion on Germany's grid, which lacks connections to move power from the wind-rich north to consumption centres in the south, has increased calls
    for a split into at least two zones, to stop high prices in one region bleeding across the entire country.


    BY THE NUMBERS

    ENTSO-E said its analysis of various options for splitting Germany's market
    suggested all would yield economic benefits, but a split into five bidding zones would deliver
    the biggest benefits, of 339 million euros ($385 million) for 2025.


    However, while splitting the market could yield lower
    prices in the renewables-rich north, ENTSO-E said prices could increase in southern regions -
    the seat of much of the heavy industry that drives the German economy.



    WHAT'S NEXT

    Germany's new coalition government has said it opposes splitting up
    the power market, which it fears could increase prices
    in the south and impact industrial activity.


    However, the issue is already disrupting power infrastructure projects, and countries including Sweden are lobbying Berlin to reconsider.


    CONTEXT

    Sweden has said it will not green light a new power cable
    to connect the south of the country to Germany unless Berlin reorganises the German market.


    Sweden and Germany are already connected by one power cable,
    which Sweden's government has said is driving up power prices in Sweden's south - despite being connected to northern Germany where
    cheap renewable energy is abundant. Sweden's electricity market is split into four zones.


    ($1 = 0.8804 euros) (Reporting by Kate Abnett Editing by Mark Potter)

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