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German price zone split is "a no-go" – BNA head

22 Jan 2020 10:56

Photo: Unsplash

Photo: Unsplash

22 Jan 2020 10:56

(Montel) The German government is fundamentally against its common power price zone being split in two, with the move a “political no-go”, Jochen Homann, president of the BNA network regulator, said late on Tuesday.

The federal nature of Germany, which consists of 16 individual states, meant politicians would never allow a split and varying prices in different parts of the country, Homann said at the Handelsblatt energy conference in Berlin.

“Expansion, expansion, expansion”
“So that’s why I’m not really worried about this at all. Instead, we need to find a different solution. And that’s grid expansion, grid expansion and more grid expansion. There’s no way around it,” he added.

Internal bottlenecks amid slow grid expansion are hampering the flow of power north to south in Germany. This is in turn limiting the transfer of electricity across borders and the EU is threatening a split – as seen between Germany and Austria – should its biggest member fail to comply with a new rule mandating at least 70% of interconnector capacity has to be available to traders by 2025.

“I would warn of a price zone split because it’s the more expensive alternative,” agreed Peter Heydecker, the head of trading at utility ENBW, speaking during a different panel discussion at the conference.

“It’s still the cheaper option economically to build out the grid.”

Larger bidding zones were also better at securing power supply and market liquidity, Heydecker said.

“Look at Scandinavia. They have a lot of small zones and since 2011, liquidity has plummeted brutally.”

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