Overview

• ENTSO-E has officially recommended splitting Germany's electricity price zone into five regions to alleviate grid congestion and reduce redispatch costs, which totaled €2.7 billion last year.
• The proposed division could generate an estimated €339 million in annual welfare benefits but faces strong political resistance from Germany's incoming government and southern states.
• Germany has until October 2025 to propose an alternative plan that meets EU cross-border capacity rules, as it currently falls short of the 70% requirement with only 41% achieved in 2023.
• Failure to act within the deadline could lead to the European Commission enforcing the division, a move that could create regional price disparities of up to €15/MWh.
• Industry groups warn that a market split could prolong uncertainty for producers and consumers, while some experts argue regional pricing is necessary to optimize grid efficiency and support the energy transition.