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Two price zones for the German electricity market — Market implications and distributional effects

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  • Egerer, Jonas
  • Weibezahn, Jens
  • Hermann, Hauke

Abstract

We discuss the implications of two price zones (i.e., one northern and one southern bidding area) on the German electricity market. In the northern zone, continuous increases in capacity with low variable costs cause large regional supply surpluses in the market dispatch, while in the southern zone conventional capacity decreases. As the spatial imbalance of supply and load is increasing, the current single bidding area more often results in technically infeasible market results, requiring curative congestion management measures.

Suggested Citation

  • Egerer, Jonas & Weibezahn, Jens & Hermann, Hauke, 2016. "Two price zones for the German electricity market — Market implications and distributional effects," Energy Economics, Elsevier, vol. 59(C), pages 365-381.
    • Handle: RePEc:eee:eneeco:v:59:y:2016:i:c:p:365-381
    DOI: 10.1016/j.eneco.2016.08.002
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    More about this item

    Keywords

    German electricity market; Congestion management; Bidding zone configuration; Distributional effects.;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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