VDA and BDEW regarding Bidding Zone Review: The Federal Government must continue to advocate for a uniform German electricity bidding zone

"The Bidding Zone Review clearly shows that the idea of dividing the German electricity price zone is economically unconvincing and that only very minimal savings would be expected in the short term. In contrast, dividing the German electricity market into several price zones would lead to massive uncertainty for industry and significantly dampen the investment climate for renewable energies - without the considerable risks and significant costs being offset by any significant economic benefits.

This makes it clear: dividing the German electricity market is neither sensible nor proportionate. The automotive industry and the energy sector expect the federal government to continue its strong commitment to maintaining the single electricity bidding zone. Germany, as an industrial location, needs reliability, planning security, and affordable energy instead of new uncertainties.

A division of the German electricity market would transform particularly industrially strong regions into high-price zones for electricity. Electricity costs, which are already very high by international standards, would be further driven up, significantly disadvantaging the companies located there and massively weakening their competitiveness, with corresponding negative consequences for prosperity and employment. At the same time, the lower electricity prices in northern Germany resulting from a division would reduce revenues for renewable energies and thus the incentives for investments in renewable energies. The further expansion of renewable energies would have to rely more heavily on state subsidies. The result would be a greater burden on the EEG account and the federal budget.

Implementing a bidding zone split would be highly complex and would take years. This long transition period would lead to enormous planning uncertainty for both operators of renewable energy sources and industrial companies. As a result, investment decisions could be postponed or even completely reconsidered. This would be a risk that Germany cannot afford in its transition to climate neutrality.

Industry and business depend primarily on the predictability of their framework conditions, also including electricity costs. Therefore, it is crucial for companies to purchase the electricity they need on the long-term futures market and effectively manage any short-term risks that arise. Germany has one of the largest and most liquid electricity futures markets in the world. The foundation for this is the large, unified electricity bidding zone. A weakened futures market increases price risks and transaction costs for end consumers. This is contrary to the EU Commission's intention to strengthen long-term electricity markets.

The ongoing grid expansion will significantly reduce the current bottlenecks in the German power grid and thus the need for grid stabilization interventions (redispatch) in the coming years. This will further diminish the apparent efficiency gains from a division of the electricity market. Rather than a division of the electricity market, the political focus should be on the accelerated expansion and digitalization of the grids."