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Norway minister criticises Germany for single bidding zone

(Montel) Norwegian energy minister Terje Aasland has told German authorities their one bidding zone policy is problematic for the European power market, he told Montel on Thursday.

“I have been very clear [with German officials] that if we are to have a system that works optimally, then the various countries’ facilities must also be optimal. Only one price area in Germany is not optimal,” Aasland told Montel on the sidelines of an industry event in Oslo.

Last week, Sweden’s government rejected plans for a 700 MW power link with Germany because “the German electricity market does not function in a way that provide accurate price signals to market participants”. It added the main reason was Germany’s failure to split into more than one bidding zone.

Aasland shared some of the Swedish concerns, saying it was “unfortunate” that Germany had to order shutdown of power generation in certain situations because of a lack of grid capacity internally.

Capacity restrictions
German TSO Tennet must at times restrict import capacity on the 1.4 GW Nordlink cable with Norway due to internal grid congestions in Germany that prevent a surplus of power in the north of the country to be exported to the large consumption centres further south.

Norway and Sweden are split into five and four bidding zones respectively, to reflect internal grid bottlenecks, though this system has also been criticised by market participants for making it more difficult to hedge long-term market exposure.

European TSOs plan later this year to conclude a bidding zone review that will assess a potential split of bidding zones as one measure that could help remove structural grid congestions in Europe.

EU regulatory agency Acer has previously asked German TSOs to reconsider the current bidding zone set-up in the country but the European Association of Electricity Traders (Efet) and power exchange EEX have strongly supported Germany’s policy of maintaining one bidding zone.

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