Western Europe's German-Luxembourg electricity market reform may seriously affect green energy investment

ENTSO-E, the European Transmission System Operators Network, recently released key policy recommendations, proposing to reorganize the existing joint electricity bidding areas in Germany and Luxembourg into five independent areas, which are planned to be implemented this year.

 

Data analysis shows that the five-area configuration scheme marked as DE5 can bring 339 million euros of quantitative benefits to the market each year by reducing the grid re-dispatch costs by about 50%. However, the transition cost of the reform will be as high as 1.269 billion to 2.378 billion euros, and the investment recovery period will take 4-9 years; all evaluation schemes show that market liquidity has deteriorated and transaction costs have risen; and regional division may hinder the development of renewable energy power purchase agreements and affect green transformation.

 

This proposal was strongly opposed by Germany.