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(Bloomberg) — Two northern German states are pushing to form a power price zone with western Denmark to make better use of wind surpluses in the region, challenging a long-held decision to keep a single power price in Germany.
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The coastal states of Schleswig-Holstein and Hamburg, through the Chamber of Commerce and Industry Schleswig-Holstein, will present a proposal on the matter to policymakers in Brussels Tuesday. They say a joint power price zone with western Denmark would help absorb excess wind power in the region and reduce costly grid interventions.
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Germany’s northern states are located along the North Sea and Baltic Sea coasts, where wind conditions are particularly favorable. As a result, most of the country’s wind generation is concentrated there, and during particularly windy periods electricity generation can exceed local demand multiple times over.
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Still, any initiative to split the country into multiple power price zones is likely to face opposition within Germany. The federal government has so far rejected such proposals, despite recommendations from the European Union energy regulator ACER. The UK has also decided against zonal pricing.
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Part of the reason is that industrial areas in the west and south could face higher prices as a result of a split, potentially lowering their attractiveness for energy-intensive companies. Critics argue that ramping up Germany’s grid expansion is a better way of dealing with imbalances in power supply and demand.
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According to the proposal’s backers, the new power zone could be introduced as early as 2030.
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