The green hydrogen producer has argued zonal pricing could make green hydrogen production 20% cheaper, as electricity accounts for 70–80% of electrolysis costs.
Yet under Germany’s single price zone, uniform wholesale rates apply nationwide, even in the north, where renewable power is abundant and cheaper. Adjusting price zones could “save companies more than €2bn in electricity costs,” Hy2Gen stated.
The Federal Ministry for Economic Affairs and Energy (BMWE) claimed the economic gains from splitting the price zone would be lower than the costs of reconfiguring the market.
Katherina Reiche, Federal Minister for Economic Affairs and Energy © BMWE/Chaperon
Instead, the government will introduce a long-term action plan focused on speeding up grid construction and permitting, using existing capacity, and adapting redispatch rules. Berlin had six months to submit its position and ultimately reaffirmed its current commitment.
Hy2Gen Managing Director Matthias Lisson argued Germany’s single national electricity price zones “ignore the facts” about regional generation and consumption patterns.
“According to our calculations, companies in zones with a high share of renewable electricity could enjoy a price advantage of around 10%,” Lisson stressed. “This would encourage the south to invest more in wind farms, solar plants, and storage facilities to make electricity cheaper in the longer term.”
Significant costs could be saved by cutting the “€2.56bn in redispatch payments” incurred each year when grid congestion forces wind and solar producers to curtail output.
Hy2Gen also highlighted findings from the European Network of Transmission System Operators for Electricity (ENTSO-E) and the Agency for the Cooperation of Energy Regulators (ACER), which have suggested Germany may need to introduce the measure to relieve grid congestion and improve efficiency.
The ENTSO-E suggested dividing Germany into five power price zones to make the system “more efficient and cost-effective.”
A reduction in green hydrogen production costs could also make electrolyser projects financially viable without state support, Lisson said.
“EU countries such as Sweden, Denmark, and Italy already operate with multiple power price zones — and it works,” Lisson said. “Most importantly, we can secure Germany’s hydrogen ramp-up, as many projects could proceed without subsidies if electricity prices fall.”
The grid congestion challenge facing Germany is not unique, however.
According to the International Energy Agency (IEA), electricity systems worldwide are struggling to keep pace with rising demand from electrification and growth in variable renewables.
In the Netherlands, the IEA warned that insufficient grid expansion and outdated market incentives have created severe congestion, delaying renewable and battery projects.