Rejecting the option of splitting into different price zones avoids fragmentation that would have favored the north (low prices linked to renewables) at the expense of the south (potential increase of +€8/MWh). This reassures southern industries, which feared relocations, and preserves economic unity, preventing a “north-south divide.” Nevertheless, greater granularity in the zones would have allowed for localized price signals, which could have limited the scale of investment needs in major high voltage direct current (HVDC) corridors (SüdLink, SüdOstLink, A-Nord), whose costs now exceed tens of billions of euros.

The German federal government has made it clear that it aims to resolve these imbalances through investment in major grid infrastructure projects.

This decision is backed by a robust financial and industrial framework (including a partial subsidy of c€ 5/kWh for certain industrial sectors and the large-scale development of gas-fired power plants) and by the public bank KfW taking a stake in the capital of grid operators.

Maintaining a single price zone generates congestion and loop flows that spill over into neighboring countries, forcing them to invest in their grids to manage flows from which they do not always derive a direct economic benefit.

For France, a structural electricity exporter, this situation results in an undervaluation of its export revenue and would require approval of additional interconnections only on the condition that the German north-south grids are built and operational.

The full version of the paper is only available in French.