The German–Austrian bidding zone and its compatibility with the free movement of goods in the EU

Abstract

Electricity grids between EU Member States are interconnected. Changes of energy policy in one Member State may therefore affect functioning of transmission grids beyond the state borders. Germany has become known worldwide for its energy transition targets, but it is also a member of a large bidding zone comprising of Germany, Austria and Luxembourg. The bidding zone enables trading between the three countries as if there are no physical limits in their transmission grids. The fundamental change in electricity generation in Germany and delays in German transmission line development have, however, resulted in a fundamental amount of commercial transactions within the bidding zone being realized physically via the electricity grids of the neighbouring countries. This article analyses the influence of the German renewable energy policy and functioning of the German–Austrian bidding zone on interstate electricity trade in the EU. The author finds that, although EU Member States may enlarge a bidding zone beyond borders of a particular Member State, they may not depart from the rules on the internal market. He argues that the creation of the bidding zone and the fundamental change of the German energy policy limits import of electricity to Germany, Austria and Luxembourg and electricity transit through their territories. Finally, he concludes that the German–Austrian bidding zone and the German energy transition constitute a prohibited quantitative restriction to imports.