Lion Hirth and leading energy economists argue for local electricity prices in Germany

In an opinion piece published in the Frankfurter Allgemeine Zeitung, the Hertie School Professor of Energy Policy argues for a reform of Germany’s electricity market.

“If Germany is to achieve its ambitious economic and climate policy goals, it needs an electricity market design that reflects the physical and economic reality. This requires the electricity wholesale market to provide local price signals. Currently, the uniform electricity price means the market ignores the limited network capacity. Locational pricing is particularly important for flexible consumers such as smart electric vehicles and batteries.”, Hirth explains their reasoning.

How the German electricity market can transform its market design by using local prices and how the current uniform pricing contradicts market efficiency and consumer demands, can be read in the opinion piece (in German) here.

The article was co-authored by: Lion Hirth (Hertie School und Neon), Axel Ockenfels (Uni Köln und MPI Bonn), Martin Bichler (TU München), Ottmar Edenhofer (PIK und TU Berlin), Veronika Grimm (TU Nürnberg), Andreas Löschel (Ruhr-Uni Bochum), Felix Matthes (Öko-Institut), Christoph Maurer (Consentec und FAU Erlangen-Nürnberg), Karsten Neuhoff (DIW), Karen Pittel (Ifo), Achim Wambach (ZEW), Georg Zachmann (Bruegel).


The Hertie School is not responsible for any content linked or referred to from these pages. Views expressed by the author may not necessarily reflect the views and values of the Hertie School.