The German-Austrian wholesale power market bidding zone is due to be split on 1 October 2018 because of electricity loop flows. The separation is likely to cause adjustments to power prices, liquidity and trading strategies.
The split is demanded by neighbouring eastern European countries which are affected by electricity transit flows – known as loop flows – congesting power grids, while Austria has voiced opposition to the plan.
Germany and Austria reached a compromise in May on how to split the zone, but the set-up agreed is not considered acceptable by their eastern neighbours.
The potential split and surrounding uncertainty has caused concerns among power traders. Many market participants have started adjusting their trade of long-term contracts to avoid being caught unprepared if the split happens.
This infographic looks at what loop flows are, the likely impacts of the zone being split and the next steps for reaching a final decision on the matter.
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