What Is a Bidding Zone?

A bidding zone is the area within which electricity can be bought and sold at a single price, with no need to reserve space on the transmission network. Europe’s wholesale market is built out of these zones, each one producing its own price for every hour or quarter hour of the next day. Most zones are a single country, but several countries are split into more than one, and one zone spans two countries.

The idea behind the zones

A wholesale market matches offers to generate with bids to consume, and produces a price. To do that it has to make an assumption about the network underneath: that power can flow freely from any generator in the area to any consumer in the area.

Inside a bidding zone, that assumption is treated as true. Trading is placeless. A wind farm at one end and a factory at the other transact as if they were next to each other, and the resulting schedule is expected to be physically deliverable.

Between zones, the assumption is dropped. The transmission capacity linking two zones is finite, it is calculated in advance, and the market algorithm is only allowed to move as much power across the boundary as that capacity permits. When the limit binds, the two zones clear at different prices: cheap where the surplus is trapped, expensive where the demand cannot be reached.

So a zone boundary is a statement about the network. It says that the grid inside can cope, and that the grid across this line cannot always.

Why some countries are split

The countries divided into several zones are the ones where a big internal transmission constraint exists and has been recognised in the market design.

The clearest cases are in the north. Norway is divided into several zones running from north to south. Ember’s statistics show hydropower supplying about 90% of Norwegian generation in 2025, and that hydropower is concentrated in particular valleys and reservoirs, while demand is concentrated elsewhere, so the price in one part of the country can sit far from the price in another when the lines between them are full. Sweden is likewise split into four zones on a north to south axis, for the same reason: generation in the north, demand in the south, limited wires between.

Denmark is split into two zones for a different reason. The western zone is electrically part of the continental European system and the eastern zone is part of the Nordic system, and the two are joined only by a direct current link. They are not merely different market areas, they are different synchronous grids.

Italy is divided into a set of geographic zones running down the peninsula, with the islands treated separately, because the transmission corridors from south to north have historically been a bottleneck. There are also some small zones that exist to represent individual constraints rather than large regions.

The zone that spans two countries

Germany and Luxembourg form one bidding zone. Luxembourg is small, closely integrated with the German network, and has always cleared at the German price.

Germany’s own case is the one most often argued about. Its wind resource is in the north and along the coasts, much of its industrial demand is in the south and west, and moving the power between them strains the network. A country in that position would be a candidate for splitting under the logic above, yet it has stayed a single zone, because a split would redistribute costs between regions and industries in ways that are politically difficult. Austria used to share the German zone and was separated from it in 2018, leaving Germany and Luxembourg together.

Great Britain is a single zone too. Whether to divide it has been debated publicly for years, with the same argument on both sides: a split would make network constraints visible in prices and guide where new plants are built, and it would also mean different consumers paying different prices depending on where they live.

What a zone price actually is

A zone price is a wholesale price for a block of time, most often an hour, in some markets a quarter of an hour. It is the price at which the market cleared for that block, and in a uniform price auction every accepted seller receives it and every accepted buyer pays it, regardless of what they bid.

Three things it is not:

• It is not what a household pays. Retail bills add network charges, taxes, levies, supplier costs and the cost of hedging, and they are usually averaged over months.
• It is not a price for a specific power station. It is a price for the zone.
• It is not constant through the day. Prices vary hour by hour, and the spread between the cheapest and most expensive hour of a single day can be very large.

Zone prices from neighbouring areas are calculated together in one coupled auction, which allocates the cross border capacity implicitly, in the same step that sets the prices. That is why prices converge when the borders are not congested: the algorithm keeps moving power from the cheap zone to the expensive one until either the prices meet or the line is full.

What this site shows today

World Power Monitor publishes annual and monthly electricity statistics for European countries, compiled by Ember, on our Europe page and the country pages beneath it. European wholesale prices and bidding zone pages are not published here yet.

The hourly operating data we do publish comes from United States grids, on the grid zone pages. Those areas are balancing authorities, which are a different concept from bidding zones: a reliability boundary rather than a market boundary, though the two often coincide.