Bidding zone — what it is and why prices differ across Europe

Quick answer: A bidding zone is a geographic area within which the wholesale electricity price is uniform, separated from neighbouring zones by transmission constraints. Europe has 41 ENTSO-E zones — most countries are one zone, but Norway, Sweden, Denmark, Italy and Ukraine split into multiple zones to reflect internal grid bottlenecks.

In depth

Bidding zones exist because electricity transmission lines have finite capacity. When a zone has surplus production but cannot export all of it to a neighbour due to a congested cable, splitting the area into two zones with separate prices is the EU's preferred solution.

Norway has five zones (NO1–NO5) reflecting north-to-south corridor bottlenecks; the dry, hydro-poor south can pay 5–10× more than the hydro-rich north on certain winter days. Sweden has four (SE1–SE4); Denmark has two (DK1 west, DK2 east); Italy has six. All other ENTSO-E members are single-zone.

Inside a zone, the day-ahead clearing price is identical for every customer regardless of city. Across zones, prices follow physical flow constraints — and Google "NO2 vs NO5 spotpris" reveals just how much they can diverge.

Related glossary terms

← All glossary terms