Germany has the highest average electricity prices in Europe. According to the latest EU data obtained from the Federal Statistical Office by Sahra Wagenknecht, a member of the German Federal Parliament, in the second half of 2023, Germany’s electricity price per kilowatt-hour (including taxes) was 41.62 euro cents, ranking first among the 27 EU member states. Germany’s electricity price is 13 euro cents higher than the EU average electricity price of 28.5 euro cents per kilowatt-hour. Although there was a slight decrease in Germany’s electricity price compared to the first half of 2023, it still remains significantly higher than the electricity price in 2022.
Following Germany, the countries with the highest electricity prices for private household users are Ireland (37.46 euro cents per kilowatt-hour) and Italy (36.19 euro cents per kilowatt-hour), while Hungary (11.09 euro cents per kilowatt-hour) and Norway (12.11 euro cents per kilowatt-hour) have the cheapest electricity rates for private consumers.
The significant differences in electricity prices across Europe are primarily related to various additional fees. For example, without the additional fees factored in, the gap between Hungary’s electricity price (8.73 euro cents) and Germany’s electricity price (30.06 euro cents) is 21 euro cents. When these additional fees are considered, the difference between the two increases to 30.53 euro cents.
In light of these data, MP Wagenknecht has urged Germany to establish a new pricing system that does not shift the costs of expanding the power grid onto electricity consumers. She stated, “What we need is not a policy that guarantees suppliers and grid operators dream returns, but rather a reform of grid costs.” She further emphasized, “The data shows that Germany’s energy transition has been a failure so far, as the whole of Europe is doing better.”
Overall, Germany’s electricity prices consist of a large proportion of grid operation costs (including distribution and transmission grids) and various taxes (such as value-added tax and eco-taxes for promoting energy transitions). Factors such as energy procurement, trade-related costs, energy policy decisions, and regulatory frameworks also play a role in determining electricity costs.
The transition from fossil fuels like coal to renewable energy sources in the short term also affects costs, including the construction of wind turbines. Personal factors such as electricity suppliers, place of residence, consumption behavior, and selected electricity prices also influence variations in the final costs.
Germany’s electricity prices are influenced by numerous cost factors, with energy procurement accounting for the largest share of electricity costs. According to investigations by the Federal Network Agency and the Federal Cartel Office, Germany’s electricity costs are composed of various factors:
– Energy procurement: 40.6%
– Grid operation costs: 19.9%
– Value-added tax: 16%
– Sales and profits: 11.6%
– Electricity tax: 4.5%
– Concession fees: 3.6%
– Offshore grid tax: 1.3%
– *§19 surcharge: 0.9%
– Measurement and metering point operator fees: 0.8%
– **KWKG surcharge: 0.8%
(*The §19 surcharge is levied under the Electricity Network Charge Regulation and relates to the EEG levy (Renewable Energy Sources Act levy), added to end-users’ network usage charges.)
(**The KWKG surcharge is an additional charge added to electricity prices to ensure financial support for combined heat and power plants. This fee aims to improve the economic efficiency of CHP plants and promote the widespread adoption of this environmentally friendly technology.)
The basic electricity price is a fixed amount that consumers must regularly pay for supplying electricity to households or businesses, irrespective of actual electricity consumption. This fee is usually settled monthly or annually.
The basic electricity price covers costs such as grid access, meter operation, administrative work, and other fixed costs of energy suppliers. Therefore, the basic electricity price typically remains relatively stable regardless of actual energy consumption.
The energy price component in electricity costs refers to the flexible amount consumers pay per kilowatt-hour (kWh) of electricity usage. Unlike the basic electricity price, the energy price is determined based on actual energy consumption.
The cost of the energy component varies depending on the energy supplier and electricity tariff, covering the costs of electricity generation, transportation, and sales.
Grid fees are the costs incurred for the operation and expansion of the power grid, collected by grid operators. The challenges of energy transition present a unique task for the power grid, requiring modifications to accommodate millions of solar installations and wind turbines. These retrofitting costs are high, leading to a continuous increase in grid fees, especially in less densely populated but wind-rich regions in northern and eastern Germany.
Grid fees vary by region and began increasing at the beginning of the year. This is due to the German government’s decision to cancel the planned €5.5 billion subsidy to stabilize grid fees in 2024, amidst budgetary constraints. Consequently, grid operators announced increases in grid fees from around 3 euro cents per kilowatt-hour to over 6 euro cents.
Electricity prices will remain unchanged for a period, apparently due to the short notice period. According to regulations, any increase in the basic supply price must be announced six weeks in advance, while other contracts typically require at least one month’s notice.
Some suppliers, such as Stadtwerke München, EWE, and EnBW, have already announced corresponding price adjustments. According to a survey by the comparison portal Verivox, 82 regional suppliers have taken similar measures. On average, prices are expected to rise by about 6% in the coming months. For a family of three consuming 4000 kilowatt-hours per year, this translates to an increase of approximately €94 annually.
However, it is not certain that electricity prices will automatically rise. Many suppliers emphasize that they will not pass on price increases to customers temporarily.
In some federal states, grid usage costs charged by distribution network operators are significantly higher than in other states, even without any price hikes. According to Check24 data, Thuringia’s grid costs are 30% higher than in other states, while Bavaria and North Rhine-Westphalia are even 31% higher.