Please note: Most German households use heating oil or natural gas for heating, for which they receive separate bills. This factsheet exclusively looks at eletrictiy bills.
Electricity price components
The energy crisis that threw European energy markets in turmoil in 2022 has caused wholesale power prices in Germany to spike, reaching unprecedented levels throughout the year. Prices began to tick upward by the end of 2021 due to rising demand globally, as more countries emerged from the Covid-19 pandemic. The crisis then intensified as a result of Russia’s war on Ukraine. The ensuing trade conflict between Russia and other European nations led to a shortage of fossil fuels in the EU, causing prices for electricity to shoot up - especially in Germany, where gas plants still account for a substantial part of electricity generation. Moreover, prices for CO2 emissions allowances in the European trading system (ETS) more than tripled between 2020 and 2022, putting further pressure on electricity costs.
Households in Germany on average paid 40.07 cents per kilowatt hour (kWh) in the second half of 2022, compared to 32.16 ct/kWh in the previous year. The increase was mostly caused by higher procurement and retailing costs for electricity, which according to the German Association of Energy and Water Industries (BDEW) rose by 160 percent compared with 2021. At the same time, the price increase for households was dampened by the abolition of Germany’s renewable energy levy, which stood at 3.72 ct/kWh, before being eliminated in mid-2022.
The average household with an annual electricity consumption of 3,500 kWh was charged 116.86 euros per month in the second half of 2022, the BDEW said. In nominal terms, this corresponds to a total price increase of 134 percent compared to 1998, when the internal European energy market was introduced. However, the real terms increase, which is calculated by adjusting the price increase for inflation, has been considerably lower. Compared to the year before, electricity prices in December 2022 were 37 percent higher, comparison website Check24 found.
The share of politically determined components, such as taxes, levies, and surcharges dropped significantly as a result of the crisis, from more than 50 percent in 2021 to 28.3 percent in the second half of 2022. At the same time, the share of acquisition and retailing costs grew to over 51 percent. Grid fees accounted for more than 20 percent of the price, including metering and associated services. The fees can vary considerably between individual regions, depending on the capcity of the local grid, population density and necessary load management in the region to keep the grid stable.
