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EXPLAINED: How customers in Germany can tackle rising electricity bills

Gas customers aren't the only ones who are set to bear the brunt of rising energy costs - electricity bills are also on the rise in Germany. Here's what to know about the latest price hikes and what you can do about them.

Published: 19 August 2022 17:11 CEST
Updated: 8 September 2022 09:53 CEST

A man plugs in a phone charger in a multi-socket adapter. Photo: picture alliance/dpa | Monika Skolimowska

Gas has been the focus of many people’s worries for the coming winter, but almost unnoticed, electricity prices have been creeping up too. According to the latest estimates by price comparison sites and announcements by electricity suppliers, customers could be in for a nasty shock in the coming weeks and months.

How are electricity prices developing?

They’ve risen sharply. The comparison portal Verivox shows the average electricity price for private consumers in Germany in an index. According to this index, the price for an annual consumption of 4000 kilowatt hours for a model household was 41.98 cents per kilowatt hour in August, which corresponds to an increase of 38 percent compared to the same month last year. Meanwhile, price comparison portal Check24 reports an increase of around 31 percent in the same period. According to this calculation, the average price of electricity currently stands at 39.9 cents.

Why are electricity prices also going up?

“The big price driver is the price of natural gas,” energy expert Udo Sieverding of the NRW consumer advice centre told DPA. Gas prices have risen mainly because Russia, Germany’s most important supplier, has slashed its deliveries to Germany by around 80 percent. In addition, according to Sieverding, there are, for example, the increased world market prices for coal and increased CO2 prices, which make electricity production more expensive.

What price increases can be expected, and when will they reach the end customers?

Verivox counted 123 price increases from basic suppliers for August, September and October, with an average increase of 25 percent. For a three-person household with a consumption of 4,000 kilowatt hours, this means average additional costs of €311 per year. Previously, the competitor Check24 had already reported a price increase of 47.4 percent in September.

“In view of the high wholesale prices, we expect numerous electricity price increases in the coming months, which will be an additional burden for households,” says Verivox expert Thorsten Storck. The average electricity price could be 45 cents per kilowatt hour or more in the coming year. Sieverding also expects prices to rise. “We have to assume that prices will rise to over 40 cents.” The end of the line, he says, has not yet been reached.

What are the big energy suppliers doing?

Germany’s largest energy supplier, Eon, expects prices for end customers to continue rising.

Price pressure prevails in all markets, CFO Marc Spieker said last week, adding: “The only thing that differs is how quickly these price increases are then implemented.”

There is no question that they will have to come in the end, he said. Electricity customers of the energy supplier EnBW, for example, will have to pay an average of 31.1 percent more for their household electricity in the basic supply tariff from October.

What could drive the price of electricity even higher?

The last three nuclear power plants in Germany are to be shut down at the end of the year. Accordingly, there would then be a shortage of electricity from the reactors. According to Sieverding, this could cause prices to go up yet again. Now Germany is feeling the full force of the consequences of “dragging its feet on the expansion of renewable energies”, he said.

An electricity metre. Photo: picture alliance/dpa | Bernd Weißbrod

Is the government doing anything to ease the burden?

Since July, electricity customers no longer have to pay the Renewable Energy Act (EEG) levy, with the funding for green energy projects now coming directly from the state.

However, the abolition of the EEG levy has only dampened the rise in electricity prices slightly, says Storck. Further relief could come from a reduction in value-added tax on electricity, which the energy industry, for example, is demanding. So far, the federal government has only announced this measure for gas bills, which will be subject to seven percent rather than 19 percent VAT until March 31st, 2022.

What can consumers do?

Unlike with gas, there are many individual electricity consumers in a household, says consumer advocate Sieverding. Electricity guzzlers such as old refrigerators, washing machines or halogen lamps should be replaced as soon as possible. An old heating pump can also help save energy.

The consumer advice centre offers electricity-saving tips on its website. For example, you can make your refrigerator a little less cold or defrost an iced-up freezer. You can use a lid when cooking and frying, and when using the oven you can avoid preheating it and switch it off a little earlier. And of course: switch off the light whenever you leave a room.

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Thousands of jobs have already been lost in the region, where wind farms now rise near abandoned open-pit mines and many people look with dread towards 2038, the deadline for the “coal exit”.

Their fears help explain the strong local support for the far-right Alternative for Germany (AfD), which does not just rail against migrants but also rejects the green energy push and questions man-made climate change.

At local elections held in Spremberg in June, the AfD scored 39.3 percent – an omen ahead of regional elections next Sunday in the state of Brandenburg, which polls suggest it could win.

Lignite, or brown coal, may be a climate killer, but since the 19th century it has been key to the identity of the Lusatia industrial region on the Polish border, known as the Lausitz in German.

“Thousands of people here have been linked to coal their whole working lives,” said the town’s mayor, Christine Herntier, an independent who has held the post for a decade.

“We are proud of our tradition,” said Herntier, 67, pointing to a huge map on her office wall of the Schwarze Pumpe plant and its surrounding industrial complex.

Most people in Spremberg, population 25,000, have grudgingly accepted the coal phase-out plan, under which the government has earmarked billions for structural transition plans, she said.

But, she added, ahead of the state election the winding down of coal “is still a big issue”.

‘Anger over wind farm’

Michael Hanko, the AfD’s top representative in Spremberg, said he is certain that the looming demise of the lignite industry is “one of the main reasons” residents are voting for his party.

“I don’t think the government has really got them on board with this whole prescribed transformation, saying that we now have to do everything with renewable energies,” Hanko said.

Michael Hanko, the AfD (Alternative for Germany) top candidate, in Spremberg, eastern Germany on, September 9, 2024. Photo by Femke COLBORNE / AFP

The AfD, founded about a decade ago, scored a triumph earlier this month when it won an election in the eastern state of Thuringia and came a close second in Saxony.

It now also has a good chance of winning in Brandenburg, the state that surrounds Berlin, where it is polling narrowly in first place at around 27 percent.

When the German government decided five years ago to phase out coal, it pledged around €40 billion to help coal regions adapt, with €17 billion for the Lausitz alone.

Much of the money is intended to flow into developing the renewables and hydrogen sectors, helping the region maintain its identity as an energy hub.

But residents complain the investment has been too slow to materialise and is flowing into the wrong places.

In Spremberg, plans to extend a nearby wind park have caused outrage among some locals, who fear it will be a threat to 150-year-old trees, a protected swallow species and drinking water.

‘Something different’

Coal has long been synonymous with the Lausitz region, which takes in parts of Brandenburg and Saxony and a small strip of Poland, and where lignite was discovered in the late 18th century.

But the industry all but collapsed after German reunification in 1990, when most of the region’s open pit mines were shut down and thousands of jobs vanished.

Today, only around 8,000 people are employed in the lignite industry across the Lausitz, with 4,500 of them in Brandenburg, though the industry is still one of the largest private employers in the state and coal remains a strong part of the region’s identity.

Already weary from the problems caused by reunification, people in the region have felt “overwhelmed” by recent global challenges, said Lars Katzmarek, a board member of the Pro-Lausitz campaign group.

Lars Katzmarek, board member of the Pro-Lausitz campaign group. Photo by Femke COLBORNE / AFP

“The coronavirus, the energy crisis, the Ukraine war – these are all very difficult things that people still haven’t fully digested… and perhaps at some point they just close their ears,” he said.

On a rainy morning in Spremberg, Joachim Paschke, 81, who used to work in mechanical engineering and welding, was buying bread rolls in the bakery opposite the town hall.

“I’m definitely not an AfD supporter but I can understand people who are,” he said.

“The established parties have nothing concrete and the AfD is offering something different. People want change.”

By Femke COLBORNE