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The Development of Electricity Prices in Germany | Prokon

Electricity Price Development in Germany - An Overview

The topic of electricity price development is as present in Germany as hardly any other. This interest is not accidental, as the electricity price affects every household and every company in the country. Especially in comparison with our European neighbours, energy prices in Germany are higher. Taking a closer look at the numerous factors influencing electricity prices helps to understand the dynamics behind electricity price development.

What influences the electricity price development in Germany?

The pricing of electricity is a complex interplay of various factors. In addition to the costs of energy generation, such as through wind turbines, taxes, levies, and the costs of expanding electricity grids also play a significant role. All of these factors are subject to their own fluctuations, which is why the electricity price can be quite unstable. This is unlikely to change significantly in the foreseeable future. There is a broad societal consensus that we want to make our country climate-neutral and promote the expansion of renewable energies – the costs of expansion are reflected, among other things, in the level of electricity prices.

Taxes and levies

Taxes and levies make up about half of the electricity price. Both factors fluctuate and thus have a significant impact on the actual costs for consumers. For example, during the Covid-19 crisis, the value-added tax was temporarily reduced to 16%, resulting in a noticeable decrease in electricity prices. The electricity tax for households is currently at 2.05 cents per kWh (as of March 2024), allowing the government direct control over energy costs. At the current time, taxes and levies amount to a total of 26.8% of the electricity price.

The role of network operators

Electricity is usually not used where it is generated. The grid operators, responsible for the cross-country power lines throughout Germany, work together with local suppliers to ensure that electricity actually reaches households. The amount customers must pay for this transport accounts for about a quarter of the electricity price. In terms of electricity price development, the influence of grid operators is clearly noticeable: the increasing grid costs offset the decreasing EEG surcharge – so the final costs remain the same for now.

One of the reasons for the increasing price of grid usage is the growth of renewable energy sources such as wind, water, and sun. Because the network of high-voltage power lines must be significantly expanded to, for example, transport wind energy from the north and east to other regions. This network is operated nationwide by four companies. For home electricity connections, there are over 850 providers responsible, each offering different prices for their electricity tariffs. As a result, not only does electricity price development fluctuate significantly, but the electricity price itself varies from region to region.

How stable is the electricity price?

The different factors affecting the price development of electricity in Germany make it clear that producers such as Prokon only have a limited influence on the final electricity price. Because the production of our certified green electricity accounts for only about a quarter of the final price. They also illustrate that the price development of electricity is unfortunately unpredictable, and statements about its stability are therefore not possible. Nevertheless, it cannot be assumed that the price development of electricity will only go in one direction in the long run, because: The better and faster the grid is expanded for renewable energies, the cheaper green electricity will be in the future. With green electricity from Prokon, your monthly instalment is therefore an active investment in the future.

The price development of green energy

Thanks to the progressive integration of renewable energy sources and the associated cost reduction in electricity generation, green energy is becoming increasingly competitive. Furthermore, the new CO2 levy is not applied to green energy, which means that renewable energy is expected to be much cheaper than fossil fuels. The decreasing generation costs for green energy are already having a positive impact on the overall (eco) electricity price development. How we calculate our 100% green energy at Prokon, explained simply and clearly, can be found in our infographic."

Become a producer with Prokon, not just a consumer.

As a member of the Citizen Energy Cooperative, you will transition from a consumer to a producer at Prokon, actively shaping the future of our energy supply. Each member contributes to making our green electricity even more profitable and at the same time makes an effective contribution to the stability of electricity price development in Germany.