Status: 08.09.2021 3:04 p.m.
Electricity prices in Germany are rushing from record high to record high. According to experts, there is no improvement in sight. This has to do with both supply and demand.
German consumers have never paid more for the kilowatt hour of electricity than they do now. On average, they had to shell out the historic price of 30.4 cents in August. This is shown by an analysis of the comparison portal Verivox. This means that the price of electricity has more than doubled since the turn of the millennium.
New record highs on the electricity exchange
Even if taxes, levies and levies now make up more than 50 percent of the total costs, the state is not to blame for the current explosion in electricity prices. It is the wholesale prices that are rising rapidly and are being passed on directly by the suppliers to the end customers.
It was only at the beginning of the week that the price of electricity in Germany on the Leipzig power exchange rose to a record high. The contract for delivery on the following day soared to 132.50 euros per megawatt hour. Futures contracts with longer terms also continued to soar.
Germans pay on top of the electricity price
High electricity prices are indeed a German phenomenon. In no other EU country did citizens pay as much for a kilowatt hour as in Germany last year, according to the European statistical office Eurostat.
The Germans are also leaders worldwide in this discipline: While in Austria in 2020 only 0.25 dollars was paid for the kilowatt hour, Germany with 0.39 dollars took the undisputed first place among the countries with the highest electricity prices.
This primarily reflects the taxes, levies and levies that have been rising steadily for decades. Incidentally, there is some relief in sight in this regard: In their election manifestos all major parties promise to abolish or reduce the EEG surcharge.
EEG surcharge over the years
The levy under the Renewable Energy Sources Act (EEG) finances the promotion of green electricity systems in Germany. It is an integral part of the electricity bill. The federal government has stabilized them for 2021 and 2022 with billions in taxpayers’ money from the budget. This will result in 6.5 cents per kilowatt hour in 2021 and 6 cents in 2022. The previous record high of the EEG surcharge is 6.88 cents and dates from 2017. In 2011 it was 3.53 cents.
Calm wind and rising prices for CO2 certificates
But taxes like the EEG surcharge do not explain the current price explosion on the electricity market. Robert Rethfeld, market expert at Wellenreiter-Invest, blames a combination of several factors for the current electricity price rally: “The economic recovery, weaker wind conditions and a rainy first half of the year compared to 2020 as well as the rising world market prices for fossil fuels”.
The rising prices for pollution rights are also cited by experts as a reason for the boom in electricity prices: Recently, CO2 emission certificates with over 63 euros per tonne of CO2 emitted were also more expensive than ever.
Increasing demand for electricity due to e-cars
Hardly any expert is likely to forecast falling electricity prices in the near future, as there are several sustainable price drivers on both the supply and demand side. The energy transition promoted by politicians plays a central role here.
More and more German drivers are turning to an electric or hybrid car. According to data from the Federal Motor Transport Authority, sales of electric vehicles soared by 80 percent in August. Pure electric cars increased their market share in new registrations to 15 percent, while plug-in hybrids had a share of 13 percent.
A trend that, according to experts, is likely to continue thanks not least to government subsidies. Just a few days ago, the Federal Ministry of Economics tweeted that the extension of the “innovation bonus” until 2025 was a done deal.
More and more industrial groups are relying on electricity
But not only consumers, but also industrial groups are likely to need more and more electricity in the future. With every tightening of the climate targets, (green) electricity is increasingly becoming the means of choice in sectors that have previously relied on fossil fuels.
“But that also means that supply cannot keep pace with demand – which will at least temporarily lead to rising electricity prices,” emphasizes Markus Voigt, head of the asset manager Aream, which specializes in sustainable investments. The scarcity of green electricity will increase the pressure on politicians to move faster with the regulation of renewable energies and to make more systems possible.
In fact, there is often a lack of German bureaucracy when building new plants. The Norwegian Statkraft, Europe’s largest producer of renewable energies, recently complained that it takes twice as long to build a wind farm in Germany than in the USA.
Power bottlenecks ahead?
While the expansion of renewable energies is stalling, in the coming year an energy producer that has been important for decades will collapse: the last German nuclear power plants are to go offline in 2022. Bloomberg New Energy Finance predicts a collapse in the energy surplus in this case: The German energy industry will only achieve three percent more than necessary in 2023. Before the 2019 pandemic, the surplus was 26 percent.
The three percent excess is an average. In other words: bottlenecks could arise in as little as two years – either during consumption peaks or if less electricity is generated due to a lull in the wind. These would then have to be compensated for by imports from other countries. New highs in electricity prices are as good as programmed.