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High German power prices, low monthly bills?

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Energy Transition

According to the most recent data, German retail power rates are the highest in the EU along with Denmark’s. The monthly power bill is, however, exaggerated in reports. Craig Morris investigates.

Average German power bills are consistently overestimated (Public Domain)

After years of coming in second behind Denmark, Germany has apparently closed ranks and is now tied with the Danes in the unpopular competition for the highest retail power rates in Europe.

According to “Strom Report” (based on Eurostat data), Danish and German retail consumers paid 30.5 Euro cents for a kilowatt-hour of electricity in 2017.

Source: Strom Report

However, the numbers are estimates; slightly different ones are also circulated. Consumer portal Verivox, for instance, put the average price in 2017 at 28.18 Euro cents (in German). Whatever the exact number is, Germany is certainly near the top.

Estimates for the average power bill are also circulated but seem systematically exaggerated. For instance, the German article linked to above comes to a monthly power bill of 93.93 euros based on 4,000 kWh of consumption annually.

That figure is even higher than the usual 3,500 kWh annually for a “three-person household” – the metric usually used by German utility umbrella organization BDEW (in German).

Both estimates are significantly too high

Germany has an estimated 41 million households and a population of 82 million people, putting the average number of people per household at exactly two. A three-person household is larger than the average.

More importantly, the number of kilowatt-hours consumed in residential buildings is also considerably lower.

In the chart below, we see that German households consume some 130 TWh of electricity annually.

Divide that by 41 million households, and you get 3,171 kWh. At 30.5 Euro cents per kilowatt-hour, the average German household thus spends 967.07 euros on electricity annually – and 80.59 euros monthly.

Now here’s the fun part: the EU does not gather statistics on monthly residential power bills, so we cannot easily compare.

“Strom Report” tries to put the matter into context using the data available, so we see that German retail power prices (not bills!) are in the middle of the field once account is taken of purchasing power.

But even that comparison does not take account of actual spending – the bills, not just the prices.

I have also written here about households not being able to pay their energy bills, and once again Germany does not perform so poorly. And note that “energy bills” concern more than just electricity: heating oil, natural gas, etc.

For comparisons of average German power bills with those in other countries, you would therefore have to perform the entire calculation above for each country: find out the amount of electricity consumed by households, divide that by the number of households, and then multiply that amount by the price.

It’s rather exhausting work – more suitable for a complete study than a blog post – so I merely refer you to our comparison of German and US power bills with data from 2013.

With generally the same creature comforts, German power bills are roughly in line with those in the US after an adjustment is made to remove consumption for air-conditioning, which German households don’t have (or need).

Why is all this so important?

The distinction between prices and costs (bills) is crucial because high prices are an incentive for efficiency and conservation, both of which are integral to the energy transition. Obviously, the debate about retail power rates in Germany is contentious.

Specifically, energy-intensive industry is partly exempt from grid fees and the renewables surcharge, leaving households to shoulder more of the burden. The design of power prices in Germany is not ideal, and there are good arguments to be made for lowering the retail rate in particular.

But high prices are not the end of the world either, at least not in wealthy countries like Germany. For instance, roughly three quarters of the price paid for gasoline in many European countries is taxes.

High prices at the pump have steered consumers towards more efficient cars, as a comparison with the US shows. Likewise, Germans pay more attention to power consumption when purchasing appliances because they know that their power prices are high.

However you come down on the issue of how high electricity rates should be, I think we can agree on one thing: German media and utility organizations should stop overestimating the average monthly power bill in Germany.

  

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  • MaxG

    I can’t speak for most, but from what I’ve learned on various forums over there; the Germs chase every Watt in their houses… I often say it cost them more to chase than actually save 🙂

    • Rod

      It is a fine line for all of us energy misers. There comes a point (for those of us still on grid) where you have to consider if you will ever get payback for some “improvements”.

      • MaxG

        Agree; though I am sure you are aware that payback is not necessarily the driver in any case. 🙂

        • Rod

          Even though I paid crazy money for my first array in 2000 it was always partly about saving money and self sufficiency. So, yes it’s not all about the shekels.

  • itdoesntaddup

    Die Bundesnetzagentur berichtet für 2016 von 328.000 durchgeführten und über sechs Millionen angedrohten Stromsperren.

    The Federal Network Agency report some 328,000 disconnections, and six million disconnection warning notices in 2016.

    Hard to square that with the propaganda about Germans managing to pay their power bills easily.

    https://www.caritas.de/neue-caritas/heftarchiv/jahrgang2017/artikel/wen-treffen-stromsperren-am-ehesten

    • heinbloed

      The liar’s numbers never ad up.

      The Federal Grid Agency of Germany published their report in English:

      https://www.bundesnetzagentur.de/SharedDocs/Downloads/EN/Areas/ElectricityGas/CollectionCompanySpecificData/Monitoring/KernaussagenEng_MB2017.pdf?__blob=publicationFile&v=2

      Household disconnections are reported on page 4 in the pdf:

      ” At the same time, there was a decrease in the number of customers
      whose electricity supply was disconnected. In 2016, a total of about 328,000 customers were disconnected,representing a year-on-year decrease of around 31,000.”

      Nowhere it is mentioned that poverty was the reason for disconnection or connection of consumers.
      Nowhere such a federal statistic exists.

      Every time a householder moves out a disconnection of the power grid is done.
      Every time a new householder moves in a new connection is done.

      New ownership/new rental contract causes a disconnection of gas and water followed by a re-connection.

  • heinbloed

    The UK’s power prices are half of those in Germany.

    The official death toll caused by “fuel poverty” in the UK is nearly 30,000

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/211180/FuelPovFramework.pdf

    The UK utilities register increasing mental insanity caused by the fuel poverty:

    https://www.eua.org.uk/cold-homes-worsening-britains-mental-health-crisis/

  • vielepunkte

    Electricity billing of about 50€ per month is normal I guess. Remember we don’t have AC in our houses and heating in winter is done with oil, gas or pellets.

  • Greg Hudson

    Oh my oh my the poor Danes and Germans. Here in Australia many people are paying much more than 30c/kWh. Me personally, I’m just on the edge at 29.83c (thanks to Red Energy for the 25% increase in Jan 2018)…