Why German energy consumers pay lower bills than US consumers

Renewables International

Back in 2013, when everyone was focusing on the price of the Energiewende, I pointed out that Germany would only be the 16th most expensive US state in terms of monthly power bills, primarily because the Germans consume so much less electricity than Americans do. There simply is a difference between prices (which admittedly are relatively high in Germany) and costs (which are prices x units consumed – in other words, the actual power bill).

This month, the BDEW announced (press release in German) that the average German power bill fell from 85 to 84 euros in 2014. Note that this figure is an abstraction, not a true statistical average; specifically, it is based on the abstract assumption of 3,500 kilowatt-hours of electricity consumed over the year. In other words, lower consumption did not reduce power bills in Germany in this calculation.

My calculation from 2013 was based on exchange rates applicable at the time. But the exchange rates have changed considerably since – instead of around 1.30 US dollars per euro, we are now only talking about 1.05 USD. That difference changes the calculation considerably.

As we see here, there is no region of the US where power bills would be lower than in Germany right now. Granted, almost all of the change is the result of the exchange rate, and electricity is not traded anyway between the US in Germany, so the exchange rate is of limited use. But I used the exchange rate applicable in 2013 back then, so I’m going to use the new one now.

Critics might argue that the main difference otherwise is the far lower consumption in Germany, which is easily less than half as great as any other place in the contiguous 48. Americans, those critics might argue, are thus getting more electricity for their money. They would be right. But people do not want loads of electricity as an end in and of itself. They want to do things with electricity. So if the Germans are happy with their efficient lights and household appliances, they don’t need more electricity.

The biggest difference in consumption, which is clearly visible within the US data, is air-conditioning anyway, which practically does not exist in Germany (where it is simply not needed). All of the US regions labeled “South” have much higher average monthly consumption levels resulting from air-conditioning. A fairer comparison would therefore include heat expenses, which are higher in Germany than in the southern United States. But Germany does not use much electricity for heat, so we would have to include expenses for oil and gas.

For the record (PDF), Germany would have the sixth lowest monthly power rates if it were a US state.

In short, this comparison does not tell the whole story. The main take away is nonetheless important – the reason why the Germans are not up in arms about high electricity prices is because their electricity expenses are relatively low. And as the most recent data show, those expenses remain stable.

Source: Renewables International. Reproduced with permission.