In Germany, the cost of electricity is set to skyrocket, with prices anticipated to climb even higher than initially expected towards the end of the year. Several factors contribute to this hike.
Firstly, the German government has decided to stop subsidizing electricity network charges, which amounted to 5.5 billion euros. This financial support will cease in 2024, leaving consumers to cover these costs themselves.
Next, the operators of transmission systems, like 50Hertz, Amprion, Tennet, and Transnet, have announced they will elevate network fees from 2024. These charges will almost double, jumping from 3.12 cents/kilowatt-hour (kWh) to 6.34 cents/kWh.
Moreover, taxes on CO2 emissions are set to escalate, impacting power plant operators who rely on fossil fuels, such as crude oil or natural gas. While taxes on CO2 emissions have long been anticipated to increase in 2024, their new height of 45 euros per ton of CO2 represents a significant rise from the initial 40 euros per ton.
The President of the German Chamber of Commerce and Industry (DIHK) anticipates electricity bills to surge by 10–20%, considering the commercial price of electricity. This price typically runs around 5 cents/kilowatt-hour higher than residential prices. The variation in taxation further impacts the cost, with only 20% of taxes levied on commercial electricity, whereas almost 27% are levied on residential electricity.
Besides these factors, the early end to the price brake on electricity is another indicator that energy costs will continue to rise. This price cap, initially set for March 2024, was abruptly put to an end on December 31, 2023.
With all these changes in the pipeline, consumers should brace themselves for higher energy bills in the coming year and possibly re-evaluate their budgets to account for these additional expenses.
