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How electricity prices are rising across Germany

As the year draws to an end, price comparison portals have observed huge spikes in electricity costs across Germany - though the scale of the price hikes vary across different regions.

Extension cable
An adapter and extension cable with devices plugged in. Photo: picture alliance/dpa | Sebastian Gollnow

According to analysis carried out by comparison portal Check24, there were at least 580 cases of price increases in the basic electricity supply at the beginning of the year, with around 7.3 million households affected.

Electricity costs increased by an average of 60 percent, the analysis found, though in some cases were much higher. In the case of the Cologne-based supplier Rheinenergie, a kilowatt hour of electricity has gone up to 55 cents – 130 percent higher than the previous price. 

Comparison portal Verifox, which conducted its own analysis, found that prices were rising by an average of 54 percent across the board. 

“The new year is beginning with a massive wave of price increases for electricity,” said Verifox energy expert Thorsten Storck.

Analysts also noted strong regional differences in the scale of the price increases, with Munich and Cologne topping the list for the most expensive electricity. 

In Munich, a kilowatt hour of energy will cost 61.9 cents from January, compared to 55 cents in Cologne.

Meanwhile, MVV Energie in Mannheim, Baden-Württemberg, will charge almost 45 cents per kWh for its basic supply from January onwards – instead of the previous 27 cents. The East German energy supplier EnviaM, based in Chemnitz, will charge 48.1 cents in the future – 20.1 cents more than before.

In Potsdam in Brandenburg, the region supplier is raising its electricity prices by around 21 percent to 46.5 cents per kilowatt hour.

READ ALSO: ‘It’s going to be a bleak winter’: How people in Germany are coping with the energy crisis

Why are the prices so high? 

In a statement explaining the imminent jump in prices, Rheinenergie pointed to the huge increase in their procurement costs and other overheads.

“Compared to the previous year, prices on the electricity exchanges have risen by more than 300 percent,” they explained. “At their peak they had increased more than tenfold. In addition, the grid fees are also rising.” 

The extreme spike on the markets is yet another consequence of Russia’s invasion of Ukraine, which has sent the price of natural gas soaring.

An electricity pylon near a motorway in Lower Saxony.

An electricity pylon near a motorway in Lower Saxony. Photo: picture alliance/dpa | Moritz Frankenberg

Though gas isn’t the only component involved in producing electricity – much cheaper renewables also account for a decent portion of Germany’s supply – it does have a significant impact on prices. That’s because of something known the “merit order,” in which the most expensive gas-fired plant used to produce electricity is decisive in setting the cost.  

READ ALSO: Germany’s Scholz dims lights on Christmas tree amid energy squeeze

What can customers do?

How to handle the latest wave of price increases may in part depend on who your current supplier is.

According to Udo Sieverding, an energy expert at the North Rhine-Westphalia consumer advice centre, people using a private supplier should consider whether it would make more sense to fall back on the so-called “basic supply.” 

“Customers outside the basic supply should even consider making use of the special right of termination in case of price increases and let themselves fall into the basic supply,” he said. 

The basic supply – or Grundversorgung – is generally provided to people who don’t set up their own electricity or energy contract with another supplier. Prices are set on a regional level and used to be considered expensive, but in recent months they have generally slipped below the rates offered by private companies. 

For people already using the basic supply, the situation is a bit trickier.

“The electricity price increases at the turn of the year are in part drastic,” said Sieverding. “Unfortunately, the new customer tariffs via the intermediary portals are even higher, which means that a change of supplier won’t lead to savings in most tariff areas.”

That means it could make sense to sit tight for now and accept the higher prices, but keep an eye on any deals that could be offered in the coming months. 

READ ALSO: EXPLAINED: How to save money on your German electricity bill

Will electricity stay this expensive in the future? 

Energy prices were rising dramatically even before Russia’s war on Ukraine – in part due to pandemic supply issues – and experts don’t think they’re set to drop anytime soon. 

According to analysis by Check24, a sample household with an annual consumption of 5000 kWh paid an average of 29.4 cents per kWh in November 2020. One year later, it was 31.6 cents. Currently, the average is 42.7 cents.

Apartments in Lower Saxony

A few apartments are lit up in a tower block in Lower Saxony. Photo: picture alliance/dpa | Julian Stratenschulte

Electricity market expert Mirko Schlossarczyk, who works for consultancy firm Enervis, said 40 cents per kilowatt-hour was likely to be the new normal in 2023 and 2024, and that prices could even rise to 50 cents per kilowatt-hour after that. 

Although wholesale electricity prices could fall again significantly in the future, as a result of a prospective drop in gas prices and the increased expansion of renewable energies – the noticeably larger share of the end customer price would be accounted for by levies, surcharges, fees, and taxes, Schlossarczyk said.

“We will not see a return to 32 cents (the pre-war price) in the coming years simply because of the comparatively high wholesale electricity price level and the already announced increases in grid fees,” he added. 

But isn’t there supposed to be a price cap coming?

That’s right: from March 2023, the government plans to introduce a cap on electricity prices that will apply retrospectively from January.

However, this still won’t take electricity bills back to pre-war levels. Instead, 80 percent of a household’s normal electricity consumption will be capped at a price of 40 cents per kilowatt hour, while any excess over this will be billed at ordinary market prices.

That is likely to mean that households that don’t reduce their consumption by at least 20 percent still face much higher bills, and even those that do will pay an average of eight cents more for a kilowatt hour of electricity than they were in 2021. 

READ ALSO: Germany plans to cap energy prices from start of 2023

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Germany opens applications for €200 student energy payout

Students in Germany can apply for a one-off €200 energy allowance from Wednesday - but so far the process has been marred with technical difficulties and long waiting times.

Germany opens applications for €200 student energy payout

Back in 2022, Education Ministry had promised students they would be able to claim their €200 payment “before the end of winter” – a deadline it has kept with just five days to spare. 

Following the launch on Wednesday, students with a governmental BundID account can submit an application for their energy lump-sum on the ministry’s Einmalzahlung200 website. 

Around 3.5 million vocational and university students are believed to be eligible for the €200 payment, which is intended to support people in higher education with the soaring cost of living.

Speaking to DPA, Education Minister Bettina Stark-Walzinger (FDP) hailed the “automated procedure” developed by her ministry and pledged that applications would be processed “quickly” after they were submitted. 

READ ALSO: German students call on government to ‘deliver’ on €200 energy payout

However, the long-awaited launch of the portal was overshadowed by teething problems and technical hiccups on Wednesday.

Due to the high volume of traffic, the site crashed for a number of hours in the morning, with the homepage replaced by an error message.

People hoping to apply for their payment also reported being placed in digital waiting rooms for several minutes before they were able to access the forms. 

There were also reports that people had faced difficulties when attempting to log in using their BundID, while other students said they had not received the code they needed from their institution in order to access the form.

The German Student Union – which has been pressuring the government to pay out the lump sum for several months – responded angrily to news of the botched launch.

The ministry has tested students’ patience to the limit, student Union chairman Matthias Anbuhl told DPA. “Winter will soon be over, and it is high time that this help reaches the students,” he added.

Criticism also came from the opposition benches, with CDU/CSU education policy spokesperson Thomas Jarzombek describing the roll-out as a “disaster”.

“After more than half a year of waiting for this ‘immediate support programme’, there is no reason to cheer,” he said, adding that the Education Minister should apologise to those affected.

According to the Education Ministry, the portal was successfully tested on both a federal and state level with “thousands of students” ahead of the launch. 

Energy relief for students

The €200 energy allowance was originally announced by the traffic-light coalition of the Social Democrats (SPD), Greens and Free Democrats (FDP) back in September. 

It was part of a package of measures designed to help people with the higher cost of living, which has been largely driven by spiralling energy costs.

After promising a “quick and unbureaucratic” delivery of the €200 payout, the ministry quickly ran into issues when it discovered it had no centralised data on students in Germany that would allow them to issue the payment. 

Duisburg university NRW

Students walk on the campus of Duisburg University in North Rhine-Westphalia. Photo: picture alliance/dpa | Roland Weihrauch

Since then, the Education Ministry has been scrambling to set up an online portal where students can apply for the money. 

The application process requires a BundID – which can be set up using electronic resident permit, eID card or Elster certificate – and an access code from a higher education institution in Germany.

According to the government, all students who were registered at a university or tech college in Germany on December 1st last year are eligible for the relief – even if they received other payments, like the €300 employee lump sum, last year. 

READ ALSO: How students can apply for the €200 energy payment in Germany