Germany: The Highest Electricity Prices in the EU

Germany: The Highest Electricity Prices in the EU

Germany often sees itself as a leader and pioneer, but to the dismay of its citizens, it also tops the EU rankings for electricity prices. Interestingly, Germany does not hold the record for the highest base price per kilowatt hour (kWh) in Europe. Luxembourg matches Germany’s base rate, while Italy, the Netherlands, and Ireland surpass it in pure energy costs. So, what drives Germany’s high electricity prices?

Electricity Prices – Balancing Climate Protection, Social Equity, and Energy Supply

The energy transition in Germany comes at a literal cost. Electricity bills consist of three main components: energy costs, taxes, and grid fees.

 

Taxes:

  • Value-added tax (VAT)
  • Electricity tax on consumption
  • Concession fees paid to municipalities for using public pathways for power and gas lines
  • Renewable Energy Act (EEG) surcharge
  • Surcharges under Section 19 of the Electricity Grid Charges Ordinance
  • Offshore grid surcharges
  • Surcharges under the Combined Heat and Power Act (KWKG)
  • Surcharges for interruptible loads

Grid Fees:

  • Costs for electricity transport, distribution, and grid maintenance
  • Meter operation
  • Costs for measurement and provision of meter data

Other Costs:

  • Energy procurement
  • Sales and distribution
  • Customer service

 

All these elements together make up the gross costs charged to end consumers.

Taxes and Surcharges – Germany Ranks Second

In terms of taxes and surcharges, Germany ranks second in Europe with 11.7 cents/kWh, just behind Denmark at 13.3 cents/kWh. However, Denmark’s pure energy costs are significantly lower at 18.6 cents/kWh compared to Germany’s rates. As a result, Danish consumers pay much less overall.

Denmark achieves such low base prices because it generated approximately 83% of its electricity from low-carbon sources in 2024. Wind power accounted for 59%, solar energy for 11%, and biofuels for one-third of its energy mix.

In comparison, Germany’s energy mix in Q3 2024 showed wind power as the leading source at 24.7%, followed by photovoltaic solar at 23.8%. Coal ranked third at 21.4%, while natural gas contributed 11.4%. Biogas and hydropower combined made up 11.8%. These figures only account for domestically produced electricity and exclude imports like nuclear power from abroad (source: Destatis). Unlike Denmark, Germany is still transitioning its energy system, relying on expensive imported electricity while coal retains a relatively high share in the mix. This means that Germany’s base price will likely remain significantly higher than Denmark’s for some time.

Subsidies Instead of Surcharges – A Different Approach

Electricity as a potential source of social tension was unthinkable just a few years ago. Modern life depends on electricity; those who can no longer afford it are effectively excluded from active participation—broadband internet, 5G networks, or electric vehicles become meaningless.

As illustrated in our graphic, four EU countries—Ireland, Austria, the Netherlands, and Luxembourg—mitigate this risk by avoiding additional surcharges on electricity prices and instead subsidizing energy costs. Citizens in these countries even benefit from negative taxes.

How Grim Are the Prospects for German Consumers?

For those unable to pay their electricity bills, the lights go out—literally—and life becomes truly bleak. Rising electricity prices also cast a shadow over other goals: as costs rise, the economic appeal of e-bikes and electric cars diminishes, prompting car owners to stick with traditional combustion engines.

The reality is that German policymakers remain committed to the energy transition—and must continue to do so—but this comes at a price. The EEG surcharge will likely persist as long as or longer than the “solidarity surcharge,” originally intended as a temporary measure. Revenues from these charges might even be partially redirected to fund infrastructure projects like rail improvements. Similarly, there is little chance of eliminating other surcharges listed above or replacing them with subsidies anytime soon.

Germany will likely maintain its leading position in Europe when it comes to electricity prices.

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