Germany's Bremen city boasts the country's most affordable electricity rates.
Germany Sees Wide Variation in Electricity Prices Across States
Electricity prices in Germany vary significantly from one federal state to another, with residents in Bremen paying the least while those in Thuringia face the highest costs. According to a study by comparison portal Verivox, these differences are due to several key factors.
Factors Contributing to Regional Price Differences
- Infrastructure and Grid Costs: Germany's power grid infrastructure varies regionally, leading to differences in transmission and distribution costs. States with longer distances from major generation sites or higher costs related to connecting renewable energy sources to the grid may incur higher grid fees.
- Energy Generation Mix and Import Reliance: The availability of energy resources also plays a significant role. States that rely more on electricity generated from imported fossil fuels or where renewable generation capacity is lower might face higher wholesale electricity prices.
- Taxes and Levies: Taxes and levies differ regionally in Germany, impacting electricity prices. States with higher energy consumption or industrial activity may have different tax burdens that affect pricing.
- Regional Market Dynamics: Wholesale electricity prices differ by region due to supply-demand imbalances and congestion on transmission lines. Areas bordering other pricing zones or with greater congestion may experience higher prices.
- Economic and Consumption Patterns: Differences in consumption patterns and economic structures (residential vs. industrial demand ratios) also influence prices. Higher demand or less efficient consumption patterns can increase prices in some regions.
Comparing Bremen and Thuringia
Bremen, a small city-state with lower grid congestion, better integration with efficient networks, and proximity to northern generation sites, enjoys lower electricity prices compared to Thuringia. Located more centrally and farther from major renewable power hubs, Thuringia may face higher grid fees and transmission costs. If Thuringia relies more on imported energy or less on local renewables, costs increase, leading to higher final electricity prices there compared to Bremen.
Impact of Procurement Costs
Electricity suppliers in Germany pass on high procurement costs to customers, which can contribute to the variations in prices. However, the study by Verivox does not account for the specific procurement strategies of each electricity supplier.
The Study's Findings
The study compared the average electricity costs of the local basic supply tariffs per federal state for a household with an annual consumption of 4,000 kWh. A three-person household in Bremen pays 1,537 euros for the same annual consumption, while in Lower Saxony, they pay 1,692 euros, in Bavaria and Hesse, they pay 1,710 euros and 1,735 euros respectively. However, the study does not provide prices for all German federal states.
Thuringia has the highest electricity prices, with a three-person household paying an average of 2,026 euros in the basic supply tariff for 4,000 kWh annually. Schleswig-Holstein and Mecklenburg-Western Pomerania have disproportionately high electricity prices, with households paying 1,850 euros and 1,849 euros respectively.
It's essential to note that prices may vary for households with different annual consumptions. The prices mentioned are subject to change due to fluctuations in the market.
- Infrastructure and business costs related to the power grid, such as transmission and distribution costs, can significantly vary across regions in Germany, leading to differences in electricity prices between states.
- Taxes and levies placed on the finance sector, particularly those related to energy consumption and industrial activity, can impact electricity prices, with states with higher consumption or industrial activities having different tax burdens and corresponding price variations.
