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LIVING IN GERMANY

EXPLAINED: Why German electricity bills are hitting record highs

Germany, which already has the most expensive electricity prices in Europe, has seen prices jump even further this year. What is behind this unwelcome news for consumers?

EXPLAINED: Why German electricity bills are hitting record highs
Financing renewables has driven up costs. Photo: dpa | David Young

According to the price comparison website Verivox, the price a consumer pays per kilowatt-hour of electricity jumped to 30.4 cents this month, marking a 5.7 percent increase since last year. This increase means that consumers have never paid so much for their electricity.

At the same time, it follows a trend seen since the start of the century. Since the year 2000, household electricity bills have on average doubled in price.

A three-person household in Germany now pays an average of €93 a month on their electricity bill, up from €41 twenty ears ago.

Statistik: Durchschnittliche Stromrechnung eines 3-Personen-Haushaltes in Deutschland in den Jahren 1998 bis 2021 (in Euro pro Monat) | Statista
Average electricity bill for a 3-person household (1998-2021). Mehr Statistiken finden Sie bei Statista

READ MORE: German consumers ‘pay the highest electricity prices in Europe’

Financing renewables

One of the main factors behind this growing burden on households is Germany’s public investment in renewable energies, which has been financed through a tariff called the EEG system. 

The system promises fixed prices to wind and solar providers to try and stimulate growth in the sector. But it has always been controversial because big industries have been exempt from paying it, meaning private households have had to pick up the tab.

 “The sharp rise in electricity prices over the past 20 years is primarily due to steadily increasing taxes, levies and surcharges,” says Thorsten Storck, energy expert at Verivox. “As long as the government does not readjust here, households will continue to pay high electricity costs in the future.”

The good news is that, with solar and wind now well established on the energy market, the main political parties have signalled an intent to end the EEG in the near future.

Back in July, Economics Minister Peter Altmaier of the centre-right CDU promised to abolish the EEG by 2025, saying that “it’s not about less climate protection, but more climate protection combined with more social fairness. Abolishing the EEG surcharge can be a first step in this direction.”

SPD Chancellor candidate Olaf Scholz has also pledged that “the price of electricity must fall.. …we want the EEG levy for renewables to stop making the price of electricity more expensive. A family would then save over €300 a year.”

Rising prices on energy exchanges

The most recent rise in the cost of electricity is not directly attributable to renewable subsidies though, experts say.

Instead higher prices on energy exchanges are driving up costs for consumers. At the Leipzig-based European Energy Exchange, where suppliers buy electricity from producers, the cost of a megawatt hour of electricity has gone up by 12 percent since the start of the year.

READ ALSO: Electricity bills in Germany – how to keep your costs down

There are at least three significant factors driving this price rise, der Spiegel reported earlier this week.

Firstly, power plants are having to pay increasingly expensive charges on their C02 emissions. Under the latest EU rules, each tonne of C02 emitted now costs an energy producer €54.

Secondly, renewables have had a bad year so far due to a lack of wind and sun. Low winds and overcast skies in Germany have meant that renewables have produced just 87 terawatt hours of electricity compared to 103 terawatt hours by the same point last year. With supply not able to keep up with demand, prices have gone up. 

Lastly, gas supplies in Europe’s gas storage facilities have reached historically low levels in recent months. This has led to a sharp increase in the cost of gas, which fuels a significant percentage of Germany’s power plants.

The drop in gas supplies is partly due to the long, cold spring of 2021 but it also has to do with a drop in supplies from Russia. Some observers suspect that Russian state gas company Gazprom has turned off the taps in order to pressure Europe into finishing the controversial Nord Stream 2 pipeline.

“The prices that power plant operators have to pay for pollution rights have recently risen significantly; by around 60 percent since the beginning of the year. In addition, higher fuel costs are weighing on wholesale prices. This increase is gradually being passed on to consumers,” says Thorsten Storck.

SEE ALSO: Germany set to finish controversial Russian pipeline despite US protest

We updated our article to change the first statistic from €30.40, as was originally published, to 30.40 cents.

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LIVING IN GERMANY

Living in Germany: Battles over Bürgergeld, rolling the ‘die’ and carnival lingo

From the push to reform long-term unemployment benefits to the lingo you need to know as Carnival season kicks off, we look at the highlights of life in Germany.

Living in Germany: Battles over Bürgergeld, rolling the 'die' and carnival lingo

Deadlock looms as debates over Bürgergeld heat up 

Following a vote in the Bundestag on Thursday, the government’s planned reforms to long-term unemployment benefits are one step closer to becoming reality. Replacing the controversial Hartz IV system, Bürgergeld (or Citizens’ Allowance) is intended to be a fair bit easier on claimants.

Not only will the monthly payment be raised from €449 to €502, but jobseekers will also be given a grace period of two years before checks are carried out on the size of their apartment or savings of up to €60,000. The system will also move away from sanctions with a so-called “trust period” of six months, during which benefits won’t be docked at all – except in very extreme circumstances. 

Speaking in parliament, Labour Minister Hubertus Heil (SPD) said the spirit of the new system was “solidarity, trust and encouragement” and praised the fact that Bürgergeld would help people get back into the job market with funding for training and education. But not everyone is happy about the changes. In particular, politicians from the opposition CDU/CSU parties have responded with outrage at the move away from sanctions.

CDU leader Friedrich Merz has even branded the system a step towards “unconditional Basic Income” and argued that nobody will be incentivised to return to work. 

The CDU and CSU are now threatening to block the Bürgergeld legislation when it’s put to a vote in the Bundesrat on Monday. With the conservatives controlling most of the federal states – and thus most of the seats in the upper house – things could get interesting. Be sure to keep an eye out for our coverage in the coming weeks to see how the saga unfolds. 

Tweet of the week

When you first start learning German, picking the right article to use can truly be a roll of the “die” – so we’re entirely on board with this slightly unconventional way to decide whether you’re in a “der”, “die”, or “das” situation. (Warning: this may not improve your German.) 

Where is this?

Photo: picture alliance/dpa | Boris Roessler

Residents of Frankfurt am Main and the surrounding area will no doubt recognise this as the charming town of Kronberg, which is nestled at the foot of the Taunus mountains.

This atmospheric scene was snapped on Friday morning, when a drop in temperatures saw Kronberg and surrounding forests shrouded in autumnal fog.

After a decidedly warm start to November, the mercury is expected to drop into single digits over the weekend. 

Did you know?

November 11th marked the start of carnival season in Germany. But did you know that there’s a whole set of lingo to go along with the tradition? And it all depends on where you are. First of all, the celebration isn’t called the same thing everywhere. In the Rhineland, it’s usually called Karneval, while people in Bavaria or Saxony tend to call it Fasching. Those in Hesse and Saarland usually call it Fastnacht. 

And depending on where you are, there are different things to shout. The ‘fools call’ you’ll hear in Cologne is “Alaaf!” If you move away from Cologne, you’ll hear “Helau!” This is the traditional cry in the carnival strongholds of Düsseldorf and Mainz, as well as in some other German cities.

In the Swabian-Alemannic language region in the southwest of the country, people yell “Narri-Narro”, which means “I’m a fool, you’re a fool”. In Saarland at the French border, they shout “Alleh hopp!”, which is said to originate from the French language. 

Lastly, if someone offers you a Fastnachtskrapfe, say yes because it’s a jelly-filled carnival donut. And if you’re offered a Bützchen? It’s your call, but know that it’s a little kiss given to strangers!

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