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How not to get shocked by your next German electricity bill

Ever opened your electricity bill in Germany and wondered why and how you're paying so much? Are you confused by German electricity contracts and their masses of inscrutable text?

How not to get shocked by your next German electricity bill

Dealing with the in and outs of getting connected and paying electricity bills is something many of those moving to Germany end up struggling with. 

To help our readers get a better sense of how electricity contracts in Germany work, The Local spoke with CEO and co-founder of digital renewable provider Ostrom, Matthias Martensen, to answer some of the most common questions asked by The Local Germanys readers.

Can you please explain ‘Nachzahlung’?

“Unfortunately, Germany is still not very digital, so upon registering with an energy provider you need to submit an estimation of your consumption for one year. After one year you will be asked to submit your actual meter reading, so your provider can calculate your final bill.

If you have used more energy than estimated, you will have to pay the extra amount – this is known as Nachzahlung or ‘after payment’. However, if you used less energy than estimated you will receive a refund into your bank account. You should of course receive a statement from your provider, indicating whether you will need to pay, or be refunded.” 

Does a landlord have any right to refuse if you want to change your electricity provider?

“This depends on your rental agreement. If you pay for your energy yourself, you have the freedom to choose your own supplier.

In the vast majority of cases in Germany, outside of a shared apartment, your electricity provider is your choice, and it is important that you compare the offers of providers, so that you pay only what you need.”

What are the major factors that influence my electricity prices?

“Energy prices are driven by two main factors—one is the raw commodity prices for coal, oil and gas, and the other is the weather. When there’s lots of wind and sun, Germany can produce a substantial amount of renewable energy, which is cheaper.

Of course, global events also have an effect on the prices offered by electricity providers, as we have seen over the last couple months.”

Looking for a new electricity provider? Ostrom is a sustainable energy provider with all services provided in English. Find out more

How often can we expect to see changes in our electricity bill prices? How will current events influence how much I pay for electricity?

“At Ostrom we try to minimize price swings as much as possible. As you can imagine, this has been difficult to do in the last few months due to the energy crisis and now Russia’s invasion of Ukraine. Unfortunately, Germany is still quite dependent on conventional power plants, a lot of which use gas and coal that is imported from Russia.

Over the next couple of months, a lot will depend on whether European governments will introduce oil and gas embargoes, as we have seen discussed in the media, or whether Russia will stop exports altogether. Both would mean higher electricity prices across all of Europe.”

What are some ways that I can reduce my electricity bill? 

“There are several ways you can save on energy. The most effective is to create good habits like switching off lights when you aren’t in the room, hanging your clothes to dry instead of using the dryer or turning appliances off instead of leaving them in standby mode.

You can also ensure that your household appliances have a high energy efficiency rating, as shown by the EU energy label. You can also ask to see the Energieausweis, or ‘energy certificate’ for an apartment or building you are looking to rent, to see how energy-efficient the property is at retaining heat, for example. 

Perhaps one of the most effective things people can do to save is provide regular meter readings via the app to the supplier. This means that your tariff can be more accurately calculated. 

Ostrom put together a comprehensive list of tips on how to save energy here: Ostrom‘s Energy Saving Tips.”

Find out more about the German energy provider built for internationals, whose service you can manage from your smartphone

A fixed-price guarantee could end up costing you more than you think.

I see many electricity providers offering a ‘fixed price guarantee” – will I save money with one? 

“Fixed prices automatically mean a tiered-system and you need luck when you sign up. In the current situation for instance this means you are locked into high prices. At Ostrom all customers are on the same price and if prices decrease, we will pass those savings to our customers. The majority of providers don’t like to take risks, and will pass the cost burden onto customers, even if circumstances change and energy becomes cheaper over time.

This is why we don’t offer fixed price guarantees at Ostrom. When prices decrease, so does our tariff. Lowering prices is something we’ve already done this year. With our flexible monthly plan, every customer pays the same price for electricity, and you can adjust your monthly payment at any time.”

In recent months the legislation surrounding contract lock-ins has somewhat changed, but the fact remains that traditional energy suppliers still require you to sign a minimum 12-month contract with them at a fixed price.

Ostrom co-founder, Matthias Martensen, and the Massbach Solarpark in Bavaria.

Not only is Ostrom a German electricity provider that passes savings onto the consumer, it is specifically designed for international workers and students in Germany. A simple tariff applies to all customers, and the more often you submit a meter reading, the more likely you are to save money. 

Furthermore, all Ostrom documentation and contracts are in English and everything can be controlled from the smartphone app, including the submission of meter readings. 

Finally, if sustainability matters to you, Ostrom sources their power from renewable sources, including the Maßbach Solarpark in Bavaria. 

Ostrom is a good choice for those making the move to Germany. As Matthias Martensen told The Local: “We know that electricity contracts in Germany can prove bewildering. Since we’re a young international company ourselves, we have a natural understanding of the needs of a modern, flexible and international clientele. It’s in our DNA.”

Looking for a sustainable energy provider designed for international residents? Find out more about how Ostrom does energy differently, and how you can benefit

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PROPERTY

Who can apply for Germany’s new renewable heating grants for homes?

According to Germany’s new heating law, many newly installed heating systems need to be powered primarily with renewable energy - but there are also hefty state subsidies on offer for eco-friendly heaters.

Who can apply for Germany's new renewable heating grants for homes?

Homeowners who want to switch to more climate-friendly heating systems have been able to submit applications to the KfW development bank since Tuesday morning.

According to reports in DPA, the online application portal was overloaded shortly after opening as a number of homeowners attempted to secure funding for a new heat pump or other renewable heating system. 

“In front of you in the waiting room are 529 people. The waiting room has been closed,” a notification on the website stated shortly before 8am. 

However, access to the portal later resumed as normal. 

Who is eligible to apply for a new heating system?

According to KfW, the application process for heating subsidies will be staggered, with applications opening to various groups over the course of 2024.

For now, applications are open to private individuals who own their own single-family homes. Most crucially, homeowners must live in their property to apply for funding at this stage. 

Applications will open to broader groups of homeowners in the coming months, but owning a home or apartment building is a requirement for this funding. Tenants don’t really have a say in the matter, beyond perhaps suggesting it to their landlords.

From May 2024, owners of existing apartment buildings with more than one residential unit, or Home Owners’ Associations (WEG) that collectively represent the owners of flats in an apartment block, will also be able to apply.

Flats in Cologne

Newly built apartments in Cologne, North Rhine-Westphalia. Photo: picture alliance/dpa | Rolf Vennenbernd

Finally, from August 2024 owners of buy-to-let homes and apartments will also be able to apply.

If you want to get started now, though, there’s no need to wait: if homeowners exchange their heating systems immediately, they can still apply for funding until November 30th, 2024. According to the latest government information, eligible projects must have started between December 29th, 2023 and August 31st, 2024.

Why is Germany subsidising personal home heating systems?

The new subsidies are provided as part of the heating law of the traffic light coalition, which came into effect from January 1st of this year. 

According to the new heating law, it is mandatory for new buildings in new development areas to have heating that is powered at least 65 percent by renewable energies. 

In many cases, this requires installing a heat pump. But compared with gas-powered heaters, installing a heat pump can be expensive. So these subsidies are aimed at helping homeowners afford energy saving heating systems.

READ ALSO: What homeowners in Germany need to know about the new heating bill

Some homeowners can apply for up to 70 percent of eligible costs. The basic subsidy covers 30 percent of installation costs for heating systems that are considered climate-friendly, such as heat pumps. 

Additionally, further bonuses can be paid to homeowners who live in their own home (rather than renting it out), and if their income falls below a certain salary limit. A contract with a specialised company is also required to be eligible for subsidies.

The contentious green heating law

There had been a bitter dispute over the heating law for months, with the Greens and environmental groups largely backing the law while FDP and more conservative parties rallied against it.

With the reform for more climate protection, the German government wanted to advance the heat transition in the building sector and protect consumers from price jumps for oil and gas if CO2 prices rise in the coming years.

According to Clean Energy Wire (CLEW), as of 2020, half of all German homes were heated by gas, making household heating a sector with huge potential for cutting CO2 emissions.

But opponents to the heating law claim it unfairly forces homeowners to make costly investments in eco-friendly sytems.

READ ALSO: ‘Heating hammer’ – Germany huffs and puffs over climate law

In October 2023, led by Bavaria’s state premier Markus Söder, thousands of people reportedly gathered in the Bavarian town of Erding to protest “heating ideology.”

The new heating law even made an appearance at the year’s Rose Monday parades – in Mainz Economy Minister Robert Habeck was seen flying away, metaphorically losing his grip on the ground with his heating law.

Rose Monday parade float

German Minister of Economics and Climate Protection Robert Habeck was seen being blown away by a heat pump during the Rose Monday carnival procession in Mainz, on February 12, 2024. Photo: by Kirill KUDRYAVTSEV / AFP

In fact, debate over the heating law may have inadvertently sparked record sales of fossil fuel powered heating systems in the short term, since an earlier draft specified that broken heating systems would have to be exchanged for renewable alternatives. According to Der Spiegel, more oil and gas heating systems were sold in 2023 than any previous year.

As a general rule, functioning heaters can continue to be operated regardless of their energy use. Additionally, old heaters that break down can still be repaired.

READ ALSO: Can a green energy transition plan help revitalise the German economy?

Only heating systems installed after January 1st of this year are subject to the new requirements.

For more information on heating subsidies, or the application process see KfW’s website.

With reporting by dpa.

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