As a result of inflation and war, energy and electricity prices are skyrocketing across Europe. Comparison portals have already calculated a price increase of around 30 percent for electricity. But the increases continue. FOCUS online shows you how the price of electricity in Germany is made up.
Energy prices are higher than ever. The situation is expected to worsen in the fall. The cost explosion has prompted many people in Germany to look around for alternatives to electricity and gas – wood-burning stoves are back in fashion. But nothing else works in the household without electricity. FOCUS online shows how the price of electricity in Germany is made up, how the Federal Republic performs in a European comparison and the purpose of the taxes on electricity as well as duties and surcharges.
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Annual billing for home electricity consumption can be complicated. Numerous components are listed in it. Not everything is self-explanatory. This is where the procurement and sales costs of the energy supplier, grid fees from the local grid operator as well as taxes, levies and levies on the state come together.
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The example of the electricity price in July of this year shows that around 44 percent of the costs are attributable to electricity generation alone. Taxes and other levies account for around 31 percent. The network fee, which goes to the network operator, accounts for around 25 percent.
1. The electricity tax
The electricity tax is the consumption tax regulated by the legislature, which applies to electricity. It is used to tax the consumption of electricity in Germany. This excise duty is harmonized in the European Union. This means: The underlying German electricity tax law is based on EU directives.
The electricity tax brings in around 7 billion euros for the federal government every year. At 2.05 cents per kilowatt hour, it has not changed since 2003. It accounts for around six percent of the total electricity price.
2. VAT
The Value Added Tax (VAT) is based on the added value of a product, which is created by adding value to a product and is transferred to the resale. A distribution key regulates how the tax is paid out to the federal, state and local governments. The revenue is used by the state for a variety of purposes. The tax is levied on the total net price. That means: The pure energy price, grid fees and other taxes and duties are taxed.
In Germany, VAT is 19 percent and is paid on all price components. In 2022, a total of 31.34 cents will be spent on electricity generation, grid fees, electricity tax and other levies. Added to this is the 19 percent VAT. That makes 37.2 cents per kilowatt hour. The VAT is therefore 5.9 cents.
3. The EEG levy – once upon a time
Since July 1, 2022, the EEG surcharge will no longer apply. Electricity customers in Germany should be relieved. Electricity providers must pass the full reduction on to consumers. From January 2023, the EEG surcharge will then be permanently abolished. The decision is part of the federal government’s relief packages.
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In 2000, the surcharge from the Renewable Energy Sources Act came into force. It served to support the financial expansion of renewable energies.
4. CHP surcharge
The CHP surcharge for the promotion of combined heat and power plants falls under other taxes. It serves to maintain, modernize and expand combined heat and power in Germany. The coupling systems generate electricity and heating with the help of gas and coal. The surcharge is about 0.38 cents per kilowatt hour.
5. Offshore grid levy
The other charges also include the offshore grid surcharge. It is anchored in the 2012 amendment to the Energy Industry Act (EnWG). Around 0.416 cents per kilowatt hour were incurred for this in 2020. The determination of the offshore grid surcharge to be applied nationwide from January 1, 2022 is based on a forecast of the costs for 2022 and the difference between the forecast and the costs actually incurred, i.e. the income from the surcharge for 2020.
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Grid operators are to be compensated for damage caused by delays and failures in the grid connections of offshore wind farms in the North and Baltic Seas with the help of the levy.
6. Allocation for interruptible loads (AbLa)
The surcharge for loads that can be switched off is also included in the area of other charges. It serves to compensate major customers, for example from industry, financially. If solar and wind power are lost, there can be a shortage in the power grid. Since 2014, large electricity consumers have therefore been obliged to switch off their electricity purchases for a certain period of time in the event of a grid overload. The compensation is passed on to the end user and is recalculated every year.
7. Concession Fee
Number four in the area of other taxes is the concession fee. It is a fee that municipalities collect from electricity and gas suppliers. The levy varies in different regions, as it depends on the energy supply contract and in some cases also on the number of inhabitants in the community. The amount is regulated in the Concession Fee Ordinance (KAV).
8. Network usage fees – ticket for electricity usage
The network fee is a fee that every network user has to pay to the operator. The money allows the consumer to use the gas and electricity networks and is also used for repair, maintenance and operating costs. In principle, grid usage fees can also be understood as a kind of access ticket to the electricity and gas market.
Electricity prices in Germany are currently higher than they have been for years. According to an electricity price analysis by the Federal Association of Energy and Water Industries (BDEW), the average electricity price for households at the beginning of the year increased by 12.5 percent compared to the annual average for 2021. The average price is 36.19 cents per kilowatt hour.
The prices for procurement, network charges and sales increased the most. On average, costs increased by 72 percent. The main reasons for this are the sharp rise in wholesale energy prices for household tariffs.
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In contrast, there was a decline in the area of taxes, duties and levies. The main reason for this is the reduced EEG surcharge, which finally ceased to exist on July 1, 2022. This has further depressed the price of household electricity. On the other hand, network charges for household customers rose by an average of 3.7 percent to 8.09 cents per kilowatt hour in 2022.
In a European comparison, electricity prices in Germany are still comparatively low. The British had to dig deep into their pockets in August. In London you pay over 64 cents per kilowatt hour in August. In Germany the price is around 45 cents.
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Electricity customers in Serbia (8.11 ct/kWh) or the Ukraine (5.36 ct/kWh) have to shell out the least. In Germany’s neighboring countries, the electricity price is usually higher than in Germany. Except, for example, in France: At around 25 cents, the electricity price there is well below the European average of just under 30 cents per kilowatt hour.
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A megawatt hour now costs around 400 euros in Germany. That’s a good three times as much as a year ago. EU-wide we are in the more expensive half, but other countries suffer far more from sometimes lower prices.
