Higher electricity bills in Hamburg: Residents pay 29% more compared to those in Bremen
In a recent analysis by energy comparison platform Verivox, it has been revealed that electricity prices in Germany vary significantly between different states. The analysis, which includes data from over 820 German basic suppliers, customers who have compared electricity, and supraregional competitors on the electricity market, sheds light on the factors contributing to these regional price disparities.
Grid Infrastructure and Fees
Germany’s electricity grid is geographically extensive and regionally segmented, operated by four different transmission system operators (TSOs). The cost of maintaining and expanding grid infrastructure varies regionally, depending on the need for new transmission lines, especially for integrating renewable energy sources. Grid fees (Netzentgelte), which cover these infrastructure costs, differ by region and are a significant component of the final electricity price.
Energy Mix and Generation Sources
The share of renewable energy and reliance on fossil fuels differ across states. Northern Germany has a higher proportion of wind and PV installations compared to some southern states. Areas relying more heavily on fossil fuels are subject to global commodity price swings, impacting regional electricity prices. Germany still depends on coal and natural gas for about 40% of its power, making prices sensitive to fuel market volatility.
Taxes and Levies
Politically determined taxes and levies on electricity, including for renewable energy surcharges and grid expansion, can vary by state. Such taxes significantly affect the residential electricity price, and the impact is more pronounced in some states due to differing local tax policies or grid costs embedded in the final consumer price.
Regional Demand and Consumption Patterns
Variations in industrial activity and household consumption across states can influence electricity prices. States with higher industrial demand might have different tariff structures or receive different pricing signals due to peak demands and load profiles.
Key Findings
The analysis found that the cost of electricity varies by 29% between the most expensive, Hamburg, and the cheapest, Bremen. In Hamburg, a family of three with an annual consumption of 4,000 kilowatt hours would pay an average of 1,607 euros for electricity, while in Bremen, the same family would pay 1,247 euros. The highest switching savings are possible in Thuringia (870 euros), followed by Hamburg (795 euros) and Berlin (752 euros).
Despite Hamburg and Bremen being only 95 kilometers apart, consumers in Hamburg pay 360 euros more for electricity than in Bremen. On average, a family of three pays 1,409 euros for electricity nationwide. However, it's important to note that the analysis does not provide information on how the savings by switching vary for families with different annual consumption levels.
Implications
The significant variation in electricity prices between German states is driven chiefly by differences in grid infrastructure costs and fees, the local energy mix and reliance on fuel imports, region-specific taxes and surcharges, and the variation in consumption patterns and regulatory measures aimed at promoting grid stability and energy transition. Understanding these factors can help consumers make informed decisions when comparing electricity providers and potentially saving on their energy bills.
[1] Verivox Analysis on German Electricity Prices (2022) [2] German Federal Ministry for Economic Affairs and Energy (2021) [3] Allianz Energie AG (2021) [4] Agora Energiewende (2020)
- The varying costs of maintaining and expanding grid infrastructure, as well as the subsequent grid fees, contribute to the regional disparities in electricity prices across different states in Germany, which is a major factor in the industries' financial landscape.
- The energy mix and reliance on fossil fuels differ significantly among states, with northern states like Hamburg having a higher proportion of renewable energy sources compared to some southern states, causing variation in pricing due to factors such as commodity price swings and fuel market volatility.
