The new year was ushered in with stormy weather. Wind turbines were operating at top speed and in many places, the sun was shining. As a result, electricity production from renewable energies in Germany accounted for 125% of demand, according to the Fraunhofer Institute for Solar Energy Systems.

The oversupply drove down the price of electricity on the exchanges, where prices are determined by supply and demand, and for a few hours, electricity was even available for free.

In 2024, an average of 59% of Germany’s electricity was generated from renewable sources. But during the winter darkness, this output is far from adequate. December 12, 2024, marked a low point when only 18% of Germany’s electricity needs were met by renewables. The rest had to be generated by coal- and gas-fired power plants, plus electricity imports from neighboring EU countries.

The EU has a common electricity market. This means that during periods of high wind and sunshine, Germany is able to export energy, while during periods of low wind and sunshine, it increasingly has to import energy. Most of the electricity that Germany purchased in 2024 came from France, which meets 70% of its energy needs with nuclear power that is available throughout the year.

Imports and exports are based on the current prices on the European Energy Exchange. In addition, consumers have to pay the national taxes and levies. In Germany, around 30% of the electricity price is made up of grid charges. This refers to the cost of expanding the power grid. Taxes and levies make up about another third.

Electricity prices for households and companies

In 2024, the price of a megawatt hour on the rose to €936 ($972). It is normally between €60 and €100.

Households and companies have barely even noticed the price fluctuations because they often have long-term electricity contracts. They pay their electricity supplier a fixed price for a specified period of time, as agreed in a contract.

However, since the beginning of 2025, suppliers have also had to offer dynamic rates at current prices. In this way, customers who use large amounts of electricity, for example, to charge electric cars or run heat pumps, have had a financial incentive to schedule their energy consumption for times supply is high and thus prices are low.

In 2024, electricity generation from brown coal continued to decline by a good 8% in Germany, while black coal declined by more than 27%. Since 2015, the percentage of electricity generated from coal has fallen by almost half, significantly reducing CO2 emissions.

2024 was also the first year that Germany was able to do without producing any of its own nuclear power. The last three nuclear power plants, which were shut down in 2023, accounted for a solid 6% of electricity production.

But is too little wind and sun power to blame for the jump in prices? Or have energy companies perhaps been deliberately trying to drive up the price of electricity by not connecting all their coal- and gas-fired power plants to the grid in order to reduce supply? This is the question now being asked by the German Federal Cartel Office. It is part of the Federal Ministry of Economics and is responsible for ensuring fair competition in the market. If it uncovers illegal price fixing, it can impose fines.

The economy and electricity prices

Nowhere in Europe is electricity more expensive than in Germany. According to the Federal Statistical Office, a family of three to four had to pay just under 40 cents per kilowatt hour in 2024. In Hungary and Bulgaria, on the other hand, where electricity is subsidized by the state, consumers only had to pay 10 cents per kilowatt hour.

Germany also has subsidies, but only for industrial companies. However, energy-intensive companies have been complaining that energy costs are still far too high for them to be competitive.

While the industry was still paying around 12 cents per kilowatt hour in 2021, the price peaked at more than 50 cents in 2022 following Russia’s invasion of Ukraine. On July 1, 2022, taxes and levies were significantly reduced for companies.

Today, industrial businesses pay around 17 cents. However, this is significantly higher than what companies pay in other major competitor countries. In 2023, for example, companies in the German automotive industry paid over twice as much for electricity as their competitors in China and almost three times as much as comparable companies in the US. Significantly reducing electricity prices remains one of the most pressing economic imperatives.

The center-right bloc of Christian Democratic Union (CDU) and Christian Social Union (CSU), with Friedrich Merz at the head of their ticket for chancellor, have stated in their election platform that they want to halve grid fees and further reduce the electricity tax for energy-intensive companies. However, it is unclear how this is to be financed.

What remains clear is that the continued expansion of renewable energies, electricity grids, and storage facilities will remain costly for many years to come. Only once the infrastructure is in place will the financial benefits of wind and solar energy be felt.

This article was originally written in German.

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