Govt measures fail to shield German households from energy price hikes

September 30, 2023

Berlin, Sep 30

Natural gas and electricity prices for German households in the first half of 2023 rose 52.5 per cent and 26.2 per cent, respectively, year-on-year, the Federal Statistical Office (Destatis) said.

The latest figures have "taken into account" the price control measures for electricity and natural gas introduced as part of the German government's third inflation relief package, Destatis said.

These measures have been applied retroactively since the beginning of the year.

Although wholesale energy prices have fallen recently, "price developments are passed on to private households with a delay", Destatis said. This was due to longer contract terms for households compared with industrial customers.

According to a forecast published by the Bavarian Industry Association (vbw) in mid-July, average electricity prices in Europe's largest economy will remain "significantly higher than before the energy crisis".

It is mainly due to the fact that electricity prices in Germany are "still heavily dependent on gas prices", vbw said.

In 2022, the heating energy demand of German households fell by 5 per cent "in response to a sharp rise in heating energy prices and a threat of gas shortage", according to a study published earlier this week by the German Institute for Economic Research (DIW Berlin).

"The savings by private households last year are unlikely to be repeated because the energy price pressure will no longer be as high, and potential savings through behavioral adjustments have been largely exhausted," said Sophie Behr, research associate of the Climate Policy Department at DIW Berlin.

Also on Friday, the Bundesrat passed an amendment to the Building Energy Act that aims to gradually replace oil and gas boilers.

In new homes, for example, installed heating systems must use at least 65 per cent renewable energy from 2024.

Currently, around three quarters of all houses and apartments in Germany are still heated with fossil gas or oil, according to the Ministry for Economic Affairs and Climate Action.

"This is not only bad for climate protection, but also means great dependence on imported fossil fuels," the Ministry said.



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