Electricity prices are falling: This is how companies and consumers benefit!

Electricity prices are falling: This is how companies and consumers benefit!

In a current report by the German Economic Institute (IW), economists Andreas Fischer and Thilo Schaefer published calculations to relieve companies and consumers of electricity prices. According to the figures published on Saturday, electricity prices could be reduced by at least five cents per kilowatt hour (kWh) through political measures. This saving is based on a typical consumption of 4,000 kWh per year and takes into account an assumed saving of 5.5 cents per kWh.

The coalition partners Union and SPD have set themselves the goal of providing companies with appropriate relief and are planning to reduce electricity taxes to the European minimum. In addition, the surcharges should be reduced in order to reduce electricity costs. According to IW, small and medium-sized commercial companies can expect savings potential of 4.6 cents per kWh, while large industrial companies could save around 4.2 cents per kWh.

Political measures to reduce costs

The federal government is also planning to reduce network fees in order to further reduce electricity prices. However, the exact details of the implementation and extent of the network fee reduction are still unclear. The structure of the announced industrial electricity price for energy-intensive companies also remains uncertain. Despite the announced measures, IW sees the new government's electricity price package as progress, but not as a long-term solution.

According to Fischer and Schaefer, the costs are ultimately passed on to consumers and the federal budget, which still puts a burden on taxpayers. The experts emphasize the need to make the German electricity system more efficient. Above all, there is a need to increase the share of renewable energies and to better integrate storage and controllable power plants. This is the only way to achieve a sustainable reduction in prices and avoid expensive solutions such as underground cables.

Market analysis and price fluctuations

Another aspect that contributes to electricity prices is the market mechanism. Energy suppliers purchase electricity directly from the producer or via electricity and energy exchanges. On the stock exchange, electricity is traded through the spot or futures market. In the spot market, electricity is traded based on consumption forecasts, with a market price being determined in a daily auction. Intraday trading allows flexible adjustments on the same day, without a fixed price, which is realized through various indices such as the “ID3 price”.

In the futures market, on the other hand, electricity is traded for future deliveries, which helps utilities hedge against price fluctuations. These strategies mean that retail prices do not immediately rise or fall with wholesale prices. Factors such as CO2 costs, weather conditions, geopolitical issues and raw material prices significantly influence the price dramaturgy.

It is important for consumers to find out about the different types of contracts. The basic service, which covers most households, includes legal regulations and has unlimited terms with short notice periods. Individual special contracts can help adapt to specific needs.

There are also some simple tips to further reduce electricity costs. These include using LED lamps, air-drying laundry, using eco programs for dishwashers and washing machines, and avoiding standby modes for appliances. In addition, consumers should use kettles instead of stoves and avoid preheating ovens to optimize energy consumption.

Current developments in the electricity market and political incentives could help reduce the financial burden on consumers and companies. More information on the subject of electricity prices can be found at BDEW and Ad Hoc News.