Comment by jstimpfle
2 days ago
This is interesting, but now explain why Germany has both the highest electricity prices in Europe as well as a relatively high CO2 footprint from electricity? Germany is buying not only nuclear but also coal energy from neighbouring countries.
Will this be fixed at some point or is the German model not actually as good as you imply?
The main reason why electricity is expensive in Germany is because it's taxed to oblivion. Even when wholesale prices are negative, electricity costs about three times as much as gas.
Now you might ask why electricity is taxed to oblivion. Some don't like nuclear or coal. Some prefer oil or gas. In the end, there's a majority that wants electricity to be expensive.
I was under the impression that the taxes are going into infrastructure and grants for renewable energies, meaning those energy prices are maybe way higher than advertised. Funny thing is we are constantly being told how cheap reneweables are to produce but apparently there are other costs involved.
FTR and for the inevitable downvoters, I am not a fan of fossil energy. I am merely a fan of well presented arguments, and downvotes aren't that.
Well, that impression is wrong. The german word for "Taxes" is "Steuer". And they go to one of the 3 levels of our government: Federal level, the 16 states, municipalities / communes.
And yes, we pay VAT (19%) and electricty tax (0.0205 € / kWh).
But we also pay other things, like Konzessionsabgabe, KWKG-Umlage, AbN and Offshore-Netzumlage. They have various reasons:
AbN is used to make electricity artificially cheaper for ecenomically important companies that have a high usage of electricity. So this doesn't go to government, it's no tax.
KWKG (Kraft-Wärme-Kopplungs-Gesetz) is payed to keep the oil and gas power plants in operation. We now have so much renewable energy, they it wouldn't be economically feasible to operate them -- they have quite low duty cycles these days. They are however important for the quality of the whole network. So this doesn't go to government, it's no tax.
Konzessionsabgabe could perhaps counted as tax. The lines of the electric grid go over public property. Or they use the area below the pedestrian sidewalks. And so they have to pay for it. So this doesn't go to government, it's no tax, more a rent.
Offshore-Netzumlage is because we have sooooo much electric wind power in the north and baltic sea, but most bigger industry is in the south. It is used to pay for the new electric trasses. So this doesn't go to government, it's no tax.
Also, electric power in Germany is both cheap and expensive. The internal price is often cheap. But the price to end-customers is often expensive. One part of that is that many end-customers don't switch their electricity power. In history, we had local power distributors, often in the hand of the city or the county. But since perhaps 20 years one can now just select anyone, whoever has the lowest price. However, the majority of the germans stay (due to lazyness?) with their local providers. Which are usually on the more costly side.
Source so far: https://strom-report.com/strompreis-zusammensetzung/
Also we should not forget that Germany has one of the best electric grids in Germany. We can take the SAIDI and compare electric grids of regions or countries. And in Europe, Germany has the lowest SAIDI of all large industrial countries. Some have a lower SAIDI, but they are tiny-states.
So, what is SAIDI? The System Average Interuption Duration Index --- or how long per year and customer the power is out. And here we're better than e.g. Austria, France, Belgium, Sweden ... but also MUCH better than the USA, which seem to have exceptional shaggy electric grids.
So price is one thing... but that you can depend on the electric power in Germany, but maybe not abroad, is another thing.
Source for SAIDI: Germany and english language Wikipedia, Bundesnetzagentur
1 reply →
All of Germany's neighbours, from which it buys electricity, are decarbonising so yes obviously it inevitably gets "fixed at some point".
Germany's wholesale prices are similar to many other European countries, the worst is easily Ireland because of their geography, small, northern, coastal, they often need to import power, and that import has to come from Britain, which is between them and the continent, so their prices will almost always be higher than Britain's already not-great prices - we're obviously not going to sell the Irish £89 per MWh electricity and then charge our own users £119 per MWh for the same product.
What I am saying is that those spot prices may not represent all of the reneweables' marginal costs. Question is, will the end consumer prices ever go down, and by how much?
> Question is, will the end consumer prices ever go down, and by how much?
No, electricity is not likely to become a deflationary product. It hasn't been in my lifetime and I don't see that changing. Products which do that are weird and they don't tend to do it for very long.
There was a period (last century, more than fifty years ago) when Oil was deflationary in the US, as the very easily extracted Saudi Oil came online and US import bans ended - you'd pay the same dollar price to fill a car with gasoline in one year as the next and of course wages continued to grow so that oil is getting cheaper in real terms. But that's a long time ago, a time when gasoline was 30 cents per gallon.
Solar PV is just straight up cheaper than any fossil power. Solar Farms the UK agreed to subsidise in 2022 came online early last year and even in those more normal times (before Trump started a war in the Middle East) the "subsidy" amounts they were paying us totalled a few million quid a year because the fossil power was so expensive. Once Trump got into it, we were being paid like £3-4M per month in "subsidy" because of course the fossil fuel costs more now but sunlight is still free.
But that does not translate into lower prices for consumers, at most it means their prices might not rise as quickly.
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Nuclear does not produce CO2. Nuclear energy is green energy.
Why I said not only... but also.