Today, it would be hard to imagine modern life without electricity, as it has become the motor of the development for humanity. But what is the price of its usage and is European price competitive comparing to the World market?The price of energy in Europe depends on a range of different supply and demand conditions, including the geopolitical situation, the national energy mix, import diversification, network costs, environmental protection costs, severe weather conditions, or levels of excise and taxation.
Highest electricity prices in Denmark and Germany
An overview of average electricity prices in euro per kilowatt-hour (EUR per kWh) for the last three years (first half of each year in order to avoid seasonal effect) is presented in the table below.
For household consumers (consumers with an annual consumption within the range of 2 500 kWh < consumption < 5 000 kWh), electricity prices during the first half of 2018 were highest among the EU Member States in Denmark (EUR 0.3126 per kWh), Germany (EUR 0.295 per kWh) and Belgium (EUR 0.2733 per kWh); The lowest electricity prices were in Bulgaria (EUR 0.0979 per kWh), Lithuania (EUR 0.1097 per kWh) and Hungary (EUR 0.1123 per kWh). The price of electricity for household consumers in Denmark and in Germany was more than three times as high as the price in Bulgaria.
The EU average price — a weighted average using the most recent data for the quantity of electricity consumption by households — was EUR 0.2049 per kWh.
Electricity prices for non-household consumers
Electricity prices highest in Germany and Italy
For non-household consumers (consumers with an annual consumption within the range of 500 MWh < consumption < 2 000 MWh), electricity prices during the first half of 2018 were highest among the EU Member States in Germany and Italy. The EU average price — a weighted average using the most recent national data for the quantity of consumption by non-household consumers — was EUR 0.1142 per kWh.
What about the rest of the world, and how is Europe positioned comparing to the rest? Based on the chart below, we can clearly notice that European countries are holding the highest prices worldwide.
Therefore, there is a constant question, how to reduce the electricity price and simplify the life of many people. In order to answer this question, we have to highlight what affects the most its range. Several key factors influence the price of electricity:
- Fuels: Fuel costs can vary, especially during periods of high demand. High electricity demand can increase demand for fuel, such as natural gas, which can result in higher prices for the fuel and, in turn, higher costs to generate electricity.
- Power plants: Each power plant has construction, maintenance, and operating costs.
- Transmission and distribution system: The electricity transmission and distribution systems that deliver electricity have maintenance costs, which include repairing damage to the systems from accidents or extreme weather conditions.
- Weather conditions: Rain and snow provide water for low-cost hydropower generation. Wind can provide low-cost electricity generation from wind turbines when wind speeds are favorable. However, extreme temperatures can increase the demand for electricity, especially for cooling, and demand can drive prices up.
- Regulations: In some states, public service/utility commissions fully regulate prices, while other states have a combination of unregulated prices (for generators) and regulated prices (for transmission and distribution).
The cost of fuels is certainly holding a leading position in electricity price.Therefore, sustainable and long-term cooperation could bring lower prices for fuels and therefore affect the overall electricity cost.
Sources and photo-credits: Eurostat, Europa.eu, US Energy Information Administration.
Written by Aleksandra Dokovic