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How households in Germany can tackle rising energy costs

Gas prices are reaching record highs in Germany, but until recently, most of the burden has fallen on suppliers. We take a look at how soaring energy costs could affect consumers - and what you can do about it.

A man adjusts the thermostat on his radiator
A man adjusts the thermostat on his radiator. Photo: picture alliance/dpa | Sina Schuldt

What’s going on? 

Wholesale gas prices have been soaring across Europe in recent months, and have reached a record high. According to the German Federal Office of Economics and Export Control, the import costs of natural gas rose 42 percent from January to July alone – and the upwards trajectory has continued ever since. 

In Germany, around half of all households use gas to heat their homes, and combined with ongoing supply issues in the country, all signs seem to point to higher costs for consumers this autumn and winter.

Nevertheless, record wholesale prices don’t always correlate directly with record bills. Though energy bills are rising for consumers, they haven’t yet surpassed the previous record set in 2008. 

READ ALSO: Why households in Germany are facing higher energy bills

How much are consumer prices currently rising?

According to price comparison portal Verifox, just a year ago, energy costs had levelled out at 5.44 cents per kilowatt hour – the lowest since 2005.

By September this year, prices had climbed to 6.49 cents, which is roughly what they were in August 2015. Then, in October, the price climbed again to 7.01 cents per kilowatt hour. For some households, this means that monthly bills have risen by 25 percent in the space of a year. 

Speaking to Tagesschau, Leonora Holling from the Association of Energy Consumers predicted that consumer energy prices were on course to exceed their previous peak in 2008, when the price climbed to 8.09 cents per kilowatt hour.

Experts agree that the volatile prices are likely to be a temporary phenomenon, but nobody’s quite sure how long it will go on for, and how much costs could rise before prices level out once again.

Don’t prices depend on how much people are willing to pay?

That’s right. When wholesale prices reach a certain level, they may start to exceed what energy suppliers are willing to pay, which would then cause prices to flatten or decrease again. Unfortunately, though, this doesn’t necessarily mean they’ll go back to the consumer-friendly lows of 2020. 

Detlef Fischer of the Bavarian Energy and Water Industry Association explains that, back then, the drop in prices was due to reduced demand as industry shut down in the height of the pandemic. Now the economy is up and running again, demand for energy has risen, he told Tagesschau.

In addition, many companies are switching to gas as their primary energy source, which should keep demand at a consistently high level. Unfortunately, this also means that prices are likely to remain higher for consumers in the long term. 

What’s the government doing? 

At the moment, not very much – though politicians are aware that the price rises will fall most heavily on the shoulders of low-income households.

On Wednesday, the issue of rising gas prices topped the EU Commission’s agenda as member states debated whether a collective response to the crisis was required. “There is no question that we need to take policy measures,” EU Energy Commissioner Kadri Simson told the EU parliament.

EU Energy Commissioner Kadri Simson speaks at the European Parliament.
EU Energy Commissioner Kadri Simson speaks in the European Parliament. Photo: picture alliance/dpa/EU Council | Mario Salerno

For now, however, Brussels is leaving it down to each of the national governments to work out how to cushion the blow on consumers. In Germany, the Federation of Energy Consumers wants the government to take quick steps to intervene – potentially by pausing or reducing taxes and grid fees, as Spain is planning to do. 

Regulators could also intervene to ensure that energy companies are remaining transparent about costs. However, with Germany being run by a caretaker government until the next one is formed, it could be a while before there’s any meaningful action on the side of politicians. 

READ ALSO: More trains and energy grants: What a Green election win could mean for Germany

What should I do if my bills go up? 

In September 2021, comparison portal Verifox revealed that around 30 of Germany’s regional suppliers had already announced prices increases of 12.6 percent – equating to an additional €188 annual costs for a single-family home. The price-comparison site predicts that most of the 700 or so German suppliers will follow suit on January 1st, 2022, making it highly likely that most people’s monthly bills will go up in the new year.

Nevertheless, there are things you can do to try and limit the additional costs – for example by staying with your existing supplier but switching to a cheaper tariff.


It’s also worth noting that Germany’s consumer rights law dictates that energy companies have to give you at least six weeks’ notice before changing their prices. During this time, you’re legally entitled to switch to a cheaper supplier – though it’s highly likely that costs will have gone up across the board. For that reason, the Association of Energy Consumer and Consumer Advice Centre both advise consumers to be proactive and start hunting down cheaper tariffs right away.

What options are there for saving energy?

There are a few ways to do this for both property owners and tenants.

If you own a property, it makes sense to make your house or flat as energy-efficient as possible, which can be done by improving the insulation and picking out sturdy, heat-preserving doors and windows. If you already have good windows but they were installed a while back, it can be worth checking that the insulation is still working well and carrying out any maintenance that needs doing. 

On a day-to-day basis, you should try to adjust your thermostat to ensure you’re not using more energy than you need. With powerful modern boilers, it can sometimes be more energy efficient to leave them running at a low level throughout the day rather than firing them up for a short burst of high heat. 

Of course, one of the easiest tricks for saving energy is to close the doors and only heat the space you need. Experts have calculated that every degree of wasted heat equates to six percent higher costs on your energy bill. 

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German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.