Germany's energy costs are notoriously high compared to other European countries.
A recent report that compared energy prices across European capital cities found that Berlin had the highest electricity prices at the start of this year.
To satisfy voters, and also to try and stimulate economic activity, the incoming 'grand coalition' of the conservative CDU/CSU and centre-left SPD parties suggests they will reduce electricity costs for both households and companies by cutting down grid fees and taxes.
In a weekly column on financial tips for Der Spiegel, editor-in-chief of Finanztip, Hermann-Josef Tenhagen, wrote that the grand coalition's plans can be expected to reduce household electricity prices by about 5 cents per kilowatt hour (kWh).
For a small household with an annual consumption of 3,000 kWh, for example, this would mean an annual savings of around €150.
READ ALSO: Why Berlin has the highest electricity prices among Europe's capital cities
But all of those savings wont necessarily come on their own. If you pay the energy bills in your household, here's what you need to know.
Reduced electricity taxes will be applied automatically
According to current proposals the electricity tax is to be reduced to the EU's minimum tax rate, which is just 0.1 cents per kWh.
Tenhagen suggests that for a household using 3,000 kWh annually, this tax reduction alone could be expected to save around €70 annually.
Those savings should be automatic in the sense that as a customer you don't need to do anything. If your provider decides to pass these savings onto their customers, your bill will simply decrease when the tax is removed.
How to take advantage of changing grid fees
Along with cutting down electricity taxes, the incoming government also plans to cut down grid fees, which are basically the upkeep costs of running an energy grid in a form that is passed onto customers. The previous traffic light government had planned to do so last year, but had to cancel their plans when they ran into budget constraints.
Thanks largely to its newly approved spending package, the new grand coalition government is gifted with a much looser budget. They could be expected to go as far as halving the current grid fees in Germany.
That would result in another three cents per kWh taken off electricity bills, or around €90 in annual savings for households using 3,000 kWh.
But those savings are not always passed on automatically. As opposed to taxes, the price customers pay in grid fees are usually fixed in a 12- or 24-month contract.
The soonest grid fees could be adjusted would be at the turn of the year from 2025 to 2026.
So if your current electricity contract is set to run out around then, you may be able to save on your next contract by comparing grid fee costs between various providers.
If you have a good contract now and your minimum contract period expires before the start of 2026, you'd be advised to let the contract continue on until grid fees are adjusted, and then shop around to see if another tariff option with cheaper grid fees.
EXPLAINED: How to change electricity and gas providers in Germany
If you need a new electricity contract now, you may want to opt for a 12-month contract rather than for 24-months. Because then your minimum contract would expire around this time next year, allowing you to switch to a cheaper tariff if grid fees are cut.
Some energy providers may pass the reduction in grid fees onto their customers when renewing contracts. But others could continue to offer the same rates, while lining their own pockets with your savings. So it pays to compare look at both energy costs and grid fees before singing an electricity contract.
It's also worth noting that any reduction in electricity costs also reduces the cost of operating a heat pump or charging an electric car -- so if you've been thinking about it, this could be a good time to go ahead and make the investment.
How can I find the best deal?
There are so many electricity providers in Germany that most customers check current fares on a price comparison website before signing on with one.
Comparison portal Check24 and Verifox tend to be the go-to resources for finding the best deals on many things in Germany, including energy tariffs. Here you can enter your postal code and the amount of people in your house (or the amount of energy you expect to use), and get a sense of which electricity contracts would be the cheapest for you.
Similarly, Focus online recently published its own electricity price comparison portal for March 2025.
Or here's yet another one by Preisvergleich.
Interestingly, results may vary slightly between the various portals even if you put the same information in all of them. But no matter which one you search in, you'll want to focus primarily on the price per kWh -- which is typically broken down into both basic price (Grundpreis) and 'labour price' (Arbeitspreis).
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