What is Electricity Price?
Quick Summary
The electricity price is the price for electrical energy per kilowatt hour (kWh). It consists of power procurement, grid fees, and government charges. In Germany, it is about 30-35 cents/kWh in 2026 – switching providers can save several hundred euros annually.
Definition in Detail
The electricity price for consumers consists of several components:
- Unit price: Price per kilowatt hour consumed (cents/kWh)
- Base price: Monthly flat rate regardless of consumption
- Grid fees: Charges for using the electricity grid
- Taxes and levies: Electricity tax, concession fee, surcharges
Electricity Price Composition 2026
| Component | Share | approx. Cents/kWh |
|---|---|---|
| Power Generation & Sales | approx. 40% | 12-14 cents |
| Grid Fees | approx. 25% | 7-9 cents |
| Electricity Tax | approx. 6% | 2.05 cents |
| VAT (19%) | approx. 16% | 5-6 cents |
| Concession Fee | approx. 5% | 1.5-2 cents |
| Total (Average) | 100% | 30-35 cents |
Note: Since 2023, the EEG surcharge for consumers has been eliminated (now funded from federal budget). However, grid fees continue to rise due to renewable energy expansion.
Calculation Example: Annual Electricity Costs
3-Person Household (3,500 kWh/year)
Basic Supply
- Unit price: 38 cents/kWh
- Base price: EUR 12/month
- Annual cost: approx. EUR 1,474
Cheaper Alternative Tariff
- Unit price: 28 cents/kWh
- Base price: EUR 10/month
- Annual cost: approx. EUR 1,100
Savings by switching providers: approx. EUR 374 per year
What Influences the Electricity Price?
Market Factors
- • Wholesale prices on power exchange
- • Gas prices (gas power plants)
- • CO2 certificate prices
- • Weather conditions (solar, wind)
Regulatory Factors
- • Grid fees (vary by region)
- • Taxes and levies
- • Government price caps
- • EU energy policy
How to Lower Your Electricity Price
- 1Compare and switch providers: Biggest savings potential – up to EUR 500 per year possible.
- 2Choose price guarantee: Protects against price increases during contract term.
- 3Optimize electricity consumption: LED lighting, efficient appliances, avoid standby.
- 4Check time-variable tariffs: With EV or heat pump, night-time electricity can be cheaper.
Frequently Asked Questions
What makes up the electricity price?
The electricity price consists of three main parts: power procurement and sales (about 40%), grid fees (about 25%), and government charges like taxes and levies (about 35%). The proportions vary by region and tariff.
Why is electricity so expensive in Germany?
Germany has high electricity prices in Europe due to: EEG levy (until 2022), high grid expansion costs, electricity tax, and concession fees. Since 2023, government price caps provide relief.
How much does a kilowatt hour cost in 2026?
The average electricity price for households in 2026 is about 30-35 cents per kWh. Prices vary significantly by provider, region, and tariff – comparing can save several hundred euros annually.
How can I reduce my electricity price?
Options for savings: Switch providers (biggest savings), choose a tariff with price guarantee, reduce electricity consumption, use time-variable tariffs, or choose green electricity (often cheaper than basic supply).
What is the difference between base price and unit price?
The base price is a monthly flat rate regardless of consumption (for meter, service). The unit price is charged per kilowatt hour consumed. Both together make up the total costs.
Legal Notice
Electricity prices are subject to government regulation under the EnWG (Energy Industry Act). Pricing must be transparent. Consumers are entitled to basic supply at the regulated tariff. Status: February 2026.