In this article, we take a look at the fluctuations on the electricity exchange. What is the relationship between the price of electricity and the price of gas? What is the German government doing to decouple the price of electricity from the price of gas? We also take a look at the electricity price cap: What exactly is capped? How is historical consumption determined if you have recently moved house? Let’s get going!
Cost cap on the energy market
Electricity price brake
On the political side, the electricity price brake ensures that everyone can afford their basic energy requirements.
The most important facts in brief: The electricity price cap for private households will come into force on March 1, 2023, with retroactive effect from January 1 of this year. The electricity price will be capped at 40 cents per kWh – but not indefinitely. The price cap relates to 80% of the electricity consumption from the previous year. This means that saving energy remains attractive, as the market price applies to the remaining 20%.
Have you recently moved house and do not yet have a historical electricity consumption record? In this case, it is not your own historical energy consumption that applies, but that of your new home.
Before the electricity price cap was decided, there were a number of government tasks that needed to be clarified. One issue was how the payment flows between private households, grid operators and the state should be regulated. As an electricity consumer, you don’t have to actively do anything to benefit from the price cap. This happens almost automatically: you are either relieved by your electricity provider or via the landlord’s utility bill.
Security of supply
The electricity price brake is therefore there to ensure that at least the basic energy requirements are affordable. How do politicians actually ensure that enough electricity is produced in general? The decision was made to keep the three German nuclear power plants in operation for the time being. In addition, further coal-fired power plants were put back into operation.
Why does the price of electricity fluctuate?
Prices on the electricity exchange fluctuate. This initially affects the electricity suppliers and then, with a slight delay, you as the end consumer. Let’s take a closer look at the influencing factors that play a role.
The price on the electricity exchange is based on the most expensive resource required to produce electricity. This principle is known as the merit order. The most expensive production resource is currently gas. If the price of gas fluctuates, the price of electricity on the exchange also changes. In other words, the price of electricity depends on the price of gas. Ultimately, it doesn’t matter whether the electricity was actually generated using gas or other resources.
Incidentally, the prices on the electricity exchange change every quarter of an hour.
Fluctuations in the price of gas are temperature-dependent. This is due to the shortage of gas supplies from Russia. When it is cold, more gas is needed for heating. This means less gas for electricity production. The excess demand for gas in relation to the gas supply causes the price to rise.
Forbes writes that the average electricity price in 2021 was 31.9 cents per kWh. At the beginning of September 2022, the average electricity price for new contracts was 41 cents per kWh. This was calculated by the specialist portal “Strom-Report”.
What other factors play a role?
Last summer, our neighbors France and Switzerland were affected by drought. As a result, less electricity could be generated from hydropower. To fill this gap, the Germans helped out with their electricity. However, nuclear and coal-fired power plants in Germany had already been throttled back. As a result, more electricity was generated from gas, which again drove up the price of electricity.
How can you save energy?
Are you on vacation? Then unplug your electrical appliances. Use up the food in your fridge first and then unplug it. Also make sure that your appliances are completely switched off, as they also consume energy in stand-by mode.
Preheat the oven? As a rule, this is not necessary. Turn your oven off a few minutes earlier and use the residual heat.
Having spaghetti tonight? Then put your kettle to good use. Compared to the hob, this intermediate step will save you energy.
Want to save even more energy? Then read all of our 25 tips. And don’t forget to take part in the quiz!
Conclusion
In this article, we learned that the price of gas is a key factor in the development of electricity prices. We also took a look at the electricity exchange and learned that the electricity price is updated every 15 minutes.
The electricity price brake serves to partially decouple gas and electricity prices.
Do you want to heat sustainably with electricity? In this article, we show you how you can use surplus electricity to heat with infrared.
