Dynamic prices could burden consumers

Change 2025

This new electricity tariff could burden consumers

Electricity generation has changed in recent years: so-called dynamic electricity tariffs are expected to expand the providers' portfolio from 2025. But they bring with them a few challenges.

The way electricity is generated has changed massively in recent years as the proportion of renewable energies has increased. Electricity suppliers are reacting and adjusting their tariff portfolio. From January 2025, energy suppliers will even have to include an additional electricity tariff in their offer, the so-called dynamic electricity tariff.

With the dynamic electricity tariff, the labor price is based on the so-called spot price, the energy price on the wholesale market or on the electricity exchange. This price depends on supply and demand and can fluctuate significantly within a few hours. If the demand for electricity is high and the supplier has to buy more electricity at short notice, the price can increase significantly and be above average. However, if there is more electricity than there are customers, the price of electricity falls below average. This can be the case at night when industry's energy needs are low, or during the day on a holiday when the sun is shining and energy-consuming machines are idle.

However, there is also the risk that private households will pay significantly more than average – especially when the general electricity demand, i.e. from industry and private households, is very high. Consumer advocates therefore warn and advise normal household electricity customers against such tariffs. Exception: “The tariffs can have added value for households with high and flexible consumption, for example for households with electric cars, heat pumps or battery storage,” according to the North Rhine-Westphalia Consumer Center.

However, there is another point that many supporters of dynamic electricity tariffs tend to leave unmentioned: With them, only part of the labor price is usually variable. The taxes, duties, levies and network fees are mostly fixed. However, the latter may change soon. The EU is planning to introduce dynamic network usage fees. This means that network operators can also set their fees for using the electricity network flexibly.

The time-variable network fees would depend on the network load (network load) and electricity generation (amount of electricity available in the network). They are particularly low when demand for electricity is particularly low but production is high. This is intended to create an additional incentive to use electricity outside of grid peaks. With the help of the additional, flexible component in the energy costs, the network utilization should be distributed more evenly over the entire day.

Experts fear that the introduction of dynamic electricity tariffs plus time-variable network fees will not spread network utilization throughout the day and night, but will shift. For example, if several million households switch on their power-consuming devices at the same time or charge their electric cars and their power battery storage, this can also lead to high network utilization and, in the worst case, even a power outage (you can find out more about this here). Particularly when the industry also switches its machines on and/or off at different times for cost reasons.

This means that not only the peaks in network utilization could shift significantly into the morning and evening hours. The increased demand for electricity over time also means that stock market prices are unlikely to fluctuate much. This means that the basic idea of ​​dynamic tariffs and network charges is lost.