Eastern German households face much higher relative energy costs than western ones – analysis

Households in East Germany on average pay nearly a quarter more for energy than those in the West if adjusted for purchasing power, an analysis by price comparison website Verivox has found. The relative costs for heating, electricity and fuel are roughly 22 percent higher for the average household in the eastern states, the analysis showed. The average energy costs in 2024 amount to 4,380 euros in the East and to 4,280 euros in the West, leading to a nominal difference of 2.3 percent. However, given that average household incomes are lower in the eastern states, the relative cost difference climbs to 22 percent, meaning the purchasing power required for energy supply in the East rather equals 5,042 euros per year, Verivox said. This means households in the East on average spent about 9 percent of their income on energy while western ones only paid about 7 percent.

Households in eastern Thuringia pay the highest relative power bills, at 23 percent above the national average, followed by eastern Saxony and western Bremen at 20 percent, and then by eastern states Saxony-Anhalt (19%) and Mecklenburg-Western Pomerania (18%). Affluent western state Bavaria had the lowest relative costs, where the share of income households paid for energy is ten percentage points below the national average, followed by western states Baden-Wurttemberg (8% lower) and Hesse (5%).

Generally, purchasing power in the eastern states is about 16 percent lower than in the western ones – while the average energy prices there are three percent higher. “In the East, weak purchasing power meets above-average energy costs,” said Verivox energy expert Thorsten Storck. The difference in costs can partly be explained by higher average grid fees in the East, where the costs for operating, maintaining and expanding the grids for electricity and gas are higher, Storck added.

Energy supply is a contested topic in the upcoming three eastern German state elections in September 2024. Differences along Germany's former political divide have moved into the focus as polls predict that populist forces from left and right will take chunks of support from the centrist parties dominant in the West. While most people in the East also support climate action and the expansion of renewables, electoral success by the populist parties could hurt progress in energy and climate policy in the region.