Lower energy prices mean Germany likely to spend much less on subsidies than planned – consultancy

Lower-than expected energy prices mean that Germany is set to spend much less from its federal budget for the gas and power price subsidies than anticipated, Marco Wünsch from energy consultancy Prognos told n-tv. The government had earmarked more than 50 billion euros for gas price subsidies alone. However, as market prices decreased in recent months, actual expenditure is likely to be only a fraction of the initially planned amount. Current consumer prices are only a few cents higher than the threshold above which the government pays support, writes the news website. The average refund under the gas price support will be 2 to 4 cents per kilowatt hour – for a consumption of about 240 terawatt hours, said Wünsch. This would correspond to costs of 7 to 15 billion euros for the period of application of the price brakes, he told ntv.

Prices have decreased due to the winter being unusually mild so far, explained Wünsch. In addition, electricity generation from wind turbines has recently increased significantly, and French nuclear power plants, many of which had been out of operation in the summer and autumn, have been brought back online more quickly than anticipated. As a result, less natural gas is needed to generate electricity in Germany. This has eased the situation not only on the electricity market, but also on the gas market.

Germany responded to the energy crisis with a series of relief packages for households and businesses, which have continuously grown in size and scope. During its first year in office, the government presented a 200-billion euro "defence shield" in September, which includes subsidies for reducing gas and electricity prices at a projected cost of 83 billion euros, a measure that parliament adopted in December.