German grid agency head says prices for electricity and gas will remain high in 2024

Prices for electricity and natural gas in Germany are likely to stay elevated for the foreseeable future, the head of the country’s Federal Network Agency (BNetzA) has said. “The times of cheap energy are over,” agency head Klaus Müller told newspaper Rheinische Post in an interview. “The price level is higher than before Russia’s war of aggression [on Ukraine]. And this will not change any time soon,” Müller said. As long as Germany continued to use a significant share of fossil fuels in its energy mix, this was unlikely to change, he argued. “I don’t think we will see the [high] prices from 2022 again, but I also don’t think that we will return to the pre-crisis level.”

Apart from the higher price level on wholesale markets, power customers would also be affected by the government’s decision to cancel support payments for grid fees in the context of its austerity measures related to the 2024 budget crisis. “This has been a difficult decision for the government. Unfortunately, you cannot save money without causing any consequences,” Müller said. The cancelled subsidies worth about 5.5 billion euros would mean that an average household with four people would have to pay about 120 euros more per year for grid fees, he added.

In a different interview with the Rheinische Post, the CEO of energy company E.ON echoed the BNetzA head’s prediction of high energy prices throughout the new year. Company head Leonhard Birnbaum said energy providers had to pass on higher grid fees to customers in the next months, adding that a higher value added tax for gas would compound the price increase for energy. While producing electricity with wind and solar power is relatively cheap, precautionary measures for times of little renewable power output meant that costs increase overall, Birnbaum said. However, the E.ON CEO argued that this did not mean at all that returning to nuclear power is an option for the country. “By now, this has become impossible from a technical point of view,” Birnbaum said. “The story of nuclear power in Germany is over.”