As Europe's largest economy and the most populous European country after Russia, Germany's electric power sector plays a significant role in the region. With an
of roughly 512 terawatt-hours as of 2022, Germany's electricity market is one of the largest in the world. However, the country is still largely dependent on fossil fuel imports for electricity generation and is striving to establish a secure and sustainable energy sector.
Alternatives to fossil fuels in Germany's energy mix
The contribution of renewable energy sources to the
energy mix of the country was at 44 percent in 2022. Despite the commitment of the country to a clean energy transition, this figure was still smaller than the share of electricity produced by fossil fuels.
Germany phased out nuclear power in April 2023, betting on renewable energies, and, that same year, the German federal government signed an agreement (the “Pact for Germany”) to facilitate and accelerate the process of renovation and additional construction of renewable energy infrastructure. Especially onshore wind energy and solar photovoltaics are displacing fossil fuel technologies in the country, with a steadily growing
electricity generation capacity. However, according to a recent study by the Federal Environment Agency, the country will not be able to meet the net-zero carbon emission goal set for 2045 if further steps in increasing renewable energy capacity and implementing carbon removal are not taken. Between March and August 2023, solar photovoltaics, wind power, bioenergy, and hydropower have produced over 55 percent of the
electricity in the country on a monthly basis.
Electricity prices in Germany: among the highest in the world
The average wholesale electricity price in Germany has been on the rise over the past few years, spiking in 2022 due to a combination of factors, primarily the post-COVID19 pandemic economic recovery and the tightening of the fossil fuels market after Russia’s invasion of Ukraine. To relieve the
domestic electricity customers from the price increase, the German government abolished the EEG surcharge in 2022, which had been introduced to subsidize the expansion of renewable energy sources, and put in place a “price brake” for both electricity and gas. Still, the average German household paid over 40 euro cents per kilowatt-hour in 2023, one of the highest
electricity prices in the world. In November 2023, a new controversial price cap was agreed to foster the competitiveness of
Germany’s industrial sector, equally effected by the energy crisis in 2022. The measure will reduce the taxes for manufacturing companies and ease CO2 emissions compensations for energy-intensive industries, as well as keep grid fees in check until 2024.
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