Comparison Of EU Electricity Prices
By Paul Homewood
Seeing as how energy prices are a hot topic at the moment, I thought I would take a look at how the UK’s electricity prices compare with other EU states.
The data below is from the official EU Energy Portal, and are based on May 2013 prices for domestic users.
In the graph below, I have put all the newer accession, mainly East European, states to the left side. It is apparent, when doing this, that their prices are consistently lower. (Cyprus and Malta are much higher, for obvious reasons.) Presumably a factor in this is that they still use much of old fossil fuel power plants left over from Soviet days.
In the next graph, I have left out the accession states, in order to give a clearer comparison between the UK and the others. France, with its high proportion of (subsidised?) nuclear, comes out lowest, while the UK is 5th cheapest, out of 15. The average price for the 15 states works out at 0.20 Euro / KWh, which is 17% higher than in the UK.
It is no surprise that the two countries, that have gone furthest with renewables, are also the ones with by far the highest prices – Denmark and Germany.
What does all this tell us?
1) There is no evidence that energy prices are exorbitantly high, or that the “market is broken”, as Ed Miliband repeatedly claims.
2) The further down the road of renewables we go, the more we will pay.
I am no defender of energy companies, and, like everyone else, they will always try to maximise their profits.
But there is a concerted push by politicians to put the blame for rising electricity bills onto “greedy energy companies”, and they are doing this to distract attention away from their own enormously expensive policies.
Don’t fall for it!
Tomorrow, I’ll do the same with gas prices.
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NOT A LOT OF PEOPLE KNOW THAT 
Reblogged this on Power To The People and commented:
The More Renewable Energy The Higher The Costs Thanks To Government Policies Energy Policies That Do Not Represent Best Interests of People They Represent.
Interesting that Spain has prices similar to the UK after their push for renewable electricity. A sign of bankruptcy for the whole country maybe.
My understanding is that the Spanish govt has directly subsidized renewables, which has kept consumer prices down.
As a result, these subsidies have added to public sector debt, and thus contributed to economic crisis.
In contrast, in Germany and the UK, the subsidies have simply been added to electricity bills, so don’t add to govt debt.
Paul
You might want to make it clear that Cyprus and Malta re not ex-USSR countries.
I have not done any detailed analysis but i would expect that the net EUETS pass on costs would be singinficantly lower in the ex-USSR countries
Yes good point.
Pricey power poisons productivity, Paul.
Strange, i live in France and pay 0.9 Euro per kw/h average over high/low including taxes and other tarifs. I guess the 0.14 is the highest possible price or just some number someone found somewhere
Can you send me some please!
I can send you the bill if you want. That way at least you feel what it’s like to pay small sums for energy 🙂
I have to agree about France as I live there too. About 9 cents a unit but there are a few sneaky environment charges thrown in. Spain is due for Bankruptcy then!!. Where does Norway fit in with their cheap Danish wind power and Hydro I wonder?
Which environment tax do you have? I only see the Tarif d’Utilisation des Réseaux Publics d’Electricité , the Contribution Tarifaire d’Acheminement and the Taxes sur la consommation finale d’électricité. None of them has an ecological component afaik
Contribution aux Service Public d ‘Electricite:
The CSPE was designed as a tax levied on electricity end-customers’ bills. Its level is set by the State and its purpose is to enable French electricity incumbent players, like EDF, to recover the extra charges incurred in performing their mandatory public service assignments. As such, the CSPE contributes to the financing of the development of renewable power generation, of the social electricity tariffs and of the nationwide equalization of electricity tariffs.
Petrossa, I would love to see your electricity bill. How can we talk? Email? please: send-me an email: l.vsandovall at gmail dot com. p.s: moderator, please keep this second comment. my email address uses 2 L.
Contrary to government assertions, the rise in energy price is not primarily due to a rise in the cost of ‘fossil’ fuels, at least not over the period examined here: http://www.scribd.com/doc/172851838/Support-for-Stop-the-Energy-Swindle
Can I repost this, Jonathan?
Paul, yes, of course you may.
What British people are angry about is the profit made by the energy companies and the hiding of tax paid/avoided. Energy companies not only supply the energy, they produce it. So the producer sets the cost and the supplier passes that on in charges to the customer. If you can set your own price and add in to that a percentage for share holders, then the customer has little choice. To also add that customers must shop around and switch supplier is crazy when every time one increases the cost the others follow. And when it is seen that cost of production is far lower than what we are being charged and profit is going into share dividends and not investment, customers are even more angry. There needs to be action, not words. A freeze on prices, now, at what they were prior to the current increase and then a real investigation into production to supply costs would work. And the energy companies would not be allowed to increase the cost until the investigation is completed. If it takes six months or a year then that is how long the prices will be frozen. Would galvanise the energy companies to move fast in any investigation. And customers would have pre price increases charges until the investigation is complete. But Cameron will not go for that. Vested interests in big business is more advantageous for him than looking after ordinary folk who are really struggling to make ends meet.
So why didn’t Miliband do something about it when he was Climate Change (And Energy) Secretary under Labour?
But the base/wholesale price is lower in Germany and Denmark, it is just higher taxes and levies that push up the consumer price. On cost of energy green seems to be the way to go. The ideal for us would be to better connected to Europe so we could import power, it is a single market after all. However the big 6 and their government pals like our isolation as they can charge as much as they like with no competition. We need more investment in power cables to Europe.
But the levies go to subsidise renewables. According to the German Institute for Economic Research
Approximately 40% of the price paid by households in 2010 was attributable to the electricity tax, VAT, concession fees, as well as charges due to the Renewable Energy Sources Act (EEG) and the Act on Combined Heat and Power Generation
Click to access diw_wr_2011-06.pdf
Don’t run away with the idea that they are taxes that fill the govt purse. They are no such thing.
To import large quantities from Europe would need a mammoth investment in infrastructure, so who would pay for this? And as for your Big 6, why are our prices so much lower than most other countries in Western Europe, not just Denmark and Germany? The only country much cheaper than ours is France, with their legacy of subsidised nuclear.
Lol. Subsidized nuclear. Is that another bollocks story like oil being subsidized? Tax advantages are for every company, also energy companies. For the rest they’re on their own.
Factor in the cost and storage of dangerous nuclear waste, and the decommissioning of nuclear power plants, and the energy cost of nuclear energy is INFINITE.
Nuclear waste is the largest form of long-term debt that any country with nuclear energy faces.
20,000 generations of YOUR families will be paying to store and guard the waste.
Mostly Harmless. Read up on the hormesis effect. In particular locales where natural radiation exceeds what low-level waste puts out.
Hello, Mr Homewood.
Firstly, I greatly enjoyed reading your blog. Secondly, I disagree with a good deal of it. That’s probably why I enjoyed it 🙂
My questions to you largely revolve around your selection of the data points in your chosen sample.
1. Why do you remove the countries that joined in 2004 from your analysis but keep those that joined in 1995 (Austria, Sweden and Finland)? What happened in those nine years that differentiate the two groups?
2. If we are differentiating these countries on wealth, should we not include Slovenia in our sample and remove Portugal? I notice that if we do that, the UK slips from 5th to 6th in our list of 15 countries.
3. You mention that the former Soviet-controlled states use fossil fuel but ignore the UK’s huge resources. The UK produces nearly an order of magnitude more oil than the next EU state, nearly an order of magnitude more gas and of the 15 EU countries in your sample, has the second largest production of coal.
You also say “France, with its high proportion of (subsidised?) nuclear”. Well, is it subsidised or not? If it is, why has the European Commission not intervened? Note: all EU states (including the more recent joiners) are subject to the same strict competition laws.
Regards,
Phillip
Lot of questions!
1) Do you mean my second graph? As I pointed out, there seems a clear pattern of the “Eastern States” being cheaper. I simply took them out of the second graph to make the comparison clearer with the “Western” states.
2) Wealth has nothing to do with it. I was speculating whether the abundance of coal power stations in Poland etc had something to do with lower prices.
3) As far as the UK is concerned, very little power is produced by oil, and our coal industry is all but gone.
4) Is French power subsidised? I don’t know, but I raise it as a legitimate question. It certainly has in the past:
Click to access cp_france.pdf
Click to access kovacs.pdf
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2012:398:10:0030:EN:PDF
The real issue is that nuclear plants are nearly fully depreciated:
France’s energy is one of Europe’s cheapest, thanks to its 58, mostly-amortized, nuclear power reactors.
http://news.msn.com/world/france-kicks-off-national-debate-on-energy
Take away a nuclear plant’s capital costs, and you can virtually give the power away. When EDF was “privatised” in 2004, was the full capital value of the fixed assets properly valued, or was it given away at (subsidised) below market value? If the plant is “mostly amortised”, it’s surely the latter.
Thanks
Paul
Thanks for getting back to me so promptly!
Without further ado:
Re. 1: then my objection is that your argument becomes “if we remove a large number of the states where fuel prices are low, UK prices look better than most of the remaining states” which is obvious.
Re. 3: this may or may not be the case regarding oil but you have ignored gas – the single biggest fuel for electricity generation in the UK by quite a margin [1]. And as for “our coal industry is all but gone”, I’m not sure this is true. Within the EU 15, the UK is the third* biggest producer [2], albeit quite a bit smaller than first and second.
Re. 4: the European Commission “concluded that the aid contained in these tariffs was compatible with the internal market on certain conditions” [3].
Regarding EdF: I don’t quite understand your point here. If the assets of the company were given away at below market value during its IPO then its investors (who can be British as much as French) would be the beneficiaries. How would that constitute state aid?
And amortizing the liability of decommissioning seems an eminently sensible idea. It’s the countries that have not amortized that need to worry. Or am I missing something obvious?
[1] Links to the UK government 2010 statistics can be found at http://en.wikipedia.org/wiki/Energy_in_the_United_Kingdom
[2] Stats from BP collated at http://en.wikipedia.org/wiki/List_of_European_countries_by_coal_production
[3] http://europa.eu/rapid/press-release_IP-12-595_en.htm
* I erroneously said second in my original post when I should have said third. Oops.
1) I was simply making the point that the UK is relatively cheap compared to most other Western European states. I could have included China, India and Timbuctoo in the graph as well!
2) UK Coal, the main producer, now produces only 5MT pa, but we import 45MT.
In 1995, we produced 37MT.
(Interesting WIKI table though – I had no idea Greece produced so much!)
http://www.ukcoal.com/at-a-glance.html
http://www.worldcoal.org/resources/coal-statistics/
http://en.wikipedia.org/wiki/UK_Coal
3) You are right up to a point on gas, and maybe this is one of the reasons our prices are realtively low. But don’t forget, it is an open market for gas, and North Sea gas prices will tend to follow European price levels.
4) The EU also said “France shall end any state aid by Dec 2015″
5) My point on amortisation/depreciation is that the assets, as you say, were given away below market value by the French govt. (Remember the French state still own, I think, 70%) This is clearly a subsidy, and as EDF no longer have to worry about the cost of depreciation, they can afford to sell electricity at a lower price than would otherwise be the case.
Hi, Paul.
Once more, thank you for coming back so promptly.
Re. 1: by all means compare but then ranking selectively chosen data is misleading. For instance, it may be interesting to compare the GDP per capita in Luxembourg, Norway, Switzerland, Qatar and the US. But if I were then to conclude that America was a poor-ish country as it’s towards the bottom of this list, you’d smile at me for cherry picking my data.
Re. 4: state aid is not necessarily unlawful so I don’t think this quote means much. I spoke to a competition lawyer about this (my wife) and her assessment was that it could not be an egregious abuse of the market if the Commission asked for such relatively minor changes (full disclosure: she is otherwise unfamiliar with this particular case).
Re. 5: I’m still struggling to see your point here. If the French government had sold a 30% stake in EdF for as little as 1 Euro, how is this subsidising anybody but the international investors? Future liabilities do NOT depend on the share price. As far as I can see, from your link in a previous post, the French have done a very good job at amortising this future liability and that’s why they enjoy low electricity costs – that is, they don’t have to massively increase prices today to pay for decommissioning that should have been paid for by amortisation over previous decades.
(BTW, to clarify I didn’t say the assets were given away at below market value. I’ve no idea whether they were or not).
Again, regards to you and nice to have a civil debate.
Phillip
We’re rather getting away from the point of the original post, which was that, compared to most Western European countries, the UK’s energy prices are not excessive.
I don’t think many people in the UK realise that.
Energy prices are important. For organizations, energy costs have a significant impact on their bottom line. Heating and lighting costs make out an important part of any household’s budget.
Europe’s energy Portal comprehensively monitors energy prices for all member states of the European Union, using its proven methodology. Energy reports are issued monthly and contain the latest electricity, natural gas and motor fuel prices for each country’s key economic sectors.
Compare Electricity Rates
I happened to notice Paul Homewoods small analysis above where he compares electricity prices in Europe and on this basis makes conclusions on the relationship between costs and technology. He has found that:
The further down the road of renewables we go, the more we will pay.
He specifically mentions Denmark and Germany as having the highest kWh costs in Europe.
Very well. But to compare prices including taxes does not say much about prices without taxes i.e. production costs. Actually Denmark has the highest wind content in our energy production in Europe (about 35%) but some of the lowest production prices. The high consumer price is politically decided and belongs to another discussion.
Perhaps Pauls Homewood will correct the flaw in his argumentation?
Kind regards Søren Fosberg
[Soren – First time comments are held in moderation. I will reply tomorrow. Regards]
Hi Soren
It is certainly not the case in the UK. Under the new Energy Act, offshore wind will receive nearly three times the market price, because it is so inefficient.
https://www.gov.uk/government/news/record-investments-of-40-billion-in-renewable-electricity-to-bring-green-jobs-and-growth-to-the-uk
And it is also not true in Germany, who pay about 60% for electricity than here. Most of the extra goes to subsidise inefficient renewables, according to the German Institute for Economic Research.
Click to access diw_wr_2011-06.pdf
When you talk of “production costs”, are you getting confused with “marginal costs”?
Paul
Paul: You write “Under the new Energy Act, offshore wind will receive nearly three times the market price, because it is so inefficient.”
I have checked your link and I find no statement that the price is determined because off shore wind is “so inefficient”. But maybe that is your own conclusion. The purpose is clearly said to be to stimulate investment in renewable energy to meet government targets on reduction in use of fossils. Considering the subsidies the fossils receive directly or indirectly – not to mention they are allowed to pollute the environment free of charge – there is little chance that the wanted transition can be effective without public spending. (Personally I think that taxing pollution would be the better approach – but that is not important here.)
Why the UK support is so high compared with Denmark I don’t know, but you may search for eexplanations here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/205620/international_support_onshore_wind_frontier.pdf
I am not confusing production costs with marginal costs. The information I refer to can be found here:
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Composition_of_electricity_prices_for_household_consumers,_second_half_2011_(1)_(EUR_per_kWh).png&filetimestamp=20130116115143
and shows a production price per kWh for Denmark of € 0,068 and for UK € 0,117.
Consumers in Denmark pay a surcharge over the electricity bill called PSO (for fossil as well as wind electricity). The PSO is used to promote en number of issues, but most of the PSO goes to promote Wind Energy by keeping payment to investors independent of fluctuating market prices. In this way the transition from fossil to renewable energy is made attractive to investors – in line with government policy.
In a typical situation the spot price for electricity is 3 eurocent and the PSO support 4 eurocent. In total € 0.07 – as above. This may apply for the first 50.000 full load hours or app. 14 years of production. After this there is no more support and production is sold at market price. As the windmills are now fully depreciated, the production price in the remaining life (20-25 years) could be as low as 1,5 – 2 eurocents per kWh.
Soren
It really is not complicated, Soren
The current market wholesale price is about £50MWh. Under the new Strike Prices, offshore will receive £155MWh.
Why? Because they need that to cover their costs. Even the Committee on Climate Change accept this, that is why they objected to the tapering off of Strike Prices down to £135MWh by 2019.
They wrote to Ed Davey last year:
The proposed strike prices for offshore wind start at a broadly appropriate level but then fall more rapidly than the evidence suggests is
achievable, including analysis by the Offshore Wind Task Force. This would put required investment during the first Delivery Plan period at risk. The rate of price degression should be adjusted to reflect the evidence on achievable cost reduction under current market conditions, rather than ideal conditions that have not been met in practice. Our analysis suggests a degression closer to £5/MWh (rather than
£15/MWh) between 2016/17 and 2018/19 is more likely to be appropriate.
Click to access CCCtoSofS_-DelPlan_letter_9_Sept.pdf
As a result, the Strike Prices were adjusted up by £5MWh.
Ok – let us keep it simple. You draw conclusions on the the cost of Danish renewables based on evaluation of consumer prices – which are including taxes and levies. Can we agree to that?
We also in Denmark have a vehicle sales tax of 180%. Does it imply to you that cars sold in Denmark are more expensive from manufacurer than cars sold in other countries?
Your argumantation is flawed.
The purpose of the article was to show that, contrary to public perception, UK electric prices are low by Western European standards.
Full Stop.
Full Stop.
Fine with me. I am sure everybody has got the point.