European Union energy prices - statistics & facts
The price that energy customers pay in Europe has never been higher than in 2023. Far from being back at pre-pandemic levels, electricity and natural gas rates were still increasing in the first half of the year. The growing energy demand observed during the ‘post-pandemic’ economic recovery in 2021 and 2022 brought about a global energy supply shortage, which evolved into an outright crisis in the European Union when Russia invaded Ukraine. Since then, the dependency on fossil fuel imports in some European countries, low hydropower production, and reduced nuclear power capacity in France have caused the EU energy inflation rate to skyrocket.
Industrial customers typically pay less for electricity than residential users, as electricity can be transported at higher voltages, thus reducing transmission costs. Furthermore, for large industrial consumers, prices are often negotiated at wholesale, rather than retail markets. In 2023, Cyprus and Hungary had some of the highest electricity prices for industries in the EU.
Europe should diversify its energy mix and shift to regionally produced clean energy to decrease its dependence on the price fluctuations of the global energy market.
Electricity prices in the EU
For consumers, the energy supply shortage has been most notable when examining electricity prices for households. Although an upward trend had been observed for years, notable jumps in the average end-user price were recorded from June 2021 until the second half of 2023. Germany regularly records the highest household electricity prices in the European region. In 2023, German residents using between 1,000 and 2,500 kilowatt-hours per year paid around 45-euro cents per kilowatt-hour. Elevated household electricity prices in countries such as Belgium and Denmark are often associated with high taxes. However, as raw material costs rose so much that they accounted for most of the end-user prices in 2022 despite the implementation of energy caps, the EU subsidized energy taxes and levies to support consumers. In 2023, as prices of raw energy started to decline, tax subsidies were withdrawn, leading to a new increase in the overall energy price.Industrial customers typically pay less for electricity than residential users, as electricity can be transported at higher voltages, thus reducing transmission costs. Furthermore, for large industrial consumers, prices are often negotiated at wholesale, rather than retail markets. In 2023, Cyprus and Hungary had some of the highest electricity prices for industries in the EU.
Natural gas prices
Much like electricity prices, household natural gas prices in the EU are consistently higher than industrial prices. Natural gas is one of the leading sources of electricity in the EU after nuclear energy, and its price strongly influences the price of electricity in the region. Since the electricity price on the European spot market is determined by the cost of the most expensive supplier, it was the rising price of natural gas that drove the price of electricity up. In 2023, Sweden, the Netherlands, and Lithuania were among the European countries with the highest household natural gas prices.Europe should diversify its energy mix and shift to regionally produced clean energy to decrease its dependence on the price fluctuations of the global energy market.
