Several reports on the Federal Network Agency’s forecast currently highlight a key point: electricity prices could remain stable or even fall in 2026 because the expansion of renewable energies will increase supply and therefore have a price-dampening effect (welt: 27.12.25). This portrayal shapes public perception, especially since it is presented as a sign of success for energy policy. However, the situation is not decided by the headlines, but by the actual costs, some of which the state covers through tax revenue and which therefore do not appear as part of the electricity price. (apollo-news: 24.01.26)
Germany’s electricity prices start at a record European level
Germany is not entering the debate from a position of relative ease. The Household Energy Price Index (HEPI) indicates an average household electricity price of 39.35 cents per kilowatt-hour for November 2025, placing Germany at the top of the list in Europe. This is significant because many neighboring countries have since mitigated the price shock of 2022 to a greater extent, while Germany remains at a high level.
A reliable assessment requires understanding the breakdown of the final price. It comprises generation costs, grid infrastructure, and levies and taxes. Therefore, while increased supply can have an effect, it doesn’t automatically explain the electricity provider’s billing practices.
Wholesale prices reveal the structural gap
Even wholesale prices only partially support the relief thesis. In 2025, the average German wholesale electricity price rose from 7.85 to 8.93 cents per kilowatt-hour. France, in the same period, was at 6.11 cents. The futures market for 2026 anticipates approximately 8.54 cents for Germany and 5.08 cents for France, which would result in a gap of around 70 percent.
This gap is related to the system architecture. Volatile generation increases the need for reserve and backup capacity. As soon as wind and solar power weaken or demand rises, prices increase, and this is reflected in the German wholesale market.
Grid costs and redispatch shift the burden
However, the greatest pressure originates in the grid, not on the exchange. Redispatch refers to interventions by which grid operators balance fluctuations when generation and consumption don’t match. These interventions have cost billions for years. They are financed through grid fees and thus passed on to customers.
Added to this is grid expansion, a long-term cost driver. The energy think tank ef.Ruhr estimates the investment required by 2045 at 732 billion euros. In an expansion scenario, McKinsey outlines an increase in grid fees from around 11 cents today to approximately 25 cents per kilowatt-hour by 2035. Following this logic, a household electricity price of around 50 cents per kilowatt-hour becomes a realistic possibility, because infrastructure costs increasingly dominate the tariff.
The 30-billion-euro support behind “stable” prices
When stability is discussed despite these cost trends, government financing plays a central role. Former economic advisor Peter Bofinger estimates subsidies in the electricity sector at €24.5 billion for 2025 and €29.5 billion for 2026. An additional industrial electricity price is planned, currently projected at around €1.5 billion. The largest single item is the feed-in tariff under the Renewable Energy Sources Act (EEG), for which Bofinger forecasts approximately €17.2 billion in 2026, although this figure could fluctuate significantly depending on the weather.
The dynamic nature of the subsidy system is crucial here. With each additional expansion, the number of installations in the grid increases. The Energy Economics Institute at the University of Cologne expects that the EEG subsidy could rise to around €23 billion by 2030. This transforms a subsidy into a permanent cost component, even if it doesn’t appear as a separate line item on the electricity bill.
Converted to kilowatt-hours, the shift becomes apparent
The magnitude can be translated into a kilowatt-hour calculation. According to Energy-Charts, Germany drew approximately 440.8 terawatt-hours of electricity from the public grid in 2025. Allocating the subsidies to this amount results in a hidden price support of around 5.7 cents per kilowatt-hour for 2025 and about 6.8 cents for 2026. The calculated household electricity price is therefore not 39.35 cents, but closer to 45 cents once tax-based financing is factored in.
This changes not only the financing but also the perception. The electricity price appears more stable because a portion of the costs is paid outside the tariff. For consumers and businesses, the burden remains real, but it is distributed differently.
Tariff stability does not replace cost reduction
The key cost drivers have not yet been removed from the system. Volatility creates a need for reserve capacity, while redispatch stabilizes the ongoing billions in costs. At the same time, grid expansion pushes grid fees into a steep curve. Subsidies can smooth out tariffs, but they do not replace a structural reduction in system costs.