Energy prices Europe: gas and electricity
The European energy market is a highly interconnected market. Countries import and export a lot of electricity, which makes most countries in the European Union dependent on their neighbors, among others. In addition, most countries in the European Union use the same gas network.
It is no secret that there is a global energy crisis and not strictly a European crisis, but there is no escaping the fact that the European crisis seems much more dramatic compared to the rest of the world. What energy prices look like in Europe, you can read below.
European gas price chart
The European gas price is mainly traded on the Dutch gas market, also known as Dutch TTF Gas Futures. The chart below shows the evolution of the European gas price over the past year.
The gas price is important not only for households that use natural gas, but also for all households that purchase electricity. In Belgium, but also in other countries in Europe, much of the electricity is produced with natural gas. As a result, the high price of gas has a direct effect on the price of electricity. High energy bill? Energy prices are historically high, but saving money is often possible.
Cheapest Electricity Europe
The cheapest electricity in Europe is found in Spain. This is mainly because Spain's energy mix is less dependent on fossil fuels. In fact, most of its electricity comes from wind and nuclear power. In addition, the Spanish government has taken several measures against high energy prices, more about which is explained below.
Energy Prices in Belgium and Surrounding Countries
The European energy market is highly interconnected. For example, in many cases, Belgium exports electricity to neighboring countries, and when there are shortages, electricity is imported from these neighboring countries. This ensures that changes in a national energy market can affect the energy markets of other countries in Europe.
Energy Prices in France
The energy market in France, as in Belgium, was opened to competition in 2007. Luminus' parent company, France's state-owned EDF, is responsible for most of France's electricity production. In 2021, 69% of all electricity produced came from nuclear power and 23% from renewable energy. Gas in France comes mainly from Norway (40 %), Russia (20 %) and the Netherlands (10 %).
Despite the large production capacity of nuclear power and renewables, prices in France have risen sharply and are currently among the most expensive in Europe. The regulated tariff still available to households and SMEs is only €0.1740 per kWh for a single meter. In addition, lower-income households receive an allowance of €277 per year.
Because an investigation report revealed problems with some of the nuclear power plants in France, EDF immediately decided to carry out maintenance. This caused the loss of a large production capacity, causing the current price of electricity in France to be very high.
Energy Cost in Germany
The electricity market in Germany has been a free market since 1998 and the gas market since 2005. The supply in Germany is many times greater than in other countries in Europe, for example, there are more than 1,000 electricity suppliers and more than 900 gas suppliers operating in the German energy market. This is because most municipalities also offer gas and/or electricity and the market is fully liberalized.
Electricity in Germany is produced mainly with fossil fuels, with lignite accounting for 20% and natural gas for 10% of all electricity produced. Renewable energy sources account for about 45% of all electricity produced. Because of its heavy reliance on fossil fuels, energy prices in Germany are generally higher than in the rest of Europe.
Energy prices in Germany have also increased very sharply. The price of electricity in Germany reached a record high of €0.3730 per kWh in July 2022. The gas price in Germany is currently among one of the highest in all of Europe, at €0.1784 per kWh. The German government has taken several measures to counter high energy prices, including tax cuts and concessions.
Energy Price in The Netherlands
The energy market in the Netherlands has been liberalized since 2001. Currently there are 48 different energy suppliers operating, of which the former monopolist Essent still has the largest market share.
Electricity is mainly produced with natural gas in the Netherlands. About 60% of all electricity produced comes from gas, nuclear or coal-fired power plants. The remainder comes from renewable energy sources, with solar and wind power generating about the same amount of electricity.
Because the Netherlands relies heavily on fossil fuels for electricity production, prices have risen sharply. The price of electricity in the Netherlands is currently around €0.88 per kWh. The gas price in the Netherlands is around €0.33 per kWh. The Dutch government has reached an agreement on a price ceiling, but the implementation is still pending.
Other energy prices European countries
In addition to neighboring countries, energy prices in Belgium also depend heavily on prices in other European countries. This is because electricity and especially natural gas can be transported over longer distances. In this section, we look at energy prices in other European countries.
The cost of energy in Spain
The Spanish energy market consists of a liberalized and a regulated market. In the free market, established in 1997, about 250 different energy suppliers operate. In the regulated market, the Spanish government sets the price.
Electricity production in Spain is significantly less dependent on fossil fuels. In fact, most of the electricity (23.3%) is generated by wind power and 20.8% comes from nuclear power. Natural gas in Spain comes mainly from the United States (33 %), Algeria (25 %) and Nigeria (14 %).
Despite Spain's reduced reliance on fossil fuels to produce electricity and a small amount of natural gas coming from Russia, energy prices in Spain did rise sharply. The price of electricity in Spain averages €0.38037 per kWh on the regulated market and about €0.20 per kWh on the free market. The gas price in Spain on the regulated market averages €0.0583 per kWh and €0.14 on the free market.
Energy price Italy
The electricity market in Italy has been liberalized since 2007 and the gas market since 2003. In the energy market in Italy, you have a large number of energy suppliers to choose from, namely 500 gas suppliers and 800 electricity suppliers.
Electricity in Italy comes mainly from fossil fuels (59.2%), of which mainly natural gas. Renewable energy sources play a relatively large role in Italy, producing about 40%. Italy relies to a lesser extent on Russian gas due to a stable supply from Algeria and Libya.
The electricity price in Italy is currently around €0.439 per kWh and the gas price in Italy is around €0.18 per kWh. The Italian government decided to reduce a component of the energy bill called the “system cost,” which accounted for about 22% of the total energy bill. In addition, the social tariff was extended and taxes on natural gas were reduced.
Energy price Portugal
The electricity market in Portugal began a liberalization process in 2006 and should be completed by 2025. In Portugal, consumers can choose either the regulated tariff or a tariff from one of the commercial energy suppliers. There are currently 28 different electricity suppliers operating in Portugal.
Electricity in Portugal is mainly generated by natural gas (34%) and wind power (29%). In addition, hydropower, solar energy and biomass also play a relatively large role. Natural gas in Portugal, as in Spain, comes mainly from Algeria.
The electricity price in Portugal is €0.1542 per kWh in the regulated market and €0.2377 per kWh in the commercial market. The gas price in Portugal is currently €0.0561 per kWh. To reduce energy prices, it is again possible to switch from a commercial energy supplier to the regulated tariff. In addition, each taxpayer receives a one-time concession of €125 and the VAT rate on electricity has been reduced to 6%.
Popular questions about European energy prices
High energy prices and the energy crisis raise many questions. Indeed, a lot is unclear, both for consumers and energy suppliers. Where one day the price of gas seems stable, the next day the price increases again by 10%.
Where does Europe get it's gas from?
In 2020, Russia was the European Union's main trading partner for fossil fuels, almost 29% of all fuels came from this country. However, the war in Ukraine has changed this significantly. Currently, gas imports from Russia to Europe are about 10% of what they were in previous years.
On the contrary, LNG imports from America to Europe have increased sharply, in Belgium by more than 600%. In addition, Norway, the Netherlands, the United Kingdom and Qatar are major suppliers of natural gas in Europe.
What does the European energy mix look like?
The energy mix in Europe can vary greatly from country to country. For example, France relies very heavily on nuclear power, while Germany relies mainly on fossil fuels. Throughout the European Union, oil and natural gas are the main fuels used to produce electricity.
An overview of the full energy mix in the European Union is shown below.
Which country has the highest gas price?
The highest gas price in Europe, according to the Household Energy Index, can be found in the Netherlands. A household signing a new energy contract in the Netherlands pays €3.33 per m3 of gas, including taxes. In Belgium, a household pays € 1.86 per m3 with a new contract.
Measures against high energy prices in Europe
To date, the European Union's response has been limited and largely left to national governments. On Sept. 14, however, the European Commission released a plan to intervene directly in the European electricity market to address Russia's complete gas shutdown.
With its emergency intervention, the European Union will help reduce volatility for both energy suppliers and energy consumers.
The European Union's emergency intervention includes three main actions: demand reduction, price cap and a solidarity contribution.
