German government to subsidize grid fees again next year to lower electricity prices

The German government has approved a subsidy of 5.5 billion euros, which will be used in 2024 to reduce grid fees in the final price of electricity. The move is intended to cushion consumers from rising electricity prices.

German transmission system operators have announced the level of grid fees for 2024. Thanks to a 5.5 billion euro subsidy from the Economic Stabilization Fund, the fees will remain almost at the same level as in the previous two years.

The German government has already subsidized transmission system fees with 12.8 billion euros this year to keep them at their 2022 level. Proceeds from the windfall tax are intended to be used at least in part to fund lower grid fees and other measures to reduce electricity prices.

Transmission system fees are calculated on the basis of operators’ cost forecasts for 2024. Although transmission system operators expect costs to fall in 2024 compared with 2023, they will remain high. The main reason is that prices on markets for electricity and other energy commodities remain high. This particularly affects the costs of redispatch, the grid reserve and the provision of balancing energy, as well as the purchase of electricity to cover losses.

Grid fees are included in electricity bills and accounted for more than 20% of the price German households paid for electricity in the second half of 2022. Distribution grid fees will also rise, by an average of 11%, despite financial support from the government.