What to expect from electricity and gas prices in Czechia in 2025? innogy’s view

Three years have passed since the collapse of Bohemia Energy, one of the largest electricity and gas suppliers. For hundreds of thousands of customers who chose three-year fixed-price contracts at the time, a key decision point is now approaching. At the same time, a longer period has passed since the 2021 energy crisis, but the market still bears its after-effects. This is compounded by growing pressure on the regulated component of electricity prices due to the necessary investment in infrastructure, which affects costs for households and businesses.

How will the energy commodities market develop in 2025, and what will it bring for customers? We asked several electricity and gas suppliers.

This is the first part of an interview with David Konvalina, innogy’s retail director.

Which factors do you believe will have the greatest impact on electricity and gas prices in 2025?

Energy prices for end customers have been falling since the beginning of 2024. If wholesale prices remain stable, most innogy customers can look forward to lower prices in 2025, despite this year’s modest increase in regulated prices.

We estimate that we will reduce energy prices for more than 70% of our customers this year. I think that is excellent news given the price turbulence of recent years. Following price reductions in December, we are again cutting prices from March for customers without fixed-price contracts, of whom we have around 350,000.

We are therefore fulfilling the promise we made to these customers before the end of the year and are once again reflecting falling procurement prices in our price lists.

How do you see the long-term development of electricity and gas prices? Do you expect a return to pre-crisis levels, or rather lasting changes in the price structure?

First of all, we need to acknowledge that a return to pre-crisis price levels is not realistic for many reasons. Compared with before the crisis, current prices are up by somewhere between 80% and 100%. Compared with what we saw here in 2022 and especially 2023, when the state introduced price caps, the current situation is considerably better.

The outlook for commodities in the coming years currently also looks fairly favourable, as forward prices are declining slightly in the years ahead. Conversely, regulated prices have been rising over the past two years, given the need for higher investment in energy infrastructure. It can therefore be expected that the regulated component will continue to rise in the future.

Prices in the coming years will also be affected by new legislation. Specifically, the EU ETS 2 emissions allowance system is due to be launched from 2027, placing a burden, among other things, on household natural gas prices. If the system is introduced as currently proposed, suppliers will have to purchase CO2 allowances for their customers from 2027.

According to initial statements by the European Commission, a CO2 allowance is expected to cost EUR 45 per tonne, which means that natural gas will be burdened by around CZK 270 per megawatt-hour. In the context of current prices, this would represent a 15% increase in natural gas prices.

Would you currently recommend that customers fix their electricity and gas prices?

I have personally already fixed my prices because I am a conservative person and do not like exposing myself to risk. So I have an innogy product fixed for three years.

However, this product guarantees a reduction in each calendar year. It is called Optimal 36, and we offer it for both commodities, natural gas and electricity. As I have already indicated, because prices decline in each calendar year, we are already reflecting this reduction in the products we are selling now.

Our customers currently most often fix their prices for two years, with the price remaining fixed throughout the contract term. The next most popular option is the aforementioned three-year fixed-price contracts with a guaranteed gradual price decrease. It is clear that people do not want to take risks. Many still remember the collapse of their supplier and the subsequent price shock, when their energy bills often rose threefold. Fixed-price products therefore currently account for 90% to 95% of our sales.

How do you ensure sufficient gas and electricity supplies? Could you outline your procurement process?

I think innogy has demonstrated over the long term that financial stability, reliability and security of supply are our strengths. During the energy crisis, we took care of hundreds of thousands of customers whose suppliers ceased operations, and we also rescued tens of thousands more people whom their suppliers arbitrarily moved to several-times-higher spot prices.

Generally speaking, at innogy we continuously purchase energy for our customers on the markets from European suppliers up to three years in advance, while also taking product characteristics into account. This means we choose different strategies for products fixed for a specific period and for open-ended products.

This smooths wholesale price fluctuations for customers and enables us to offer them a more stable price. We then put together an attractive offer for customers from the available wholesale prices.

I want to emphasise that we already comply with the planned so-called supplier hedging index, included in the forthcoming amendment to the Energy Act (LEX OZE III). Simply put, it means having a significant share of volumes for supplying fixed-price products secured at the time of sale.

In addition, as the largest gas supplier, we serve as a safety net in the gas market and must be ready at any time to ensure supply under the supplier-of-last-resort regime for customers left without supply by their suppliers.

How do you differ from other suppliers on the market? Do you offer customers any additional benefits that could increase their satisfaction or deliver savings?

We are the largest gas supplier and the fourth-largest electricity supplier in Czechia. In total, we provide reliable energy supplies to 1.7 million customers. Customers can find us at more than 40 branches across the country.

Our innosvět app and web portal make life easier for customers. There, they can find all information relating to their supply points and also arrange everything online.

We also have a Premium programme for our customers, with a monthly updated offer of attractive discounts on a wide range of goods from renowned brands. Customers can choose from electronics, household goods, sports equipment and much more.

Customers can receive further attractive discounts with the innogy Card. For example, CZK 40 off cinema tickets for all Czech films, or a 20% discount on one-day ski passes at 13 Czech ski resorts.