German power bills are low compared to US average
In 2015, the average German household power bill fell slightly from 85 euros to 84 euros per month. What’s more, that level is relatively low compared to US averages. But Craig Morris says comparisons are not easy.
While Americans pay on average around 12 cents per kilowatt-hour of electricity, Germans easily pay twice as much. Yet, citizens are not demonstrating against the energy transition. On the contrary, when an Energiewende demo takes place, it is always citizens wishing to protect their right to make their own energy.
One reason is that the average power bill is a fairly small part of household budgets. Germans consume only a third as much electricity as Americans do. Their power bills are thus not so large.
But how can we compare these rates? If we do so with the exchange rate, then German power bills currently look very small indeed because the euro has dropped from around 1.30 USD in recent years to around 1.10 USD in the past few months. Convert at that rate, and Germans only pay around 92 dollars a month for electricity – compared to the US average of 110 dollars. But even at the higher exchange rate from 2014, German power bills would still only come in right at around 110 dollars.
Another question is whether Americans simply have more appliances at home. Aside from air-conditioning, which is practically unknown in Germany, Americans and Germans have quite similar creature comforts at home. Granted, homes are larger in the US at around 2,400 square feet, whereas the average German home comes in closer to 1,000 square feet. Likewise, refrigerators and some other appliances are generally bigger in the US. Otherwise, the differences are not that great:
Clearly, Germans are not doing without appliances for a lack of money. So in the chart below, we separate out air-conditioning to isolate the biggest difference between the two countries.
Because the exchange rate has fluctuated so greatly, we opted for a different conversion metric: purchasing power parity. The average German power bill squeaks in at the lowest level of any US census region. However, if the impact of air-conditioning is removed, German power bills would be among the highest. Furthermore, in a state-by-state comparison (here is a PDF listing average power bills by US state) Germany would come in with the 21st lowest monthly power bills, quite close to the middle.
Clearly, the message in this comparison largely depends upon assumptions and the means of conversion. Our chart is therefore not the final word, but we hope it will improve the discussion outside Germany. For instance, the National Review published an article this month claiming that German energy policy is crushing the poor. But their calculations are hard to follow. The author finds that the yearly power bill in Germany is 1,700 USD per person (sic); in the chart above, we see that the annual bill per household (here, assumed to consist of three people) would be around 1,200 USD.
To reach this calculation, the author combines industrial (assumed to be 16 cents) and retail power rates (30 cents) to come up with a composite. But that industry price is extremely high. Roughly 25 percent of German power consumption is largely exempt from the renewable energy surcharge and other levies (such as the grid fee and other taxes), and such energy-intensive firms actually pay closer to four cents.
By including industrial power rates as a part of per-capita power expenses, the National Review’s estimate includes power costs that go into products and services but are not paid for in household bills. This comparison could be interesting, but the article provides no such figure for the United States. It is therefore unfortunate that the article concludes that “the electricity cost would amount to more than 10 percent of available income. And that is for the median-income household… For the rich, $1,700 per year in electric bills might be a pittance, or at most a nuisance. But for the poor who are just scraping by, such a burden is simply brutal.”
As in other countries, the poor in Germany may very well consume fewer products and services than the rich, so their burden would also be lower. Overall, the Germans spend only a small part of their household budgets on electricity. And as in other countries, the poor spend a larger share of their income on necessities – not just electricity, but heating oil and gasoline as well.
Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International. Thomas Gerke (@Zoido4Design) made the chart comparing US and German power bills.