Energy prices in Europe: how will your bill look like?

As a company director, the energy cost is an essential issue and it matters all the more when you consider establishing your activity abroad!

Three factors determine electricity and gas price: Matter, Transport and Taxes:

Natural gas and electricity prices can significantly vary between countries and result from 3 main factors:

  • The matter fare: Gas and electricity entail production and exploitation costs that could be high, notably due to the infrastructures.
  • Transport and management fare: Energetic fluxes are difficult to ship and stock which means that these costs can increase the final bill.
  • Taxes: There are numerous taxes on energy. For instance, in France, gas is subject to 2 different taxes and the subscription to the 5.5% VAT.

Some costs are identical for every provider, like the access to the network whose tariff is fix. However, other fares vary such as conveyance or management costs. It is through their reduction that a provider can reach a lower price! At the European level, we note large variations of the medium prices of energy for the companies.

Electricity prices face great variations from one European country to another:

In the European Union, electricity has a medium price of 114 euros per MWh. Facing an increasing demand, the average European electricity cost has risen by 15% in 10 years!

Throughout Europe, Sweden has the cheapest electricity price for companies with 68 euros per MWh while Italy and the UK display higher tariffs: over 130 euros per MWh. The price even reaches 150 euros per MWh for Germany. As a comparison, in France, it remains under 100 euro per MWh.

It is to be noted that France and Germany have very similar pre-tax tariffs, namely 70 euros per MWh. A higher taxation level in Germany can thus explain the final difference on the bill: Taxes represent 47% of the final cost against only 24% in France. This taxation level is also high in Italy where 37% of the total price is collected by the administration, whereas it is relatively low in the UK with 27%.

Electricity prices for non-household consumers, first half 2018
Source: Eurostat

European gas price is lower than the electricity price

In Europe, the gas price is way inferior to the electricity price with a European medium around 36 euros per MWh. And this price goes lower over time! Through the last 10 years, it went down by an overall 9% in the EU.

Considering the fluctuation between countries, Belgium this time displays the lowest price at 28 euros per MWh, closely followed by Eastern countries such as Bulgaria and the Czech Republic with 30 euros per MWh. Scandinavian countries that possess affordable electricity nevertheless have the most expensive gas: over 70 euros per MWh for Denmark, Finland and Sweden. The largest countries hold prices relatively close to the median in euros per MWh: 30 for the UK; 32 for Italy; 37 for Germany and 41 for France.

Gas prices for non-household consumers, first half 2018
Source: Eurostat