German monopoly watchdog calls for deep energy sector reforms, “happy hour” for electricity users

The transition to renewable power sources requires a comprehensive reform of the electricity system in Germany to better align prices with power output, the country’s monopoly commission has said in an expert opinion on the energy sector for the government.

“Only by tackling the root causes of high energy prices can we achieve durable changes. Merely doctoring symptoms is not enough,” said commission head Tomaso Duso. More competition and more efficiency are needed to make the energy transition a success, the competition watchdog found. This applies not only to electricity supply, but also to district heating, gas infrastructure and charging points for electric vehicles, the advisory body consisting of economists and legal experts concluded.

In the electricity sector, “dynamic grid fees” and progressive digitalisation are seen as key steps. “The system currently rewards a behaviour that brings grids to their limits,” commission leader Duso said. Today’s grid fees would not offer incentives for using available grid capacity more efficiently, leading to curtailment of wind power in northern Germany while gas or coal plants are fired up in the south. Dynamic grid fees could help steer supply and demand and ultimately allow for “a happy hour” for electricity consumers, Duso argued. A digitalised grid would allow for introducing more flexible fees – and could help the country avoid the “politically difficult” debate about splitting into multiple power price zones, he added.

The monopoly commission also lamented a lack of competition among operators of EV charging infrastructure, especially along Germany’s motorways, where most projects were awarded to the same company without a tendering process. The commission called for more tenders and welcomed the planned launch of a price transparency office for customers. A similar price transparency platform would be needed for district heating, where monopolies are becoming a risk due to the disappearance of oil and gas heaters. At the same time, more and more gas grids will fall idle as customers switch to other heating technologies, raising the question of who pays for phasing out the obsolete infrastructure. “We need a targeted decommissioning of gas grids as well as binding plans by grid operators,” Duso said.

Germany’s government recently affirmed its rejection of splitting the country into different price zones to improve cost efficiency, publishing instead an action plan to address grid bottlenecks. The government will subsidise electricity transmission grid costs with 6.5 billion euros in 2026, which could reduce the fees by an average of 16 percent for household consumers.