Most people take electricity from the socket for granted - but how exactly does the energy market actually work? What do terms such as kilowatt hour, dynamic electricity tariff, grid fee or feed-in tariff mean? And how can I as a consumer not only keep an overview, but perhaps even save money?

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The German energy market is complex - but it can be understood. In our glossary, we explain the most important terms relating to electricity, photovoltaics, energy management, tariffs and sustainability - simple, understandable and practical. Whether you're just getting into the subject or looking for a specific explanation, this reference guide will help you make informed decisions and better control your electricity costs.

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🔌 General Electricity Terms

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Kilowatt (kW)

A kilowatt is a unit of power measurement. It indicates how much energy a device consumes or generates. For example, a kettle has a power rating of about 2 kW. If the

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Kilowatt Hour (kWh)

The kilowatt hour is the central unit for your electricity consumption. It shows how much energy you've used over time – for example, a washing machine uses around 1 kWh per wash cycle. Electricity prices are charged per kWh. Using energy-efficient appliances or deliberately saving electricity can directly reduce your electricity bill.

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Power Grid

The power grid transports electrical energy from power plants to our homes. It can be divided into two different types of networks:

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• Transmission networks operate at very high voltage and distribute electricity over long distances.
• Distribution networks deliver electricity to end consumers at the local level. Distribution network operators are often local utilities and are also responsible for smart meter installation

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You usually don't notice the networks – but you pay grid fees through your electricity bill to cover the cost of transporting electricity to your doorstep.

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Load Profile

A load profile describes how electricity consumption is distributed throughout the day.

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• SLP (Standard Load Profile) is a typical profile for private households – without detailed measurement.
• RLM (Recording Load Measurement) is used for customers with a smart meter and measures consumption in 15-minute intervals.

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You can use the RLM profile with a dynamic electricity tariff. By consuming electricity during cheaper times (e.g., midday & night), you can reduce your electricity costs.

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Direct Current (DC)

Direct current flows constantly in one direction. Batteries, solar modules, and many electronic devices work with it. For feeding into the household network, it usually needs to be converted to alternating current.

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Alternating Current (AC)

Alternating current constantly changes its direction – in Europe 50 times per second (50 Hz). It is standard in the power grid and suitable for household appliances. Alternating current can be transported more easily over long distances.

☀️ Photovoltaics (PV)

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Photovoltaics (PV)

Photovoltaic systems convert sunlight into electrical power. Solar modules installed on roofs or balconies are used for this purpose. The generated energy can be used directly in the household or fed into the power grid – allowing you to reduce electricity costs or even generate income.

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Balcony Power Plant or Plug-in Solar Device

A balcony power plant is essentially a mini solar system that you can install yourself at home since it only needs to be plugged into a socket. Despite what the name suggests, a balcony power plant can be installed in places other than just balconies. There are also mountings available for flat roofs or gardens. Balcony power plants can be particularly beneficial for urban apartments to reduce electricity costs.

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Inverter

The inverter is the heart of a PV system. It converts the direct current from solar modules into alternating current that you can use in your household or feed into the power grid. High-quality inverters can optimize self-consumption – and thereby reduce your electricity bill.

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Hybrid Inverter

A hybrid inverter can additionally control battery storage systems. This allows excess solar power to be stored and used later when the sun isn't shining. This increases grid independence and saves on electricity costs.

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Solar Module

Solar modules are the visible panels on the roof or balcony. They convert solar energy into electrical energy. The more modules, the higher the possible power generation. The performance of your solar system is influenced by your solar module's output, orientation to compass direction, angle to the sun, and many other factors.

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MPPT (Maximum Power Point Tracking)

This technology in the inverter ensures that solar modules always operate at their optimal point to extract maximum power – even under changing light conditions. This generates more electricity and improves the system's economic efficiency.

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Independent Meter (PV Meter)

An additional meter measures how much electricity your PV system produces – independent of consumption. This is important for calculating feed-in tariffs or optimizing your self-consumption.

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Kilowatt-Peak (kWp)

The unit of measurement for a PV system's peak power under optimal conditions. It helps compare systems. A 5 kWp system can generate up to 5 kW of electricity on a sunny day.

🔋 Energy Management

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HEMS (Home Energy Management System)

A HEMS is a digital system that intelligently controls electricity flows in the household. It connects PV systems, storage, heat pumps, or wallboxes and helps to consume electricity when it's cheap or self-generated. This can significantly reduce your electricity costs.

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Cloud HEMS

A Cloud HEMS performs the same task as a "normal" HEMS. However, instead of a physical device that an electrician needs to install and connect to your devices at home, the Cloud HEMS uses internet interfaces to connect with your devices. The Ostrom App is an example of a Cloud HEMS, which you can use to optimize charging your EV, for instance.

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Battery Storage

A storage system captures excess solar power and releases it later. This way, you use more of your own electricity - instead of buying expensive power from the grid. The investment can pay off over the years through savings.

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Additionally, with a dynamic tariff, you can charge your storage when electricity is cheap and discharge when it's expensive. This increases your savings, as the storage is particularly underutilized in winter when your solar system produces little or no electricity. During this time, you can especially optimize your grid consumption with a dynamic tariff.

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Controllable Consumption Devices

These include devices like heat pumps, electric vehicles, or water heaters that can be flexibly switched on and off. When properly controlled, they can operate during times of low electricity prices – saving money.

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Self-Consumption

Self-consumption is the portion of self-generated electricity that you use directly. The higher this share, the less electricity you need to buy expensively from the energy provider. Using your solar system's electricity yourself is the best way to reduce your electricity costs. To optimize your self-consumption, it's worth using a (Cloud-)HEMS or additionally installing a battery storage system.

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Grid Feed-in

Excess electricity that you don't use yourself is fed into the power grid. You receive a legally regulated feed-in tariff for this, which can help refinance your investment. However, the best use of your self-produced electricity is self-consumption

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Feed-in Tariff

This is the compensation you receive for fed-in electricity. It's legally regulated (e.g., through the EEG) and is usually lower for new systems than electricity costs – therefore, it's always worth optimizing the self-consumption of your solar power.

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Full Feed-in

All generated electricity is fed into the grid. This makes sense for large systems. For households, a self-consumption solution is often more worthwhile, as grid electricity is more expensive than the feed-in compensation.

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Degree of Self-Sufficiency

The degree of self-sufficiency indicates how independent you are from the public power grid. A high degree means more self-supply - often through PV, storage, and intelligent energy management. This makes you more independent from rising electricity prices.

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Very few households can be completely self-sufficient, especially in winter when the solar system produces little or no electricity. Therefore, it always makes sense to choose an affordable electricity tariff to purchase the remaining power cheaply.

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Amortization

Shows when your investment (e.g., in a PV system or battery) has paid for itself through savings. The higher the self-consumption and electricity prices, the faster the system amortizes. A solar system amortizes in approximately 9-15 years. Since such a system's lifespan is about 25 years, you can save several thousand euros in total.

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Smart Charging

Intelligent charging of electric vehicles considers when electricity is cheaply available. With a dynamic tariff, you can benefit from hourly prices instead of a fixed price by shifting your consumption to particularly cheap times.

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The Smart Charging function does this automatically. It shifts charging times to cheaper hours, allowing you to charge more affordably and environmentally friendly. This way, you can save up to 33% on your charging costs.

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Virtual Power Plant

Many small generators (PV, storage) and consumers (EVs, heat pumps) are connected to form one large power plant. Together, they can flexibly respond to the electricity market – with the opportunity to earn money or save on electricity. Our virtual power plant is called NeoGrid! Currently, it's only available for EVs. In the future, many other consumers like storage systems and heat pumps will be able to participate in our virtual power plant.

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Smart Meter

A digital electricity meter that measures your consumption in real-time and reports it to the provider. It's the prerequisite for dynamic tariffs and targeted energy management. If you want to install a Smart Meter, you can already do so through Ostrom in many regions of Germany. We work with local grid operators and make it easy for you to order a Smart Meter. In some cases, we even offer you a free Smart Meter. Find out here if you qualify.

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Load Management

Load management is the regulation of electricity consumption to avoid peaks and use electricity more efficiently. This is particularly useful for large households that have several major consumers like EVs and heat pumps.

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Demand Side Management (DSM)

DSM means: consumers react to price signals or grid constraints and adjust their consumption – e.g., by running devices automatically during cheaper times. This reduces costs and stabilizes the grid. A Virtual Power Plant does this automatically, for example, with all connected devices.

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Peak Shaving

The goal of peak shaving is to avoid electricity price spikes – e.g., through battery use or load shifting. A HEMS or functions like Smart Charging with a dynamic tariff does this automatically by shifting consumption to cheaper times and avoiding price peaks.

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Load Shifting

When you shift your electricity consumption to times with lower prices – such as running heat pumps at night – it's called Load Shifting. With dynamic tariffs, this can lead to noticeable cost savings.

⚡ Tariffs & Market

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Fixed Rate Tariff

With a fixed electricity tariff, the price per kilowatt hour remains constant throughout the entire contract period – regardless of fluctuations on the electricity exchange. This provides planning security but can be disadvantageous when market prices fall, as you remain locked into an old and expensive contract.

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Dynamic Electricity Tariff

The electricity price changes hourly according to the current market price. During times with abundant wind or solar power, prices are often particularly low – even negative at night or especially on weekends. Those who can be flexible with their electricity consumption (e.g., for charging an EV or doing laundry) often save significantly with a dynamic tariff.

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Energy Rate

This is the price per kilowatt hour of electricity consumed – the variable part of your electricity bill. Depending on your tariff type, you can reduce these costs in different ways.

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• Fixed Rate: With a fixed rate, you can only save by reducing your consumption
• Dynamic Rate: Since prices fluctuate hourly with a dynamic rate, you can reduce your electricity costs not only by consuming less but also by shifting your consumption to particularly favorable times.

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With a dynamic tariff, you have more options to influence and thus reduce your electricity costs.

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Base Rate

A fixed monthly amount charged for grid usage, metering, and billing – independent of actual electricity consumption. It applies even with low consumption. Those who use little electricity should look for the lowest possible base rate.

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Since Ostrom offers electricity at cost price, we charge a fixed fee of 6 € per month in addition to the base rate that everyone pays.

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Spot Price / Market Price

This is the price at which electricity is traded short-term on the power exchange (usually hourly). It is subject to significant fluctuations. With dynamic tariffs, hourly prices are passed on to end customers – creating savings potential through targeted usage.

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Cost Price

The price at which a provider purchases electricity and passes it on to you – without profit markup. Some providers (like Ostrom) offer electricity at cost price and only earn from the base rate. This is particularly transparent and cost-effective, especially if you have high consumption.

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Power Exchange (EPEX Spot)

The European power exchange where electricity is traded for short-term needs (day-ahead or intraday market). The prices formed there directly influence dynamic tariffs. High renewable energy levels lower exchange prices – benefiting customers.

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Grid Fees

Charges for using the power grids – they make up a significant portion of electricity costs. There are grid fees included in the monthly base rate and usage-based grid fees charged per kWh. Usually, grid fees per kWh are fixed. However, if you have controllable devices under §14 EnWG, you can also apply for variable grid fees:

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• Fixed Grid Fees: Constant amount, independent of consumption behavior.
• Variable Grid Fees: Can vary depending on time of day or grid load.

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In the future, variable grid fees combined with a dynamic tariff can enable significant savings when you use electricity during grid-relieving times.

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Basic Supply Provider

The basic supply provider is the legally designated energy provider in your region that automatically supplies you if you don't choose another provider. They ensure your power is never disconnected. Basic supply is relatively expensive, which is why switching often pays off and can significantly reduce your electricity bill - with Ostrom, even transparently and flexibly with electricity at cost price and monthly cancellation options.

📈 Sustainability & Policy

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CO₂ Balance

Indicates how many greenhouse gases are caused by certain activities (e.g., electricity consumption, travel). A green electricity tariff or the use of PV systems helps improve your own CO₂ balance – a contribution to climate protection. At Ostrom, you get affordable and TÜV-certified green electricity at cost price.

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Energy Transition

The transformation of the energy system away from fossil fuels (coal, gas) towards renewable sources like wind and solar. The goal is a sustainable, climate-neutral, and independent energy system. Customers can actively participate through their own PV systems or green tariffs.

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Smart Meter Rollout

This is what the gradual installation of smart meters (or intelligent metering systems) in Germany is called. These meters enable transparent consumption analysis and are prerequisites for dynamic electricity tariffs or automated energy management. This can reduce costs and avoid CO₂ emissions in the long term.

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§14a EnWG

This regulation in the Energy Industry Act allows grid operators to temporarily reduce power to certain controllable consumption devices (e.g., heat pumps, wallboxes) when grid overload threatens. In return, customers receive reduced grid fees – resulting in cost savings with flexible control. For you, this means more opportunities to reduce your electricity costs if you can control your consumption devices.

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Sector Coupling

Describes the intelligent connection between electricity, heat, and mobility. For example, excess PV electricity can be used for heating (heat pump) or charging an electric car. This replaces fossil fuels – and often reduces costs.

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EEG (Renewable Energy Act)

The EEG promotes the expansion of renewable energies in Germany. It regulates, for example, the feed-in tariff for solar power and secures investments in clean energy. Many projects were financed through the EEG surcharge – today, end customers usually no longer pay an EEG surcharge.

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Climate Neutrality

The goal is to achieve net zero climate impact through the prevention and offsetting of greenhouse gas emissions. For consumers, this means switching to green electricity, PV systems, or energy-efficient devices, among other things. This not only helps avoid CO₂ but often also reduces costs.

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