Energy

How You Will Benefit from the Strompreisbremse in Germany

By

M. Martensen & R. Kunkel

23.12.2022

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How You Will Benefit from Germany’s Strompreisbremse (Energy Price Brake)

Wholesale energy prices have never been this high. Here at Ostrom, we’ve also had to increase our prices throughout the year in response to this energy crisis—but in keeping with our One Fair Tariff (unique in Germany), as wholesale prices decrease, we’ll decrease our prices too (as we did on 15.12.2022).

Despite the recently falling prices, German consumers were hit hard in 2022. To provide some relief, the government has responded with an energy relief package called the Strompreisbremse, which translates to “Energy Price Brake”.

How Does It Work?

On paper, the Strompreisbremse is simple:

  • 80% of your base consumption has a fixed unit price of 40 cents per kWh.
  • The remaining 20% is charged at the rate determined by your energy provider. If you’re with Ostrom, this is on average 53 ct/kWh, which is the market price as of 15.12.22.

When Does It Take Effect?

Officially, the Strompreisbremse begins January 2023. However, the law was adopted not long before the end of 2022, and it takes time to implement all requirements. Because of this, your monthly deposit will be automatically adjusted from March 2023 onwards. Any difference from January and February will be balanced retroactively, most likely in March 2023.

Why the 80% 20% Split?

The idea is that you’ll be relieved of high energy bills while still having the incentive to reduce your energy consumption. This is why the Strompreisbremse is calculated using your base consumption from 2022.

For Example:

  • The grid forecasts that your annual base consumption is 2000 kWh.
  • 80% of 2000 = 1600. So 1600 kWh is capped at 40ct/kWh.
  • The remaining 400 kWh is charged at the market rate (currently around 53 ct/kWh if you’re with Ostrom).

But if you consume 10% (=200 kWh) less than was forecasted by the grid, then:

  • 1600 kWh is still capped at 40 ct/kWh.
  • The remaining 200 kWh is charged at the market rate (approx. 53 ct/kWh).
  • And, of course, you won’t be charged for the 200 kWh you managed to save.

Better yet, if you manage to consume 20% less electricity than forecast, you win! The unit price for every kWh you use will be capped at 40 ct/kWh.

How Does Ostrom Know My Base Consumption?

The local grid forecasts your annual base consumption for 2023 by reading your meter to determine how much you consumed in 2022. The grid then sends this number to Ostrom, and we must use that to calculate the 80%.

If you just moved in—especially if you moved to a new build completed in 2022—then the forecast could be a little off:

  • Just Moved: The local grid still reads your meter to make its annual consumption forecast, but it will include the consumption of any previous tenants in 2022, which could differ from your household’s consumption.
  • New Build: The grid will still send an annual consumption forecast, but in this case, it’s tough to predict how high/low that will be.

Unfortunately, there’s nothing we can do about this, as it’s up to your local grid to make the forecast.

If you only switched to Ostrom recently, it won’t affect your consumption forecast because the local grid takes consumption readings from your meter, which has nothing to do with your electricity provider.

How Much Will I Save?

If you’ve read this far, you’ll know the savings will differ depending on a few things. Below you’ll find some calculations based on consumption estimates for 2-person household, but we’re also improving our tariff calculator to include the Strompreisbremse—so stay tuned!

At market rate 41 ct/kWh:

  • Yearly cost without Strompreisbremse are around: 943€
  • Yearly cost with Strompreisbremse are around: 847€
  • You would save 69€

At market rate 50 ct/kWh:

  • Yearly cost without Strompreisbremse are around: 1150€
  • Yearly cost with Strompreisbremse are around: 925€
  • You would save 225€

Do I Need to Do Anything?

Absolutely nothing. We take care of every step and are already working with our external vendors to prepare everything and ensure we meet all legal requirements. We will inform all our customers regarding any changes once everything is finalized.

How Does It Work for Suppliers?

Ostrom, as a supplier, will receive the Strompreisbremse funding from the transmission system operator in March 2023. This amount is also based on the grids’ annual consumption forecast. This subsidy pot consists of excess profit tax from energy generation companies and some government funds.

Any Questions?

You can always reach out to us in the live chat or at hallo@ostrom.de.