As Europe grapples with fluctuating energy prices, a new report has revealed significant disparities in electricity distribution costs across major capital cities. These results show that cities such as Budapest and Amsterdam bear a heavier burden of distribution charges. By comparison, cities like London and Madrid have significantly less burdens. This analysis paints a daunting picture of the overwhelmed state of energy costs. It further energizes essential discussions around who bears these costs and how they impact consumers and the competitive electricity market.
The report shows that London and Madrid have the lowest distribution shares of all Europe’s big five economies. London only achieves a distribution share of 18%, and Madrid is at 22%. Budapest leads the pack with an outrageous distribution cost taking up 65% of its monthly electricity bill. With this allocation, the PPA comes to an expense of 5.94 cents per kilowatt-hour (c€/kWh). This difference highlights the starkly different ways energy is produced and distributed around the country and how that affects consumers.
Distribution Costs Across Major Capitals
According to Infrastructure Commissioner Violeta Bulc, the report shows that the European Union’s average allocation share is currently at 28%. Interestingly, the EU capital cities of Hungary and the Netherlands are listed among those with the biggest shares. Amsterdam, for example, has a distribution share of 39% if you exclude tax refunds from the equation. Other cities leading in distribution shares are Luxembourg City at 46%, Podgorica at 43% and Bucharest at 42%.
In comparison, other cities like Paris and Berlin have much lower distribution shares, at 17% and 16% respectively. This variance illustrates how geographic location and local policies can have a major impact on the cost of electricity for residents. In comparison, Nordic capitals, including Helsinki, Oslo, Stockholm, and Copenhagen have distribution shares of 25 percent or less. In the other places, these shares are between 17% and 23%.
The report underscores a trend in Southern Europe, where cities like Athens and Rome show some of the lowest distribution shares at 15%. These figures suggest that residents in these areas may face less financial strain from distribution costs compared to their counterparts in more expensive cities.
Gas Prices and Distribution Shares
Here’s what we found when we looked at gas prices, which show the same pattern of discrimination across European capitals. The residential end-user gas price distribution share varies widely from a mere 10% in Kyiv to a steep 43% in Bern. Dublin now reports a distribution share just under 32% – further illustrating the disparity in energy costs across the region.
All of these variances, while clearly positive policy changes, do put affordability pressure on consumers. The report exposes the fact that by April 2025, household electricity prices will differ widely. In Budapest they will even go slightly negative at only 9.1 c€/kWh, while simultaneously in Berlin prices will rocket to 40.4 c€/kWh. These types of disparities are not harmless—they can have dramatic impacts on household energy budgets and energy use patterns in the future.
“Disparities among markets are primarily driven by their investment plans and are related to electrification demand, level of RES penetration, distributed generation, the age of the network infrastructure etc.” – Rafaila Grigoriou and Ioannis Korras.
The Impact of Temporary Support Measures
The pressure cooker of the current energy crisis has forced the hand of most European countries. They are taking steps to provide temporary relief to reduce the financial impact on consumers. According to Rafaila Grigoriou, “Since the beginning of the energy crisis, there has been a significant number of temporary support measures that involved the reduction or abolishment of network charges or taxes in European countries.”
These measures have reduced bills for both electricity and gas, many still in effect in some markets. VCE International Program Director Liane Grigoriou points to Slovenia as an example where residential electricity customers have seen positive outcomes from these efforts. Temporary measures are set to expire any day now. This raises doubts about how consumers will be impacted yet again.
“Those have affected both electricity and gas bills and a small number of those are in fact still active in some markets.” – Rafaila Grigoriou.
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