Energy crisis in Europe: Which countries have the cheapest and most expensive electricity and gas?
Annual energy inflation in the EU reached a record level following Russia’s invasion of Ukraine. The annual energy inflation rate exceeded 40 per cent in June 2022, and then prices began falling gradually.
In February 2023, energy inflation was considerably lower (16.6 per cent) compared to the same period in the previous year (28.7 per cent).
However, many households and businesses still struggle with the cost of energy. European governments have allocated significant support to households and businesses to mitigate the impact of larger energy bills in the midst of overall cost-of-living crises.
Which countries have the lowest and highest electricity and natural gas prices? How much funding have governments in Europe allocated to shield households and businesses from the energy crisis?
Winter has almost ended in Europe. Households will soon be relieved of the bulk of their energy bills as their main use of energy is for home heating (63 per cent of final energy consumption in the residential sector in the EU in 2020).
However, energy for other purposes such as lighting, heating water, and cooking remains a crucial necessity. The EU’s efforts to diversify its sources of Russian gas stepped up dramatically.
In February 2023, residential electricity prices including taxes in the EU varied from 9.2 €/kWh in Hungary to 49.9 €/kWh in Ireland according to the Household Energy Price Index (HEPI). These prices reflect the costs in the capital cities of each country rather than the average rate.
Ireland was followed by Germany (49.5 €/kWh), the UK /48.5 €/kWh) and Italy (48 €/kWh). At the bottom, Hungary was followed by Malta (12.3 €/kWh), Croatia (14.4 €/kWh) and Bulgaria (15.3 €/kWh)
The EU average was 28.3 €/kWh. Prices were lower in France (26.7 €/kWh) and Spain (24.1 €/kWh) than the EU average.
Electricity prices according to purchasing power standards (PPS)
When adjusted to purchasing power standards (PPS), the prices change, but the countries with the highest and lowest prices largely remain the same. PPS is an artificial currency unit that eliminates general price level differences between countries. Theoretically, one PPS can buy the same amount of goods and services in every country.
In February 2023, the residential electricity prices according to PPS ranged from 14.1 €/kWh in Malta to 51.6 €/kWh in Czechia. The countries within the top five remained the same, although their spots in the ranking changed.
Czechia was followed by Italy (49.1 €/kWh), Germany (44.5 €/kWh), Ireland (41.6 €/kWh), and the UK (41.5 €/kWh).
The EU average was 30.8 €/kWh. The rankings of Bulgaria and Romania in PPS are considerably higher compared to the rankings by current prices.
Prices in PPS were lower in all four Scandinavian countries than the EU average.
Natural gas prices are lower than electricity prices
Measured in €/kWh, residential natural gas prices including taxes were lower than electricity prices in the EU. Gas prices varied from 2.5 €/kWh in Hungary to 30.1 €/kWh in Sweden.
Similar to electricity, gas prices were also relatively higher in Germany (22.3 €/kWh) and Italy (20.9 €/kWh) in February 2023.
Among the countries with the cheapest gas prices, Croatia (5.2 €/kWh), Slovakia (6.1 €/kWh), and Romania (6.3 €/kWh) followed Hungary.
Electricity prices versus gas in France and Spain
While electricity prices were lower than the EU average in France and Spain, gas prices were higher than the EU average at current prices.
In February 2023, residential gas prices based on PPS varied from 4.3 €/kWh to 25.2 €/kWh in the EU. The EU average was 14.1 €/kWh. Germany and Italy were among the top four countries in terms of highest gas prices in PPS, similarly to the current prices.
While France and the UK ranked slightly above the EU average in terms of current prices, their rankings based on PPS were lower. The PPS ranking of Bulgaria was also significantly higher compared to the general price level.
Most and least government support for electricity and gas bills
The rising wholesale energy prices prompted governments in Europe to take measures to protect households and businesses from direct financial impacts. According to Bruegel, a Brussels-based think tank, the fiscal support rolled out by 29 European countries (27 EU Member States plus the UK and Norway) to shield citizens and firms from the energy crisis was worth at least €758 billion from September 2021 to January 2023.
Germany’s support equal to 41 per cent of the EU total
This support totalled €646 billion in the EU as a whole. Germany, a heavily gas-dependent country, earmarked €265 billion in support, corresponding to 41 per cent of the EU total.
Germany was followed by the UK (€103 billion), Italy (€92.7 billion) and France (€92.1 billion).
Considering the level of support as a percentage of gross domestic product (GDP) and per capita can provide more meaningful data for understanding the lowest and highest levels of government support.
Allocated funding as percentage of GDP varied from 0.5 per cent in Denmark to 7.4 per cent in Germany. Germany was followed by Malta (6.8 per cent), Bulgaria (5.7 per cent) and Austria (5.3 per cent).
At the bottom of the list, Finland (0.6 per cent), Cyprus (0.9 per cent), and Ireland and Sweden (both 1.3 per cent) follow Denmark. Norway’s support was equivalent to 2 per cent of the GDP. This suggests that government support in Scandinavian countries has been comparatively lower in terms of GDP percentage.
This figure was 3.8 per cent in the UK and 3.7 per cent in France.
Germany has earmarked more than €3,000 per capita since September 2021
Between September 2021 and January 2023, total support to households and firms on a per capita basis varied from €233 in Cyprus to €3,732 in Luxembourg. Germany (€3,179) ranked second.
This figure was €2,375 in Austria and €2,257 in the Netherlands, while it was €1,530 in the UK and €1,358 in France.
What is HEPI?
The energy prices in this story are based on HEPI data. The Austrian energy regulator (Energie-Control) and the Hungarian Energy and Public Utility Regulatory Authority (MEKH) commissioned VaasaETT to compile and publish electricity and gas price rankings for 33 European capital cities on a monthly basis.
That project is known as HEPI, and it is intended to address the persistent lack of current, frequently updated, and methodologically reliable information on household prices for both electricity and gas at the European level.