According to our estimates, if gas prices continue to be high, this means that heating costs for private households will increase fivefold. In contrast, the price increase due to the much-discussed gas levy is almost negligible.
The heart of the problem? A whole chain of events is reducing the supply of energy: Due to the Russian war of aggression and the extensive halt to deliveries by Gazprom, the supply of gas is scarce throughout Europe.
The hot summer has also restricted the electricity production of hydroelectric power plants in many places. In addition, electricity production in France is also severely restricted due to the failure of or maintenance work on nuclear power plants.
This scarce supply is now meeting demand that is falling too slowly. The high price is an expression of how far apart availability and demand for energy are currently.
Saving premiums pay off for consumers and suppliers
Since an increase in gas imports from other countries and an expansion of electricity generation is hardly possible in the short term, there is basically only one way for the coming winter: to reduce energy consumption, and to do so quickly.
Since almost half of the natural gas in Germany is used by private households, offices and small businesses for heating and for the provision of hot water, one of the most pressing energy policy questions these days is: How can effective, understandable and fair incentives be created that encourage people to save energy ?
This is where the energy companies themselves come into play. You can create additional savings incentives easily and unbureaucratically: with savings bonuses. Utilities should pay their customers when they reduce their energy consumption.
Specifically, at today’s prices, gas suppliers could pay a customer with average consumption an energy saving bonus of several hundred euros per year if they reduce their consumption by ten percent.
For electricity, the premium could still be around 100 euros with a similar reduction. Higher savings should be associated with higher premiums accordingly.
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What initially sounds paradoxical is common practice in some American companies and, in view of the increased prices, is also economically advisable for many suppliers.
A win-win situation for consumers and suppliers that results from the latter’s business model: Energy suppliers forecast their customers’ consumption and procure the corresponding amounts of energy for the future on the energy exchanges.
In the face of increased prices, they can benefit if their customers’ actual consumption is lower than forecast. Because the unused energy can be resold at a profit, for example to other suppliers or industry.
The premium can amount to several hundred euros per year
A year ago, for example, a municipal utility had to pay five cents for a kilowatt hour of gas, but the market price is currently regularly over 25 cents. Every kilowatt hour procured a year ago and planned for its own customers but not used today can be sold by the supplier on the market and earn 20 cents.
An average household with a gas connection uses around 17,000 kilowatt hours a year. If he reduces his gas consumption by ten percent, the supplier can currently sell the amount of energy saved for 340 euros. The premiums for households could therefore also be in this range.
Such a savings premium does not cost any tax money, and the suppliers usually do not have to pay extra. The premium simply passes on the high resale value of the energy to those who reduce their energy consumption.
A problem that can be solved is the lack of transparency about the development of consumption. Admittedly, this makes planning, prognosis and evaluation of the measures more difficult. Meters are currently only read once a year, so it is not immediately clear whether and under what conditions customers are actually reducing their consumption.
However, a simple incentive for customers to transmit their meter reading without further ado can remedy the situation: Anyone who informs the energy supplier of the meter reading – for example via an app – automatically receives a lottery ticket for each weekly upload.
The winners could get prizes of 1000 euros or other prizes; the energy supplier benefits from more accurate information about the development of consumption.
The first companies have already recognized the potential. EnBW and MVV reward the reduction in gas consumption during the heating period. Other companies do not seem to have any plans at the moment or are on hold.
Politicians could oblige companies to offer savings bonuses
Against this background, should politicians also become active? There are arguments for this, because the goals of profit-oriented companies do not always coincide with those of society.
For example, companies could keep the savings premiums too low because they want to retain as much of the savings as possible, or simply act too lazily. Companies could therefore be obliged to offer their customers gas savings bonuses.
And at a level that is based on the social value of saving energy, minus a fee and a risk discount. In this way, households can help to overcome the crisis and still earn money in line with the value of the gas they save.
But companies should not wait for politicians. Because if appropriate programs are set up intelligently, they help everyone involved to get through the crisis in the best possible way: society, customers and the companies themselves.
The authors:
Silvana Tiedemann is a research associate at the Hertie School in Berlin and chairwoman of the supervisory board of the Möckernkiez housing cooperative.
Lion Hirth is Professor of Energy Policy at the Hertie School in Berlin and Managing Director of the consulting firm Neon Neue Energieökonomik.
Axel Ockenfels is a professor of economics at the University of Cologne and spokesman for the center of excellence for behavioral research there.
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