Agora study advises more favorable grid expansion

01.07.2025

Source: E & M powernews

The Agora Energiewende think tank recommends measures with which the German government could save up to 160 billion euros in grid fees by 2045 and keep electricity costs stable.

With targeted reforms to the expansion and operation of the electricity grids, the German government could significantly reduce the planned state subsidies for grid fees. This is the conclusion of a recent study by the Berlin-based think tank Agora Energiewende, which was published on June 30. Agora Energiewende is a Berlin-based think tank that focuses on strategies for a climate-neutral energy transition.

According to the study, the subsidies required from the federal budget to relieve the burden on electricity consumers could be reduced from the previously estimated 197 billion euros to just 35 billion euros by 2045. This would require structural changes in grid operation and cost optimization in grid expansion. In total, the state could save around 160 billion euros by 2045 to achieve climate neutrality. "Attractive electricity prices are the prerequisite for making the purchase of electric cars, heat pumps or electricity-based industrial plants worthwhile - and for permanently reducing CO2 emissions," said Agora Managing Director Markus Steigenberger. A clever package of measures could significantly reduce the costs of building and operating the electricity grid and thus make subsidies from the household budget superfluous in the long term.

According to calculations by Agora Energiewende, without reforms and state subsidies, the burden of grid-related costs for electricity consumers could increase by up to 30 percent in the next ten years. For a four-person household, this would mean that the electricity price would rise from around 13 cents/kWh at present to around 15 cents/kWh. This would correspond to additional annual costs of around 104 euros.

Industrial customers without exemptions would have to expect an increase from the current 5 cents to 6 cents/kWh. For example, a dairy company with an annual consumption of 900,000 kWh would face additional costs of around 8,500 euros per year. According to Agora, the proposed measures could keep grid-related costs at the current level in the long term. The study takes into account all grid-financing components of the electricity price, including the levy for offshore wind farms.

Three central measures

Agora Energiewende identifies three key measures to reduce grid costs. Firstly, overhead lines should be increasingly used instead of underground cables when expanding the grid. This would significantly reduce investment costs. Secondly, the think tank suggests that the federal government should take an equity stake in grid companies in order to reduce financing costs for grid operators.

Thirdly, the study suggests introducing dynamic grid charges. These should encourage flexible consumers such as electric vehicles or heat pumps to use electricity primarily when the grid is underutilized. In this way, peak loads could be smoothed out and costly grid expansion avoided.

"The current distribution of grid costs and levies has grown historically, follows complicated rules and contains numerous exceptions. Nobody knows exactly which players bear which share of the grid fees," says Steigenberger. From Agora Energiewende's point of view, grid fees should be simple, standardized nationwide and dynamic in the future. This would create economically sensible incentives to consume electricity flexibly, relieve pressure on the grids and stabilize costs in the long term.

Contribution to the cost reform of the Federal Network Agency

According to the think tank, the Federal Network Agency's current reform process for a new grid fee system also offers opportunities for a fundamental reorganization. Agora Energiewende has submitted its own statement to the ongoing consultation process. According to the study, the aim is to achieve a cost distribution that is transparent and based on causation.

All grid-related costs - including the costs for connecting offshore wind farms - are to be bundled into one item. This would simplify the previously complex structure of levies and charges. The Agora Energiewende study is entitled "Electricity grid fees - good and cheap. Reducing expansion costs and future-proofing the charging system" and comprises 58 pages. It calculates the development of electricity grid fees up to the year 2045 and provides specific recommendations for policy-makers.
Without measures, rising grid costs threaten to undermine the economic viability of electricity-based technologies and slow down the transition to climate-friendly solutions. "Simple grid fees that also provide economically sensible incentives to relieve the grid should be the aim of the current reform. This saves costs, ensures attractive electricity prices in the long term and enables a modern grid infrastructure as the backbone of a climate-neutral energy system," explained Steigenberger.

More information on the Agora grid cost study is available on the Internet.

Author: Susanne Harmsen