The European Union wants to create a single energy market in Europe. The European Commission hopes that its Energy Union strategy will make the EU’s energy supply more secure, affordable and climate-friendly. But the energy market is highly fragmented, and focused on national interests.
The price that the average European household pays per kWh of electricity has risen from 12 cents in 2005 to 18 cents in 2014. However, the prices in individual countries varies significantly. In Bulgaria and Hungary, households currently pay around 10 cents per kWh. In Germany and Denmark, energy is three times more expensive.
Factors that influence cost include a country’s geographical location, energy resources, and world market prices. But energy policies are increasingly a significant factor.
Energy subsidies are growing across the majority of countries in the European Union. Only Austria and Sweden decreased their subsidies from 2008 to 2012. The rest of the EU increased by 57%. Leading the way? Denmark and Greece, which increased subsidies by over 1000%, and Germany, which accounts for roughly 25% of all energy subsidies in the EU.
But despite more subsidies, electricity prices are still increasing. While household electricity prices have risen by 50% from 2005 to 2014, the average price for industrial consumers has increased by 66%.
These prices also vary significantly across the EU. In Germany and the Netherlands, prices for medium-sized industries have remained fairly stable, increasing by approximately 25%. In the United Kingdom and Poland, however, prices have gone up by as much as 100%.
To build a successful Energy Union, the Commission has a tough job ahead of itself: harmonising the different national policies, building a transnational infrastructure, and getting member states to work together, towards a common goal.