The Ultimate Guide to Retail Electricity Prices

Learn how electricity price is determined, how Europe is dealing with the energy crisis and how consumers can save money on EV charging with time of use tariffs.

Executive summary

Use the complexity of retail electricity prices to your advantage


Electricity is a heterogenous good over time. Because it cannot easily be stored, its value depends heavily on the time it is delivered. Prices are formed by the merit order, meaning if demand is high, the most expensive generation source sets the price.


Not sure how electricity price is determined? The electricity component usually reflects one-third of an end user’s electricity bill. The rest comes from grid fees, taxes and other surcharges. These are different in every country and change over time.


During Europe’s energy crisis, retail electricity prices soared in every country. Generally, the countries more reliant on gas saw the most significant price hikes.


Monthly imports of natural gas from Russia to the EU dropped by almost 75% in 2022. Lack of supply was a major reason for the price rise. Overall gas consumption in the EU dropped by 17.7%, showing that price incentives can and do change consumer behavior.


Energy tariffs, market conditions and user preferences vary heavily between European countries. And every country is at a different stage of implementing  measures. The UK, for example, offers 30 different smart charging tariffs, while Switzerland offers just one.


Leveraging time of use dynamic tariffs allows electric vehicle drivers to save money in every country. Holistic smart energy management systems are key to integrate renewables and stabilize the grid, while minimizing costs for end users.

Spot market prices vary heavily across Europe

Average electricity spot market prices at 31 May 2023 in €/MWh

Day-ahead prices (the leading market for electricity in the European Union) vary significantly across bidding zones due to different generation sources. Here we see that while bidding zones in Norway, Sweden and Finland experienced negative prices on the last day of May, Poland and Greece had sky-high prices above €100/MWh. Even within Norway, prices varied from minus €0.8/MWh in the north to €51.6/MWh in the south. Prices neared €100 in most southern regions, while Central Europe had mid to low prices.

Electricity prices grew substantially over 2021 and 2022

Average day-ahead Prices for electricity 2019 - 2022

Generally speaking, countries more reliant on gas saw the most significant price hikes during the energy crisis. In Italy, for example, average day-ahead prices rose by over 800% from 2020 to 2022. In contrast, Poland is more reliant on coal-fired power stations and experienced price increases of just 350%. Sweden retained the lowest electricity prices in the EU throughout the crisis. Its high shares of renewable energy in public electricity generation – in 2022 around 64% – clearly contributes to their energy independence and helps protect consumers from price volatility. Government intervention also influenced price increases. Spain and Portugal, for example,  introduced controversial price caps for natural gas used for electricity production, thereby indirectly lowering the overall price of electricity in 2022.

Price is a good indicator of the current electricity mix: the cheaper, the greener.

Price (€/Mwh) vs renewables share in Germany, January to April 2023

Aside from a few outliers, this scatterplot reiterates that power prices drop as the share of renewables (wind and solar) increases, giving consumers a financial incentive to shift their consumption to times when renewable production is high. It also shows that renewables alone are not enough to consistently reduce electricity prices and their volatility. Digital technology is crucial to reduce the outliers and make the trend a more constant downward trend.

Austrian EV drivers could save more than 200€/year with time of use tariffs and smart charging

How costs for EV charging at home can be reduced with time of use tariffs

These calculations are based on the usage trends of an “average” commuter. We assume the commuter drives 11,300 km/year with a consumption of 15 kWh/100km and charges at home 75% of the time. Charging at the cheapest time periods with a smart charging solution enables savings of up to €213 in Austria, to €58 in Norway. The percentage cost reduction ranges from a massive 63% in Sweden to 24% in Norway.

However, because electricity prices vary from day to day and from country to country,  the savings potential could be much higher on any given day. The key to always maximizing the savings is leveraging a holistic energy management system that uses time of use tariffs to always automatically shift charging to the cheapest time period, whenever and at whatever price that may be.

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