4.1
Energy prices
Energy prices are by nature volatile, depending on a number of different factors. Volatility and variability of prices can be observed both in the short- and long-term horizon. In this section, we will focus on the long-term trends across the past decade (2010‑2022), concentrating on the evolution of the last year and leaving the fluctuations across previous years to further considerations.
Residential electricity prices are generally more stable than industrial ones, as the latter are more directly correlated with wholesale electricity prices, with lower additional cost components and taxes. Residential prices are available for some customers in the form of regulated prices and are generally higher due to higher system costs and additional excise taxes and levies. Wholesale electricity prices are linked to a variety of factors, including the variability of fossil fuel prices (depending on the mix of the market considered) and on the eventual carbon pricing. Whether these prices are fully passed on to final consumers is generally dependent on the market rules in place.15
Broadly, we can observe two groups both for residential and industry prices:
countries where prices remained more stable over the years, with 2022 being in line with previous trends
countries that saw a stronger upward trend, and a marked increase over 2019‑2022.
As can be observed in Figure 4.1 and Figure 4.2, most of the countries analysed saw a flat or decreasing trend through to 2022. Noticeable exceptions were the four European countries and Japan, with the exception of German residential prices and French industrial prices.
The strong increase in European countries was partly (and in some instances largely) moderated by the state aid put in place in these countries, while Japan opted to introduce support measures as of 2023 (see section 4.2 for further details). Residential electricity prices in Germany in 2022 remained almost at the level of 2019 thanks to a larger amount of financial assistance to help customers, while over the same period residential prices increased between 8% and 17% in France and Japan and 20% and 32% in Spain and Italy.16 Industry prices increased between 13% and 14% in Germany and Japan and 36% and 39% in Italy and Spain.
The strong increase in European countries was partly (and in some instances largely) moderated by the state aid put in place in these countries, while Japan opted to introduce support measures as of 2023.
15 See section 4.2 for further details on the evolution of wholesale prices in 2022.
16 Residential and industrial electricity prices for France, Germany, Italy and Spain are derived from Eurostat (see Chapter 7 for the individual sources). Residential prices for all four countries are relative to the range 2 500 kilowatt-hours (kWh) to 5 000 kWh. For industrial prices, the most representative band has been chosen to be ID (2 000 megawatt-hours [MWh] to 20 000 MWh) for Germany, IC (500 MWh to 2 000 MWh) for France and Spain, and IB (20 MWh to 500 MWh) for Italy.
Contrary to electricity prices, all countries analysed registered an increase of gas prices from 2019 to 2022, although with more moderate or with stronger impacts (Figure 4.3 and Figure 4.4). The growth of traded gas prices (Henry Hub, Title Transfer Facility [TTF] and Asian spot LNG) started to be seen already during the second half of 2021, due to the combination of several factors, among them a burgeoning economic growth following the end of the Covid‑19 restrictions, a tightening of demand-supply also due to some limited availability of supply, and a cold winter in the northern hemisphere (IEA, 2021b). This led to a steep increase of gas prices, with TTF reaching a level during the second half of 2021 four times greater than in 2019.
After the Russian invasion of Ukraine in the beginning of 2022, the situation tightened further, increasing the pressure on supply and in particular in Europe, with TTF prices that reached a level almost eight times greater than in 2019. The resulting pressure on the LNG market, with much higher demand from Europe, led the Asian spot LNG price to surge almost in sync with European prices (reaching 5.5 times the level of 2019) and the price of exporting countries to also increase, though by lesser extent due to a large availability of cheaper domestic resources, with Henry Hub prices doubling over 2019‑2022 (in real terms). These increases were passed on (partly or entirely) to end users, resulting in the growth observed in all the countries analysed. As for electricity, some countries (in particular European ones) did put in place support measures, resulting in different trends across countries (see section 4.2 for further details).
Contrary to electricity prices, all countries analysed registered an increase of gas prices from 2019 to 2022, although with more moderate or with stronger impacts.
Among the countries with a more moderate impact from 2019 to 2022 are Canada and the United States for both residential and industrial prices, but also Chile and France for residential and Brazil for industry. This lower growth, generally between USD 2/MWh and USD 10/MWh,17 nonetheless represents a significant increase for Canada and the United States (the countries with the lowest prices among those analysed), with percentage increases between 20% and 60%.
The four European countries and Japan saw a much stronger absolute increase from 2019 to 2022 for both residential and industrial prices, ranging between USD 25/MWh and USD 65/MWh, despite the support measures put in place in the European countries.18 While this increase in some countries is comparable in percentage growth to the increase of gas prices in the United States, in other countries such as Italy and Spain the growth was more than twofold, reaching 125% to 150%.
While the increase in some countries is comparable in percentage growth to the increase of gas prices in the United States, in other countries the growth was more than twofold.
Overall, it can be observed that the impact of the energy crisis has been very varied depending on the country analysed, with a clear larger impact for both residential and industrial electricity and gas prices in France, Germany, Italy, Japan and Spain (Figure 4.5).
17 The gas prices in this chapter are expressed in net calorific value (NCV) terms, contrary to the usual reporting in gross calorific value (GCV), for easier comparability to electricity prices. For natural gas, the NCV is assumed 10% less than the GCV.
18 Residential and industrial gas prices for France, Germany, Italy and Spain are derived from Eurostat (see Chapter 7 for the individual sources). Residential prices for all four countries are relative to the range 20-200 gigajoules (GJ). For industrial prices, the most representative band has been chosen to be I4 (100 000 GJ to 1 000 000 GJ) for Germany and Spain, and I3 (10 000 GJ to 100 000 GJ) for France and Italy.