Electricity, gas, fuel: What consumers can expect in 2025

What will change on 1 January 2025 with regard to energy prices?

Several changes are coming together.

Firstly, the government is phasing out some measures, such as the state takeover of gas network costs and the gas price cap. The latter limited the gas price increase to 15 percent compared to the average level in September 2022. The subsidy of 15 cents per litre for heating oil and the discount for wood pellets will also be discontinued. These measures were based on a tripartite agreement from 2022 between the government, the trade unions OGBL, LCGB and CGFP and the business association UEL. The agreement pursued three objectives: Limiting inflation, protecting households and companies from a price shock and accelerating the energy transition.

The electricity price cap agreed at the time will continue until the end of 2025, but will be halved. In other words, consumers are likely to face a 30 per cent higher electricity bill. Parliament passed the corresponding law on 4 December with LSAP and déi Lénk voting against. It affects end customers with a consumption of less than 25,000 kWh per year, i.e. mainly private households and smaller companies.

At the same time, there are changes to the tariff for using the electricity grid. In future, it will be based less on the amount of energy consumed (as before) and more on the power used. There is a simple reason for this: due to the growing electrification of more and more areas of life (heating, mobility, etc.), it is becoming increasingly important to protect the grid from overloads despite the expansion of the infrastructure. According to the ILR, the new tariff model is to be designed to be "more in line with the causer". To this end, consumers will be categorised into different performance classes. Consumers will be able to find this information on their bills from January 2025.

Claude Rischette, one of the ILR's deputy directors, told radio station 100.7 at the beginning of December that around 93 per cent of consumers would probably fall into the lower power category of three kW. According to the climate agency, "the simultaneous use of standard household appliances rarely leads to the reference value of 3 kW being exceeded". This means that at least the impact of this component is likely to be low.

What impact does this have for consumers?

According to Statec estimates, you can expect a 17 per cent higher gas bill and a 30 per cent higher electricity bill for average consumption. A household with a consumption of 4,000 kWh of electricity and 2,400 m³ of gas would have to pay around 670 euros more per year.

Based on electricity alone: For a one-person household with an annual consumption of 1,500 kWh, the annual bill is likely to be 100 euros higher than before (590 euros), including the state contribution. For a family with an annual consumption of 4,000 kilowatt hours, this could mean an increase of 270 euros to a total of 1,150 euros.

The adjustment to the grid usage fee could result in a "moderate increase in grid costs", especially for households with high-performance appliances such as electric cars or a sauna, according to a statement from the Ministry of Economic Affairs. According to a media report, this could be in the order of up to 150 euros per year. Unless you avoid using energy-intensive devices at the same time or programme your vehicle's charging process for a time when the electricity grid is not used much.

What does this mean for the energy transition?

The parliamentary representatives of the majority and opposition do not agree on this point.

In combination with the reduced subsidies for solar systems and the reduced subsidies for electric cars, some members of the opposition fear that this will send the wrong signal to consumers who are thinking about buying an electric car or a heat pump. They argue that the government could have held on to the measure until the expected fall in energy prices from 2026. This would ultimately have been better for the economy as a whole, as it would have slowed down inflation, said Green MP Joëlle Welfring, for example. After all, according to an RTL report from the beginning of December, it cannot be ruled out that two index instalments will be due next year. The director of the Chamber of Commerce had already warned of this scenario, which would cause additional difficulties for companies. In this case, he said, the government would have to find solutions with the social partners. In its economic report of 20 December however, the Statec assumes an inflation rate of 2.1 per cent for 2025, which means that only an index slump can be expected in the second half of the year.

The government, on the other hand, does not see the energy transition in danger: "The transition to electric cars and heat pumps remains financially advantageous compared to solutions based on fossil fuels, " the Ministry of Economic Affairs announced at the beginning of December. The authority backs up its statement with sample calculations to show that, on balance, houses equipped with heat pumps have lower energy costs than buildings heated with gas or heating oil. A family living in an existing building with a heat pump would therefore pay around 600 to 700 euros less in the new year with an electricity consumption of 13,000 kWh than in a house with gas heating (4,000 kWh electricity, 2,460 m³ gas) or oil heating (4,000 kWh/2,755 litres).