High Electricity Costs and Negative Energy Prices #

Back in 2022, European electricity prices went up dramatically and have stayed high throughout many European countries ever since.¹ And while Austria continues to enjoy manageable electricity prices when adjusted for purchasing power, the rise in costs in 2025 due to several factors was still strongly felt by the general population.²³

On the other side, due to the accelerating expansion of renewables energies, wholesale electricity prices fell dramatically, especially for specific hours of the day, which can be seen in the following graph.

It shows the average weekly wholesale energy price per kWh including VAT in Austria with the dashed line indicating the static price (13.8ct/kWh) of my electricity provider, which was one of the cheapest available at that time.⁴ One can see the familiar pattern of high prices in the morning and evening when people are getting ready for or come home from work, and lower prices during the night and midday. Furthermore, at the end of the week, electricity demand drops and thus also prices fall significantly. All of these differences are potential opportunities to reduce one’s electricity bill.

And with the emerge of dynamic electricity tariffs⁵⁶, consumers today are given the choice between continuing to pay a fixed rate or switch to a variable rate directly tied to the wholesale electricity price, giving them a clear incentive as to when they should consume electricity.

More Price Information #

While the daily and weekly pattern we saw in the first plot is present throughout the year, average prices do not convey the wide price spectrum and its strong seasonal aspect, which can be better spotted in the next plots.

Looking at the overall price distribution on the left, we can see prices scatter widely but with a clear majority of 66.8% of all hours of the last year occurring below my static price, 15.4% of all hourly price happening below 50% of my static price and 343 hours, i.e. 3.9%, even seeing negative prices, meaning you would have gotten paid to use electricity during these times. Unfortunately, as we can see in the right plot, these low and high prices are not distributed equally throughout the year, but instead are highly depended on the season with extremely low prices happening almost exclusively during spring and summer while extremely high prices almost exclusively occur during fall and winter. But this is not as bad as it seems at first glance as the total number of hours with extremely high prices, .i.e. above 2x my static price, is miniscule, making up less than 1.5% of all hours of a year.

What does this all mean so far? Paying wholescale electricity prices does not represent a clear advantage at all times, but significant prices differences throughout the day, week and season potentially enable opportunities for cutting electricity costs by adjusting one’s consumption pattern.

My Own Consumption Pattern #

So simply switching to a dynamic market tariff and paying wholesale electricity prices isn’t enough as we saw in the graphs before. While you benefit from low prices around noon and on weekends, you would pay extra during the morning and evening peak. Thus, your goal has to be to shift as much electricity consumption away from times with high prices to times of the day with low prices. But this is easier said than done and, as I will argue further down below, a lot comes down to your living situation, not just your willingness to change your behavior. In my case, as a person living in an urbanized area, who does not own an electric car or heat his home electrically, the only appliances that are sufficiently powerful and controllable are the dishwasher, the washing machine and the electric stove, which I would discount quite a bit as I do not want to skip dinner because electricity prices are too high. Of course you can try to micro-optimize by only charging your phone during noon or turn off any lights immediately when leaving a room, but this won’t move the needle a lot. On the other side, if you have large controllable electrical consumers, you are in a much better situation to shift your consumption, but I would claim that many people are in a similar situation as I am, with little room for further optimizations.

Despite this limited control, I managed to shape my daily consumption curves to consume most during times with low electricity prices.

Consumption is lower during weekdays and higher during the end of the week, which is to be expected and also beneficial for using a dynamic tariff, because, as we have seen in the weekly average price graph above, Friday, Saturday and Sunday have slightly lower prices throughout the day. Even more importantly though, one can see a clear consumption peak around noon which perfectly coincides with the daily price valleys, meaning I regularly would have paid substantially less during these times compared to my static electricity tariff. But while this consumption pattern looks quite promising for the case of using a dynamic tariff, it should be noted that it is also highly personal. If you have never thought about when you turn on specific home appliances, your consumption curve will most likely look much more similar to the average weekly price curve, because that’s the whole reason behind the morning and evening peak - people use a lot of electricity during these times which results in high demand, which leads to higher prices.

So while it is great to see that my average consumption throughout the week was always highest when prices were lowest, it does not necessarily tell the full story as we have seen in the price distribution visualization. Thus, I also plotted at which price points most of my electricity consumption happened.

This representation tells us way more about how successful I was at using electricity when it it cheap. For more than 65.1% of my overall consumption the wholesale electricity price was below my static price. Even better, more than 16.6% of my usage happened at prices below 2.5ct. That’s a 81.9% saving over the static price for quite a big portion of my overall consumption.

A First Savings Estimate #

Given these figures, I wanted to make a naive estimate to see how close or far I would be from the measured and calculated result in the end. My guesstimate goes as follows: I will save 81.9% on 16.6% of my electricity use and assume that the rest, i.e. 83.4%, happens at my static price, which is not that unrealistic considering the bell-shaped consumption curve around my static price and that the kWhs consumed at extremely high prices is relatively low.⁷ Based on these assumptions, a household with my consumption distribution would pay 18.1% of the static price for 16.6% of its consumption and 100% of the static price for the remaining 83.4%, resulting in an overall savings rate of 13.6%⁸.

According to https://www.e-control.at/tarifkalkulator, an average household in Austria consumes around 4725kWh of electricity per year and pays 1456€ for the case of having the same non-dynamic electricity tariff as I am. Thus they would save 1456€ * 0.136 = 198.0€. Smaller households obviously have lower consumption and thus lower overall costs, which in my case turns out to be around 384€ for around 850kWh of electricity used. Here the savings would amount to 52.2€⁹.

13.6% of savings sounds pretty good, but unfortunately, even in the best case scenario, where households would be able to shift even more of their consumption to times of lower prices, they still would only be able to reduce their overall electricity costs by a much smaller portion. This is because the energy price is only one part of the overall costs consumers pay for the use of electricity as we will see in the next section.

The Electricity Market is not a Supermarket #

So far, we only looked at a single aspect of the electricity market, i.e. the energy price, but to be able to understand why saving on one’s overall electricity bill is actually much harder then outlined so far, we have to dig a bit deeper. Normally when you buy a good in the supermarket, it is pretty straight forward: product price * quantity. It is that simple, because all the implicit costs like the logistics, storage, etc. are bundled together with the cost of the product itself. This is different from the energy market, where, since the liberalization of the energy markets around 2000¹⁰, a clear distinction between energy generation and transmission has to be made.

This means that, today, the total electricity costs in Austria and most European countries consist of three components: one for generation, one for transmission and one for taxes. Here is a short summary for each of them:

1. Energy costs:
   • The price you pay your electricity provider for the electrical energy you consume
2. Grid fees:
   • This goes to the grid operators, who are responsible for delivering the electricity you need, when you need it
3. Taxes and duties:
   • As the name suggests, this portion includes widely different taxes and often gets distributed among the federal government, the states, and cities and municipalities

So, in reality, when you pay your electricity bill, your money actually gets divided among numerous completely different entities. And while their exact share of the overall electricity cost can vary slightly from year to year and depends on several factors, roughly speaking, each of these components makes up about one-third of your electricity bill in Austria¹¹. For smaller households like mine, you can even find yourself paying more in grid fees than for the actual electricity itself as you can see in the plot below.

Updating my Savings Estimate #

Regardless of the exact percentages, the important aspect is that the only component you can influence without reducing consumption or moving to a new city or country is the price you pay for the energy itself. Let that sink in; in my particular case, the part that I can influence not even makes up 40% of my overall electricity bill. Referring back to my former savings estimate of 13.6%, this means that in the best case, I would only be able to save around 384€ * 0,369 * 0,136 = 19.3€, or just around 5.0% of my overall costs. And while the energy costs for the four person household make up 46.5% of their overall bill, this would still only result in savings of 1456€ * 0.465 * 0.136 = 92.1€ or 6.3% of their total costs. So after this small detour, my savings estimates need to be adjusted down from 13.6% to 5.0% for my personal case and to 6.3% for a bigger household with a similar consumption pattern.

But enough of price and consumption analysis and explanations of the electricity market. How much money would I have actually saved by switching to a dynamic electricity tariff?

Would a Dynamic Electricity Tariff Have Saved Me Money? #

When I turned on the quarterly-hour measurements for my smart meter and started paying more attention to when I use my electrical appliances I was quite optimistic to be able to save a decent amount of money on my electricity bill. Unfortunately, the more I looked into the whole topic, the more it became clear that achieving this goal is actually much harder than originally thought. But now that I collected a full year of actual consumption and price data, how did I do?

For the comparison I use my current electricity provider’s static tariff disk.energy Strom, which was and still is one of the cheapest options without considering any one-time switching discounts, and compare it to the price I would have paid using the cheapest dynamic tariff as of time of writing this article - AAE Naturstrom SPOT Stunde II.

The following graph compares the two different tariffs on a month to month basis with the static tariff on right and the dynamic one on the left respectively.

The base fee refers to costs regardless of consumption, while the working price is the amount of electricity used times the energy cost, which changes every hour for the dynamic tariff while staying the same for the static tariff. Note that I only show the energy costs in this and the following plot as the grid fees and taxes only depend on the total consumption and are thus independent of the electricity provider.

As one would expect, energy costs for the dynamic tariff are lower from late spring through early autumn, but also quite a a bit higher for late autumn and throughout the winter months. Looking back at the seasonal price distribution from earlier, this really comes as no big surprise.

However, based on this representation, it is hard to spot a clear winner yet. Thus, lets look at the whole year in aggregate.

What is this? A tiny saving of 6€ over a whole year, that’s are mere 4.2% savings rate regarding energy costs and an almost negligible 1.6% savings rate in terms of overall electricity costs. This clearly fell short of my rough savings estimate of 5%.

Why is that? Obviously, my estimate must be wrong! But even though it was quite vague, I would argue that this is not the reason why my estimate was so far off. You see, electricity providers with dynamic tariffs do not sell you electricity based on the actual wholesale energy price, but add a markup for every kWh consumed to compensate them for the cost and the risk associated with buying the right amount of electricity at every time of the day for all their customers¹². For example, my selected provider AAE Naturstrom charges a price markup of 1,56ct gross per kWh consumed¹³, which adds an additional cost of 13.3€ for the dynamical price tariff that was not considered during my back-of-the-envelope calculation. If we subtract this markup, the actual saving would have been 19.3€. That is a 13.6% savings rate regarding energy costs or a 5.0% savings rate regarding the total electricity costs compared to the static tariff. So it seems my estimate was actually spot-on. Nice!

All results are summarized again in the table below.

Now, one might wonder how consistent these results are, given that both my consumption pattern and the general wholesale electricity price level might change over time. Fortunately, as preparing the article took longer than expected, I continued to gather data, allowing me to explore the stability of my findings. The total savings rates for rolling year periods are 1.4% (Oct 24 - Sep 25), 1.0% (Nov 24 - Oct 25), 1.2% (Dec 24 - Nov 25), 1.8% (Jan 25 - Dec 25), and 1.7% (Feb 25 - Jan 26), clearly suggesting that the initially proclaimed savings rate of around 1.6% is a plausible indicator of the overall savings potential, rather than merely a result of the originally selected time frame.

Conclusion #

So, what to make of this whole experiment?

Despite the big electricity price differences throughout the day, with most hours below my static price, numerous hours even negative and more than 65% of my total consumption happening below my static price, it still seems to be really difficult to save a substantial amount of money by using dynamic tariffs. This is quite different to what many electricity providers like spottyenergie or aWATTar claim on their website.

This has several reasons, which I already touched upon, but want to summarize here again.

1. Wholesale electricity prices are mostly low during spring and summer, but often much higher during winter. This is disadvantageous as most households will spend more time inside and thus consume more electricity during winter than in summer. So while you might save some money during certain months, you pay more in others as we have seen in the monthly energy cost per provider plot.
2. Shifting one’s electricity consumption is actually much harder than one might think. Often a big part of electricity use is some kind of base load that comes from appliances that run all the time like freezers, fridges or other devices that remain in standby mode. For other appliances like electric stoves, dishwashers or washing machines, where one theoretically has full control over, it is nonetheless often difficult to adjust their use around low electricity prices in practice. Consider it this way: If your daily rhythm does not dramatically differ from the classical one of getting up in the morning and coming home from work in the evening, you will almost inevitably use quite some energy during the morning and evening price peaks. This is especially true for smaller urbanized households where most of their electricity consumption comes from these appliances. On the other side, households with large controllable electricity consumers like electric cars or a heat pumps can shift much larger amounts of their overall electricity consumption much more easily.
3. The cost of the actual energy used represents a much smaller part of one’s overall electricity bill as one might think. Once again, this favors larger households with higher consumption where energy costs make up 50% of their overall bill compared to smaller households where its share can be even less than 40%. Or, to put in another way: 50-60% of your overall electricity costs are static, i.e. they depend only on the amount of electricity used, not the time, regardless if you have a dynamic tariff or not.

Dynamic Electricity Tariffs, a Marketing Gag? #

So, are dynamic electricity tariffs just a marketing gag? No, I would not say so, but several factors have to come together for such a tariff to actually make sense. As already pointed out, households have to have a high electricity consumption, e.g. through a heat pump or an electric car that is charged at home and quite some flexibility for when to use them. It might also be worthwhile for farms that have a high electricity usage over summer e.g. for drying crops or artificial watering and little consumption during winter. But for small urbanized households like mine with their low overall consumption and little room for flexibility, I would argue that a potential saving of a few euros per year is not worth the effort of having to pay attention when to use electricity. Even more, I think it is highly likely that the only reason why the dynamic tariff came in cheaper as the static one is that I was actually able to shift a sizeable portion of my overall consumption to times of low prices, meaning that most households with the same yearly power usage probably would have not saved any money at all.

So what does this mean then? For me personally, I will stick to my static tariff as it became clear that there is almost nothing to gain by switching to a dynamic pricing model. On a more general note, I find the results quite unfortunate. As the world shifts to ever more renewables and thus more intermittent energy production, it would be beneficial for the efficiency of the energy industry as a whole that consumers act upon this constant change by consuming more when electricity is abundant and prices are low and less when it is not and prices are high. And while the price signal is already here as we have seen, I would argue that it is only worth it for specific groups of households and bigger consumers like factories to act upon it as of today. With high urbanization rates in Europe and elsewhere, providing no incentive for this big group of consumers might result in leaving a huge pool of flexible electricity demand on the table, making the overall energy system more costly for everyone. Regardless of what the future holds, I hope you learned something. I for sure did.