How is the energy price established?
The energy world is a complicated one for many businesses. For example, you have to deal with both an energy supplier and a grid operator. In addition, there are many factors that affect the price you pay for your electricity or gas. On this page, we explain in a nutshell how the energy world works.
Energy price insight
The above data are based on an annual consumption of 200,000 kWh with tariffs of 0.2 €/KWh standard tariff and 0.15 €/KWh low tariff. The customer owes PZEM a fee for supplying the profile, taking over programme responsibility and bearing any imbalance costs.
There is also the energy tax, a tax levied by the government on the consumption of electricity and gas. We are in charge of collecting this tax. Energy tax rates are set annually by the government.
The Renewable Energy Storage (RES) is a government levy on the consumption of electricity and natural gas. This surcharge is designed to encourage the financing of renewable energy production. We are in charge of collecting this surcharge.
Finally, there is sales tax (VAT 21%). Converted, this constitutes about 17% of the total amount. Our energy price can be divided into two categories: the contract price + several taxes.
Factors determining market price of energy
How the market price of energy comes about is a complicated story. There are many factors that influence the market price: fuel prices of power plants, for example. But also market demand, economic developments, the price of CO2 and weather influences.
The balance between supply and demand plays a crucial role in the price of energy.
Challenges in Energy Storage: As large-scale energy storage is still limited, balancing supply and demand remains a challenge.
Increasing Role of Renewable Energy: The supply of solar and wind energy is becoming increasingly determinant. However, this also causes price fluctuations due to dependence on weather conditions
Weather directly affects both the demand for energy and its production.
Extreme weather patterns: Lack of wind or extreme cold can lead to higher energy prices due to reduced production and increased demand.
Temperature: In warm weather, the demand for gas falls, while in cold weather the demand and hence the price rises.
Renewable energy production: sunny days increase production from solar panels; windy days boost energy from wind farms.
International developments can significantly influence energy prices.
Influence of Conflict: Wars, sanctions and economic conflicts can affect the availability and price of energy resources such as gas and oil.
Import dependency: Reducing gas production in Groningen has made the Netherlands more dependent on foreign energy sources.
Find out more?
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