The Federal Government wants to significantly reduce energy prices for private households and businesses. It passed comprehensive resolutions early on to achieve this central goal from the coalition agreement. These initial relief measures are now having an effect: anyone who concluded a new supply contract for electricity and gas in January 2026 will pay noticeably less than before. 

Electricity prices for new customers fell by 6.7 percent to 34.87 cents per kilowatt-hour (kWh) in January. Numerous regional basic suppliers have also announced significant price reductions. The main factor behind this price fall for households are the reduced grid fees. Industry also benefits from this: the electricity price for industrial customers fell by over 12 percent. Gas customers are also benefiting from the abolition of the gas storage levy on 1 January: gas prices for new contracts amounted to 9.66 cents per kilowatt-hour, 4 percent below the price in December.

Getting Germany back on track for growth

These first steps towards lower energy costs will ease the burden on citizens in Germany, strengthen the economy, and help to secure jobs. “We are now lowering energy prices to secure jobs in this country”, said Federal Minister of Finance Lars Klingbeil. “Our top priority is to get Germany back on track for growth.”

The Federal Government has anchored the financing of the relief measures in the budgets for 2025 and 2026. The law regarding the federal subsidy for transmission grid costs in 2026 came into force on 12 December 2025. The amendments to energy industry law for the abolition of the gas storage levy have been in force since 28 November. The amendments to the Electricity Tax Act came into force on 1 January 2026.

Relief amounting to 10 billion euros 

In total, citizens and companies will receive energy cost relief to the tune of 10 billion euros per year – in addition to the existing relief of 17 billion euros provided through the assumption of the former Renewable Energy Sources Act (EEG) levy for renewable energies.

Households that purchase electricity and gas can save an average of around 160 euros in 2026 (based on an annual electricity consumption of 3,500 kWh / annual gas consumption of 20,000 kWh). 

At the same time, the Federal Government must operate soundly and responsibly. “We can only spend the money we have”, emphasised Federal Chancellor Friedrich Merz in a side meeting of the banking industry conference in Berlin at the beginning of July. He said that the goal of reducing energy prices remained despite the steps already taken: “We want to further reduce electricity costs if we have the financial leeway to do so”, said the Chancellor. “This Federal Government will act with honesty.”

This is how the relief for consumers will work: 

• The gas storage levy was abolished on 1 January 2026. Falling gas prices will ease the burden on all gas customers – private households and companies. Lower gas prices also ensure more favourable electricity production from gas-fired power plants. Electricity prices on the market are also likely to fall, as they are geared towards the most expensive energy sources – which is often gas.
• The Federal Government will also subsidise transmission grid fees with 6.5 billion euros in 2026. The lower grid fees have also benefited all consumers and all companies since 1 January 2026.
• The reduction in electricity tax will continue to apply permanently from 2026. This will relieve the burden on more than 600,000 manufacturing companies as well as agriculture and forestry, including small and medium-sized enterprises – from butchers and bakers to energy-intensive companies and the construction industry. This measure will cost the budget around three billion euros a year.