With the end of the state tariff shield, Luxembourg consumers will be paying more for their energy in 2025. On our online comparisons, we have already seen increases ranging from +40% to +53% on electricity contract prices. Here's everything you need to know.
In a nutshell:
- Electricity bills will jump by an average of +43% (+53% for some suppliers) at the beginning of 2025 with the end of the tariff shield., This means that the average household will go from €850 to around €1,200-€1,400 a year, despite government subsidies.
- The government releases 171 million euros to support consumers whose annual consumption is less than 25,000 kWh, This includes a 10% increase in the cost-of-living allowance, a tripling of the energy bonus and the perpetuation of the ECI.
- Prices will not fall in Luxembourg in the short term: the increasing use of electricity (electric vehicles, heat pumps, etc.) requires ever greater investment. in Luxembourg's 12,279 km network, which needs to be strengthened to support the energy transition.
The stage is set: electricity bills have already risen by around +43% at the start of 2025.
Claude Seywert, director of Encevo (Enovos), which confirmed a rate increase at an interview on RTL radio and, more recently, in Virgule columns. At the time, estimates were around +30%.
On our electricity comparatorRecently, we have seen an average of +43% on electricity offers. This figure even rises to +53% for certain suppliers.
At issue: the end of the price cap (or "tariff shield"). Until now, this measure has protected Luxembourg consumers from the upheavals of the global energy market since the war in Ukraine.
Whilethe average household currently spends around €850 a year on electricityAccording to Encevo's estimates, this amount would already have reached €1,440 without government intervention.
So how much will prices really rise in 2025?
The initial estimate of +30% for electricity tariffs provided for an additional annual cost of 250 to 300 euros for a family of four.
Here are some examples for other types of household:
- For a flat consuming 1,500 kWh per year: the bill will rise from €490 to €590 in 2025with a government contribution of €110 already deducted
- For a single-family home (4000 kWh/year): the increase will be more marked, rising from €880 to €1150.even after a €300 government contribution.
But please note that these scenarios were based on an average rise of 30% predicted by experts at the end of last year.
We will undoubtedly have to think bigger. A single person could pay €750 a year.
Government response: an increase in aid to Luxembourg
Faced with the scale of the increase, the Luxembourg government has decided to take substantial action. A budget of 171 million euros has been released to support consumers.
This State contribution will be applied automatically to the bills of customers whose annual consumption is less than 25,000 kWh, from 1 January to 31 December 2025.
In addition, the government has introduced a number of complementary measures to protect the most modest households, such as :
- A 10% increase in the cost-of-living allowance
- The tripling of the energy allowance
- Or the continuation and increase of thetax credit equivalent (ECI)
Knowing also thata customer supported by social services cannot be disconnected from the electricity network. Suppliers are required to offer alternative solutions such as payment plans or energy management advice.
More information on this website set up by the government.
Forthcoming changes to network charges
If this increase is solely due to the end of the tariff shield, other changes could lead to further price rises in the future.
The first thing to remember is that the price of an electricity bill breaks down into three main parts:
- The price of electricity itself (20 to 30% of the total)
- The tariff for use of the electricity network (35 to 45%)
- Miscellaneous taxes and charges (25 to 35%)
So the biggest item of expenditure is not the price of electricity, but the tariffs for using the electricity network.
This price is used to develop and maintain the existing network (cables, high-voltage lines, transformer stations, etc.).
A network that needs more investment
There are several reasons why the Luxembourg network needs major investment:
- The current network (12,279 km) needs to be strengthened to support the energy transition
- Increasing demand for electricity (electric cars, heat pumps) requires more investment
That's why 2025 will see the birth of a complete overhaul of the electricity grid pricing system, orchestrated by theLuxembourg Regulation Institute (ILR).
Focus on the new network pricing system
To put it simply, with this new network pricing system, theILR favours consumption during off-peak periods and penalises consumption during peak periods (in order to adapt production to consumption). In plain English:
- Consumers will be classified into specific categories according to their consumption in the previous year
- Each category will be assigned a reference power level which will determine the annual fixed costs.
- Additional costs will be applied if the allocated power level is exceeded.
- The simultaneous use of several energy-guzzling appliances may lead to additional costs
ILR points out that the impact will vary according to consumption profiles:
- For residential customers using standard household appliances: the impact will be negligible
- For households equipped with high-power devices (electric cars, saunas, heat pumps): higher costs are possible.especially for those who will be obliged to consume a lot of power during peak hours.
To sum up, it is unlikely that electricity prices will fall in Luxembourg in the short term. On the contrary: the increasing use of electricity promoted by the government (electric vehicles, heat pumps) is likely to put pressure on the grid and require ever greater investment.
