The Usability Challenge of Dynamic Electricity Pricing in Germany

It is quite funny how some of my external family members in Taiwan perceive Germany as this green, innovative and advanced place. While I hate to break their bubble, it seems that the reality paints a different picture: As part of the energy transition to more green and sustainable energy Germany’s took on the goal to rely 80% on renewable energy sources by 2030. Although Germany is on the trajectory to produce and create more green energy, the system is still not efficiently wired for the grid to be stable. In fact, Germany's energy industry has warned  of the risk of power outages if feed-in cannot be controlled in future, as grids could soon be overloaded . This can have even more of an impact during peak electricity times, when many people get ready in the morning before work and in the evening after just returning home.

The solution - Dynamic Tariffs Link to this headline

To stabilize the grid, dynamic or variable tariffs was introduced as a solution to tackle this problem. The concept - Electricity prices change hourly based on real-time supply and demand, instead of fixed rates. In short: when demand is low (at night) and supply is high (lots of solar energy during noon), electricity prices go below the fixed rates. That also means that when demand is high and supply runs thin (peak electricity times) electricity prices go up above the fixed rates.

Typical graph for fixed contracts pricing vs dynamic pricing in a day

Smart private households are already profiting from the cheap times by shifting large energy consumption into cheap electricity times and overcoming expensive hours by using stored home battery during peak times. According to smart home company tado°, households with dynamic electricity contracts that shifted their consumption to the cheapest hours in the first half of 2024 saved up to 34% on electricity costs compared to the average wholesale market price.

And since 01. January 2025 energy providers are legally mandated to provide dynamic or variable electricity contracts to their customers. But even with all of these conditions in place, this concept does not seem to reach the masses - People feel misinformed, misguided and mistrust this concept as a solution for their day to day. There are several factors that have led to this that I’ll break down in detail:

The State of Germany Link to this headline

Problem 1 - Cherry picking of the negative Press Link to this headline

Over the years, dynamic pricing has been followed by a trail of bad reputations. During Dunkelflauten (lit. ”dark doldrums”), periods in which little or no energy is generated due to no sun or wind, push up electricity prices during peak times. The news of high prices in winter times bring a shock that reach big headlines:

Dunkelflauten explode energy prices! Electricity customers pay up to 120ct per kilowatt-hour!

Although these headlines are factually true, the real problem is that people are under-informed on dynamic tariffs and their practical implications. In fact, 81% of Germans still feel uninformed about dynamic tariffs ; with little understanding about the topic, it is easier to instill fear from rare incidents rather than inform how to avert these doomsday scenarios, let alone shine light on the compounding upsides of variable pricing.

Problem 2 - Dumb meters and low smart meter adaptation Link to this headline

Global Smart Meter electricity adoption in February 2024

To benefit from dynamic pricing, each private household needs to install a smart meter. Compared to a regular meter, these smart meters can instantly track energy consumption and provide feedback to how much a regular day consumption would look like through connecting to devices. However, since 2016, there has been no clear standards for metering systems in Germany and led us to have 35 Mio. digital meters installed, 25 Mio. of which that are ‘dumb’ and do nothing other than measure your total consumption; only 2% actually qualify as smart that not only provide detailed consumption information but also support dynamic pricing models.

It all starts with awareness Link to this headline

Without knowing your own energy consumption, it’s difficult to build an awareness of how much electricity is used in the day-to-day. Unlike mobile data, people generally have a fairly good understanding of how many gigabytes they need. On the other hand, kilowatt-hours(kWh) will seem like an abstract unit and is unfamiliar to most. Most people pay a fixed electricity contract, live out their lives and get a shocker electricity bill at the end of the year; meanwhile wondering why electricity prices have gone up. Even when most Germans follow energy-saving behaviors , such as turning off the light (89%) when not needed or lowering the room temperature (70.5%), they cannot immediately quantify how much their change in behaviors impacted their end-of-year bill. Smart meters and integrated apps provide that feedback and can show patterns in behaviors. While a smart meter is essential for the dynamic tariffs to work, first people have to grasp an understanding of their consumption and how it affects their current energy bill before seeing the real gold in using dynamic pricing.

Problem 3 - Entering Information Hell Link to this headline

In my own research to learn more about variable pricing, I found myself sliding down in the information iceberg. What may seem like ‘just a different electricity contract’ easily spiraled into a messy tangle of questions: Is the dynamic pricing for me? > How does pricing work? > Do I need to buy a battery >Which subsidiaries can I get? >What set up is the best for dynamic pricing? > Do I need to know programming?!

My ‘simplified’ version of the dynamic pricing iceberg (There was so much more to go into!)

Let’s unpack one in an example: Link to this headline

• “How is electricity price set up?” (”What is ct/kWh? How much is one kWh?”)
• “Dynamic price makes up 40% of the total electricity price, Network charges (Netzentgelte) are fixed and take up 1/4th of the price”
• A new law that allows for variable network charges that also vary like the dynamic pricing. = Save up extra money along side dynamic pricing in cheap periods. (”How much can I save during cheap times?”)
• Network charges vary from region. “I have to check or contact my local utility company”.
• “What do I need to do to profit from variable network charges?”
• “I need to install a control box for my electric utility company to profit from variable network charges” (Does my local utility company offer this option?)
• I need to register at your local utility company to be able to use them.

Imagine this process for each component adjacent to the dynamic pricing: Heat pumps, EV & Wall boxes, Battery and PV-Panels for the roof, you name it! Even those who want to take action and are willing to learn, are easily overwhelmed by the plethora of information. It takes a lot of time, energy and effort to arrive at the right information, conclusions and actions.

Long story short: Information has to be transparent, streamlined and appear at the right time at the right place.

Problem 4 - There is no one-size-fits-all persona Link to this headline

At first glance, it’s easy to assume that the ‘main’ target audience of tech-savvy individuals would need some convincing. In an interview with my friend, someone with the ideal set up for a dynamic pricing, I realized that the decision process rarely rests solely on the individual. He might already adopt to more energy-saving behaviors but what about other members in the same household? What about his children and his wife that are less informed and are used to electricity to ‘just’ work?

In an anecdote my friend told me:

Our heat pump was set to summer mode, which means it can’t just turn on and off like a typical gas heating system. My wife was feeling cold and asked why we couldn’t just turn up the heat. She was used to quickly warming the house and walking around in a T-shirt.

This alone was a valid reason not to choose dynamic pricing as that would be too much hassle. So, how do we educate and convince those that are less interested but still are involved in the end?

What can we learn from the good examples? Link to this headline

Other countries and companies are already headstrong in dynamic market, so what did they do right?

Sweden started rolling out smart meters since the beginning of the 2000s . By 2010, 91% of of meters could register hourly. Additionally, in 2012 the government installed smart meters free of charge if customers chose to subscribe to a hourly-based electricity contracts. By January 2024, 77 % of Swedish households had some form of dynamic electricity contract. From 2021 to 2023 households with hourly-variable contracts and adapted their consumption saved about 42% on annual electricity costs compared to a one-year fixed-price contract.

Not only did they start early they also build trust in digitalizing their systems through targeted governmental supports. Although there are cultural differences to consider, Sweden and other Scandinavian countries serve as a prime example of how to approach variable pricing from a holistic approach.

In Norway 95.5% of households contracts are tied to dynamic pricing tariffs in Q2 2025

Unlike larger energy providers, start-ups specializing in dynamic pricing from the get go, like Tibber and Octopus Energy , emerge as the leaders in the german dynamic market. For example, 1KOMMA5° provides integrated solutions and builds trust by showcasing real case studies on their web pages. While they score with empathic story telling, they still lack the technical nit-bits, as well as the flexibility and adaptability to land with those who want to learn and do more.

1KOMMA5° builds trust with real case studies and real people

Since 1. January 2025 energy suppliers - even the big ones like EnBW, are legally required to offer dynamic electricity contracts. While they do have the renown, they still lack the right strategic packages and communication designs to convince customers to jump onto the dynamic-pricing train. In an independent usability testing of EnBW dynamic tariff page, our test participants left the dynamic pricing site with more questions than answers.

In one usability test, one user said:

At this point, I would probably, as a user, leave the site and then Google something like ‘EnBW dynamic electricity tariff test’ or ‘EnBW dynamic electricity tariff’. Or I’d ask ChatGPT to explain the tariff to me, because I’d be thinking: "hey, the information I’m getting here is far too little to decide whether this makes sense for me". Especially when it comes to understanding how it compares to a static electricity tariff.

(Translated from German into English)

Usability testing of the EnBW dynamic tariff webpage

In this example, users were shown the price before they had a chance to understand what dynamic tariffs are or how they could benefit from this pricing model. There was also little information or reassurance on whether their profile would be compatible with dynamic pricing.

What are the next steps? Link to this headline

With all these challenges unwinded, it's clear that the solution isn't just more technology or only regulation, it's better communication and trust-building. The information exists, but it's scattered, technical, and often overwhelming. This is fundamentally a UX and communication challenge.

Consumer acceptance is already growing. In surveys from 2022 to 2024, more people are becoming willing to embrace dynamic pricing in their homes—the momentum is building.

Survey conducted by V. Pawlik, published on Statistica (23.06.25)

And this is where the real opportunity lies: Instead of focusing on technical complexity and potential problems, the industry needs to lead with benefits and empowerment. People should feel excited about:

• Taking control of their energy costs (without losing their mind)
• Supporting renewable energy with every smart decision
• Saving hundreds of euros while helping stabilize the grid
• Being part of the energy transition rather than victims of it

And one positive momentum leads to the next. My friend that I interviewed also told me:

When we got our PV-Panels on our roof, that’s when we started having new ideas. Once you have that on your roof, you start thinking differently and develop a sort of ambition: “how can we use even more of our own production?” That’s when we started considering buying heat pumps as well and integrating EVs.

This anecdote only supports that one domino effect can cascade into more sustainable and green actions. Dynamic pricing should be positioned as the natural next step in this journey of energy independence and optimization.

Despite diving deep into every technical rabbit hole, we've likely only scratched the surface of what's possible. The infrastructure is being built. The technology works. The only missing piece is making people feel confident and excited about the future of energy.

The question isn't whether dynamic pricing will succeed, it's whether we'll make the journey empowering or frustrating for millions of households.

Germany is at the forefront of the energy transition, with dynamic electricity pricing playing a pivotal role. The adoption of smart meters is essential for enabling variable energy tariffs across Europe, yet challenges remain. Smart meter adoption challenges include consumer awareness and infrastructure readiness. By addressing these, German energy providers can offer more dynamic contracts, leading to potential electricity cost savings for households.

The shift towards renewable energy sources is crucial for grid stability. However, renewable energy grid stability requires careful management to ensure consistent supply. Smart home energy management systems can aid in this transition by optimizing energy use and reducing household electricity bills.

Looking towards the future, electricity market reform 2025 aims to further integrate dynamic pricing models. This reform is expected to overcome existing energy transition barriers in Germany, fostering a more sustainable energy landscape.

For consumers, understanding and comparing electricity tariffs is crucial. Electricity tariff comparison in Germany can help households make informed decisions, enhancing energy consumption awareness and promoting efficient energy use.