Expensive electricity: Why network costs are so high in Austria

She analyzed the structure of the Austrian electricity distribution network in a European comparison. Germany has 10.4, France 2, Belgium 1.4 and the Netherlands only 0.3. In Croatia, Malta and Ireland there is only one network operator. “This means that Austria is clearly one of the most fragmented distribution networks in Europe,” says the paper.

Cost disadvantages

According to the study, the size distribution of domestic operators is also exceptionally unbalanced. The largest ten percent of companies supply almost 90 percent of all metering points, while around a hundred small operators together only cover around ten percent of customers. Many of these small operators only operate in one or two communities. According to Economica, small operators have structural cost disadvantages, while larger units operate much more efficiently.

The share of network costs in total electricity costs in Austria is 37.5 percent, well above the EU average of 26.9 percent. This proportion has increased in recent years – from 30 percent in 2000 to 37.5 percent in 2024 (see graphic).

Economica refers to an analysis from Sweden that shows that the average costs of a network operator fall the larger its customer base is. A reduction from the current 171 companies there to nine would lead to significant efficiency gains.

If one assumes that the underlying cost structure is similar in Austria, this model can be transferred to domestic conditions, according to Economica. If the 14 existing network areas (nine federal states plus Innsbruck, Graz, Linz, Klagenfurt and Kleinwalsertal) were each managed by a single operator, the national average Austrian network costs would fall by 5.1 percent. The effects would be particularly pronounced in Tyrol (minus 24.4 percent) and in Styria (minus 14.7 percent).

If these cost reductions are passed on to customers, the average network fees for households would fall from 9.40 to 8.92 cents per kWh (excluding tax).

Unnecessary complexity

For oecolution, the study shows that the large number of operators creates unnecessary complexity and causes avoidable costs. This is particularly problematic in view of the urgently needed network expansion.

Merging the operators within the existing network areas would significantly reduce these disadvantages. “We have over 100 operators for a monopoly with state-regulated prices. This is not a quality feature, but a cost problem. This can be done cheaper with fewer operators,” says oecolution managing director Christian Tesch.

He therefore advocates targeted bundling of the many small operators. Larger units could carry out central tasks more reliably and simplify processes overall. “The network expansion is urgent and expensive. This makes maximum efficiency all the more important. Therefore, the more than 100 network operators must be quickly merged into just a few,” says Tesch.