Digital utility Tibber targets German retail power market

* Nordic company launches cheaper supply contract

* Takes on retail arms of established players

* Sees smart energy future via metering, displays

* Longer-term aims for EVs, balancing markets

FRANKFURT, Oct 16 (Reuters) - Nordic digital utility Tibber’s German arm has entered the retail electricity market offering supply contracts that are adjusted hourly to reflect fluctuations in wholesale prices, it said on Friday.

German power procurement prices are among the cheapest in Europe but end customers pay some of the highest prices in a fragmented market with a high percentage of state taxes and fees.

“We introduced an hourly tariff this week to enable the household customer to save money,” said managing director Marion Noeldgen.

Tibber also said its lean operation allowed it to forego typical distribution earnings, instead charging a 3.99 euro ($4.70) monthly fee per account.

That would make its offering around 20% cheaper than the market average, it said.

The German market is led by E.ON, Vattenfall and RWE, but there are also hundreds of small suppliers.

Industry data shows that the state’s share of the German retail price of roughly 31 cents a kilowatt hour (kWh) is 52%, with 25% going on procurement and distribution and 23% cents on grid usage fees.

Tibber says it will be transparent about wholesale prices, fluctuations in which traditional suppliers only partly pass on in order to protect their profits.

The company operates in Sweden and Norway and entered Germany in May, hiring 10 staff.

Its customers will need smart meters - which are not yet mandatory in Germany - to give them control over hourly prices and an overview of their real-term usage.

It also eventually envisages enabling users with smart meters to switch the power consumption of their electric cars or heat pumps to cheaper periods, saving them money, while selling aggregated power volumes into lucrative balancing markets. ($1 = 0.8484 euros) (Reporting by Vera Eckert, editing by Kirsten Donovan)