EU approves German industry electricity price, companies say more relief needed

The EU’s consent to introducing a temporary industry electricity price subsidy in Germany is a “huge success” for the country that will provide substantial relief to its energy-intensive industry, economy minister Katherina Reiche has said.

The European Commission on 16 April greenlighted state aid schemes for electricity price relief for energy-intensive companies in Germany, as well as in Bulgaria and Slovenia until the end of 2028. Germany can now disburse up to 3.8 billion euros in support to the sector. 

“This is an important signal for Germany as an industrial location,” Reiche said. The agreement forms “an important building block” for making industry more competitive amid high energy prices and preparing the country’s transformation to climate neutrality. 

The Commission said the measure is appropriate for accelerating the transition towards a net-zero economy and implementing its Clean Industrial Deal. “Such measures will help avoid industrial activities relocating to locations where environmental regulations are absent or less ambitious,” the Commission said.

Economy minister Reiche said the measure would complement a series of government initiatives aimed at lowering energy prices, including a lower electricity tax for companies, support for grid fees and the removal of a gas storage levy. The industry electricity price initiative has been debated in Germany for years. The current government promised the subsidy at the end of 2025, before the US- and Israeli-led war on Iran triggered a shock on global fossil fuel markets and raised fears of a new energy crisis in Germany and Europe. 

According to the economy ministry, the industry electricity price will be available to companies from more than 90 industry sectors and aims to offer them a rate of five cents per kilowatt-hour. The government intends to use the scheme to cover the difference between wholesale prices and the target price. 

Thousands of companies, for example from the chemicals sector, glass producers, or semiconductor producers, could benefit from the scheme, the ministry said. Companies are required to reinvest at least half of their savings into decarbonisation measures within four years of benefiting from the scheme. 

An industrial gas producer with an annual consumption of 550 gigawatt hours, for example, could receive about eleven million euros from the state, the ministry said. 

It added that combining the scheme with the existing power price compensation scheme that shields companies from carbon pricing would not be possible. 

The German Chemicals Industry Association (VCI) welcomed the scheme’s introduction, but called it “a small auxiliary building block” that would not provide enough relief alone to have a meaningful impact. “The conditions set by the EU are so strict that companies will see little of that money,” said VCI energy expert Matthias Belitz. 

The EU limits state aid to guarantee fair competition. However, to aid the process of state aid approval and allow countries to support companies in international competition in their efforts to move away from fossil fuels, the European Commission in June 2025 introduced specific conditions. Among these are guardrails for support for electricity costs for energy-intensive users, for example limiting it to at most half of a company's annual electricity consumption. It also prescribes that companies must invest at least 50 percent of the aid in new clean assets, such as renewable energy generation capacity or energy efficiency improvements.

VCI said the scheme would lower electricity costs by less than ten percent for most companies, as taxes, levies and fees remain payable in full. “This alone will not solve our energy cost problem,” Belitz argued, adding that combining the industry electricity price with the carbon price compensation scheme should be made possible. 

He added the industry electricity price could only be a first step on a path to bring down energy system costs more broadly. “The ideas of economy minister Reiche for lowering system costs go in the right direction.”  

The German Trade Union Association (DGB) said the industry electricity price would provide greater planning security for companies at least until the end of 2028, but called on the German government and the European Commission to prepare an extension of the scheme to ten years. 

DGB board member Stefan Körzell also called for allowing a combination of the industry electricity price with the carbon price compensation scheme. “This will strengthen value creation and jobs at an economically difficult time and support the climate neutral transformation in Germany,” Körzell said.