Germany urges EU to let industry combine electricity price subsidies
Clean Energy Wire / Tagesspiegel Background
The German government has called on the EU to allow industrial companies to receive several electricity price subsidies at the same time. Firms should profit from the country’s planned “industry electricity price” and from the existing power price compensation mechanism, which provides relief from emission trading costs, finance minister Lars Klingbeil, a Social Democrat (SPD), said at a press conference. “Both instruments should work in concert, which would be an important signal, for example for the steel industry,” Klingbeil said.
Energy-intensive sectors, such as steel, chemicals and glass, are coming under international competitive pressure due to Germany’s comparatively high electricity prices. A subsidised industrial electricity price is a core element of the government’s strategy to halt industrial decline and boost the country’s weak economic growth.
But implementation has run into delays, as the EU must agree to the scheme under state aid rules. Industry representatives have questioned whether the EU would allow companies to benefit from several power price subsidies at the same time. The EU had already set general conditions for the subsidies, for example limiting it to at most half of a company's annual electricity consumption.
Klingbeil said in parliament it was key that both instruments could apply simultaneously without companies having to choose. “Brussels must not refuse to do this. They must come to terms with industrial policy realities,” reported energy and climate newsletter Tagesspiegel Background
The coalition confirmed its intention to introduce an industry electricity price of five cents per kilowatt-hour for parts of the electricity consumed by energy-intensive companies, which is set to remain in place from 2026 until 2028. Chancellor Friedrich Merz from the conservative CDU said the corresponding talks with the European Commission were nearing conclusion.
Klingbeil said the industry electricity price would cost the state three to five billion euros, to be financed from the country’s Climate and Transformation Fund. In addition, the finance ministry plans to top up next year’s funds for the power price compensation by one billion euros, compared to the original cabinet draft, to allow more companies to benefit.
While energy-intensive companies in the country already enjoy exemptions from certain taxes and levies, the wholesale price of electricity continues to be much higher than before the energy crisis.
Industry association BDI called on the EU to give the German government “sufficient leeway” in setting the industrial electricity price so that it actually reduces costs for as many energy-intensive companies as possible. “At the same time, other companies should also be given access to power price compensation,” the lobby group said. Municipal utility association VKU also welcomed the industry power price, but criticised that many smaller businesses won’t benefit from it, even though they also compete on international markets.
Germany’s parliament also approved the government plan to pay the country’s four major transmission grid operators a subsidy of 6.5 billion euros from the Climate and Transformation Fund (KTF) in 2026 to reduce grid fees to relieve private households and businesses. Total energy price subsidies for all consumers will add up to 10 billion euros in 2026, the government said.
