Germany’s energy price caps prove too cumbersome to effectively reduce costs for companies – report
Clean Energy Wire
Germany’s energy price caps, implemented to help consumers with rising costs during the energy crisis, often did not compensate businesses for price increases to the necessary extent, according to a report by Bavaria’s economic association (vbw). The caps were put in place to limit the cost of so-called basic consumption for households and medium-size enterprises. While they work in theory, in practice the caps often failed to achieve their desired effect due to stringent requirements and complex regulations, the industry lobby group's report said. “Industrial companies with high energy consumption are urgently lacking support. These consumers in particular are hit the hardest by high energy prices,” Bertram Brossardt, managing director of the vbw, said.
On top of calling for the price caps to be extended until the end of 2024, the vbw is pushing for the introduction of an industry electricity price to secure lower prices long-term. Brossardt said that such interventions were needed to “strengthen the international competitiveness” of German businesses, as high energy costs make the country an unattractive place for export-oriented industries. The association does not expect electricity prices to fall to an internationally competitive level before 2030. “Cheap electricity is the best protection against carbon leakage, it prevents deindustrialisation, and is a driver of decarbonisation. Without it, a successful transformation of our economy is inconceivable,” Brossardt said.
The current price caps are expected to run out at the end of the year, but economy minister Robert Habeck said that he wants to extend them until 2024. They were originally introduced as part of Germany’s “defence shield” package to protect households and businesses against soaring energy prices. The caps for households' gas and electricity bills led to the desired effects, a recent government report had claimed. Separate plans to lower electricity prices for industry were recently rejected by finance ministry advisors.