12 Sep 2023, 14:20
Jennifer Collins

Proposed industry power price could slow Germany's renewables expansion – report


A mooted cap on industry power prices could stall green energy expansion in Germany by making investments in wind and solar unprofitable, according to a report by business daily Handelsblatt. Several renewable energy investors and plant operators told the newspaper that a Green Party proposal for an electricity price of 6 cents per kilowatt hour on 80 percent of the electricity consumed by energy-intensive companies competing international was creating uncertainty. One farmer in North Rhine Westphalia said he was waiting for a government decision on industry power prices before he starts building a solar plant on his land. He calculated a charge of 8 cents per kilowatt hour (kWh) to recoup his costs, arguing that anything lower would put him out of business.
Talk of an industry price of 5 or 6 cents is also slowing the uptake of power purchase agreements (PPAs), industry players told the newspaper. PPAs, which are a long-term contract between an electricity generator and a customer that guarantee power price, are regarded as a key tool for financing the expansion of wind and solar plants. Prices are now around 10 cents per kWh hour. "If you can have an industrial electricity price of 5 or 6 cents for five years, then you'd be stupid to sign up for something more expensive," said one unnamed high-ranking manager.

With the energy crisis causing massive electricity price fluctuation, both Germany's ruling Green Party and Social Democratic Party (SPD) have proposed subsiding energy prices for selected industries. The SPD proposed a 5-cent per kWh cap. But Germany's other coalition party, the FDP, as well as finance ministry advisors, have rejected the calls.

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