German Steel Federation: Industrial Electricity Price: Relief For The Steel Industry Insufficient
German Steel Federation: Industrial Electricity Price: Relief For The Steel Industry Insufficient
In mid-November, the coalition committee approved key points for an industrial electricity price. The plan is for energy-intensive industries to be able to purchase electricity at a price of 5 cents per kilowatt-hour over the next three years.
The German Steel Federation views this step as a generally positive sign from the federal government on the path to internationally competitive energy prices. However, due to European state aid regulations, the measure is unlikely to provide any significant additional relief, particularly for energy-intensive sectors like the steel industry.
State aid law prevents noticeable relief
Kerstin Maria Rippel, CEO of the German Steel Federation, acknowledges the government’s efforts but emphasizes: “The federal government is clearly striving to establish competitive electricity prices. We recognize this. However, due to the applicable state aid regulations in the Clean Industrial Deal State Aid Framework (CISAF), the planned regulation bypasses the steel industry.” This relief is urgently needed, as current electricity prices are a threat to the very existence of electric steel plants, especially medium-sized ones and those already operating with low CO2 emissions. Furthermore, excessive electricity costs are hindering the entire industry’s transformation to climate neutrality.
Demand for adjustment of EU regulations
For an industrial electricity price to be effective for particularly energy-intensive companies, the EU state aid framework would need to be adjusted and key restrictions lifted. A functioning industrial electricity price must apply to total electricity consumption and be fully compatible with CO2 electricity price compensation.
Rippel demands: “We need a holistic, sustainable and very concrete solution: An internationally competitive electricity price for industry of thirty to sixty euros per megawatt hour ‘all in’ – that is, including network charges and all taxes and levies.”
Electricity price compensation as an important component
Until this goal is achieved, the announcements regarding electricity price compensation are particularly important for the steel industry. Rippel welcomes the government’s commitment to extending this compensation beyond 2030 and emphasizes the importance of further relieving these costs through a higher state aid limit. Now it is up to the EU Commission to act.
The German Bundestag approves network charge subsidy
The German Bundestag passed another significant measure to reduce electricity costs, a matter of national responsibility, at the end of November. Starting next year, a subsidy for transmission network charges will be reinstated. For the German steel industry, this represents a necessary and long overdue step. Over the past two years, transmission network charges have skyrocketed by 130 percent, placing a considerable burden on companies. For the steel industry alone, the additional costs since the subsidy was last granted in 2023 amount to €300 million annually.
Rippel expressed relief at the decision: “We are relieved that the Bundestag has now paved the way for the urgently needed relief of €6.5 billion in network charges. This was a correct, but also overdue step, which is vital for the survival of our member companies. And not only that: In addition to energy-intensive industries, the subsidy also benefits businesses and private households, thus easing the burden on Germany as a whole in terms of electricity costs.”
A permanent solution is needed.
The planned reduction in grid fees from 2026 onwards will provide some relief for energy-intensive companies. However, it is already clear that the costs for grid expansion will continue to rise. Rippel therefore demands: “To regain planning certainty, grid fees must now be reliably and permanently capped, and the subsidy for the coming years must be legally and unequivocally secured.” This remains an urgent task for the national legislature.
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