Summary of the energate talk: An industrial electricity price with narrow limits and far-reaching questions

Following intensive negotiations at European level, the German industrial electricity price is once again within reach. However, the framework set by the EU Commission is narrow and raises crucial questions. In a talk organized by energate, experts from industry, trade, law, and business associations discussed the opportunities, risks, and necessary structural reforms for Germany as a business location. Participants included:

Dr. Niclas Wenz - Head of the Electricity Market and Renewable Energies Division, German Chamber of Industry and Commerce (DIHK)

Sandra Talhof – Partner and lawyer for energy law, Ziska & Talhof Rechtsanwälte

Anne Köhler – Managing Director, Energy Traders Germany

Jan Christoph Schaffrath – Managing Director Energy and Climate Policy (DIE PAPIERINDUSTRIE)

Elias Küpper – Founder & CEO, RIZM

Moderators:

Christian Seelos, energate

Rouben Bathke, energate

The narrow framework of the EU: An instrument for the few?

The panel agreed that the industrial electricity price that is now possible is far removed from the original idea of an all-encompassing price of 4 to 6 cents per kilowatt hour. The new EU state aid framework (CISAF) sets out strict conditions: the aid is limited to a maximum of 50% of electricity consumption, the price may not be subsidized to less than 50 euros per megawatt hour, and 50% of the aid received must be reinvested.

This results in significantly less relief than the industry had hoped for. In addition, the circle of potential recipients is very limited. In particular, the particularly energy-intensive sectors that already benefit from electricity price compensation are not expected to receive any additional benefits. The instrument is therefore aimed at a specific group of companies that are energy-intensive but do not belong to the top category. For the broad SME sector and many core industries, the industrial electricity price thus remains unattainable.

Risk of market distortions and unintended consequences

A key point of criticism in the discussion was the potential negative impact on the electricity market. Energy traders warned that a state-subsidized price would reduce the incentive for companies to hedge themselves on the market through forward contracts or power purchase agreements (PPAs). This would reduce liquidity on the trading markets and increase transaction costs for all other players.

In addition, the short-term nature of the measure was identified as a risk. A “bridge electricity price” limited to 2030 could become a stumbling block for urgently needed long-term investments in flexibility and decarbonization. If companies rely on the subsidy instead of adapting their processes to the new, volatile energy world, they could be in for a rude awakening once the aid expires. The subsidy must therefore be designed intelligently to support change in a targeted manner and not create counterproductive incentives that block the path to the future.

The call for structural and more intelligent reforms

The experts agreed that the industrial electricity price can at best be a bridge. What is crucial is what awaits at the other end of this bridge. Instead of isolated subsidies, a sustainable solution requires far-reaching structural reforms. The most important starting points were:

Targeted expansion of supply: More generating capacity must be expanded in order to extend periods of low electricity prices and reduce price peaks. Both the expansion of renewable energies and the use of existing CHP plants in industry will help in this regard.

Reducing system costs: A noticeable relief for the entire economy could be achieved by reducing government-induced price components such as taxes, levies, and surcharges.

Strengthening market mechanisms: Instead of intervening in the market, policymakers should strengthen confidence in price signals and improve the framework conditions for market-based instruments such as PPAs.

Modernize grid fees: The current system of grid fees often creates false incentives. There have been calls to reverse the logic: instead of rewarding inflexible behavior, a modern system must promote flexibility. Companies that adapt their consumption to the grid situation and thus stabilize the system should benefit from this instead of being penalized.

Conclusion: The industrial electricity price in its current form is a blunt instrument with limited effect and considerable risks for market efficiency. The discussion made it clear that the focus must not be solely on subsidies. The key to competitive energy prices and a strong industrial location lies in a bundle of bold structural reforms that improve the electricity supply.