The German coalition committee launched key points for an industrial electricity price in mid-November. The plan is for energy-intensive industries 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 fundamentally a positive signal from the federal government towards achieving internationally competitive energy prices. However, due to European state aid regulations, the measure is unlikely to bring any significant additional relief, particularly for highly electricity-intensive industries such as the steel industry.
State Aid Law Prevents Tangible Relief
Kerstin Maria Rippel, Managing Director of the German Steel Federation, acknowledges the government's efforts but emphasizes: "The federal government is visibly trying to establish competitiveness in electricity prices. We recognize that. However, due to the applicable state aid regulations in the Clean Industrial Deal State Aid Framework, CISAF for short, the now planned regulation bypasses the steel industry." This relief would be urgently needed, as current electricity prices pose an existential threat, particularly for medium-sized and already low-CO2 electric steel mills. Moreover, excessive electricity costs would hinder the transformation of the entire industry towards climate neutrality.
Call for Adjustment of EU Regulations
For an industrial electricity price to be effective for particularly electricity-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 combinable without restrictions 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' – meaning including grid fees and all charges and levies."
Electricity Price Compensation as Important Building Block
Until this goal is achieved, the announcements regarding electricity price compensation are particularly significant for the steel industry. Rippel welcomes the government's commitment to extending this compensation beyond 2030 and emphasizing the importance of deepening this relief through a higher state aid limit. Now the EU Commission is called upon to act.
Bundestag Adopts Grid Fee Subsidy
Another significant relief for electricity costs, which falls under national responsibility, was adopted by the Bundestag in late November. Starting next year, a subsidy for transmission grid fees will once again be granted. For the German steel industry, this represents a necessary but also long overdue step. Over the past two years, transmission grid fees had exploded by 130 percent, placing considerable burden on operations since then. For the steel industry alone, additional costs since the discontinuation of the subsidy last granted in 2023 amount to 300 million euros annually.
Rippel expresses relief about the decision: "We are relieved that the Bundestag has now cleared the way for the urgently needed relief of 6.5 billion euros in grid fees. This was a correct but also overdue step that is vital for our member companies. And not only that: The subsidy benefits not only electricity-intensive industry but also businesses and private households, relieving the entire German business location regarding the location factor of electricity costs."
Permanent Solution Required
The planned reduction of grid fees starting in 2026 does provide some relief for energy-intensive operations. However, it is already clear that costs for grid expansion will continue to increase. Rippel therefore demands: "To regain planning security, grid fees must now be reliably limited on a permanent basis and the subsidy must be legally secured crystal clear for the coming years." This remains an urgent task for the national legislator.
