The big chemistry summit with Chancellor Olaf Scholz is taking place today. It is also about the industrial electricity price. The industry warns of migration and a collapse of large German industry because it is no longer globally competitive; Bayer, BASF and Co. alone consume ten percent of German electricity. Wolfgang Große Entrup, head of the Chemical Industry Association, says: “The high energy costs are threatening our existence.”
Economics Minister Robert Habeck presented a concept for a “medium-term bridge electricity price” in the spring, according to which electricity-intensive companies would only have to pay six cents per kilowatt hour (kWh) for the majority of their electricity by 2030, the rest would be borne by the state. Condition, among other things: a location guarantee. The Chancellor and Finance Minister Christian Lindner have so far rejected the subsidy because it would come at the expense of private individuals and small companies. Bundesbank President Joachim Nagel also says no.
Will Germany’s industry go down the drain without cheap electricity? What’s wrong with the lawsuits? Ten questions and answers.
A made-up word, because the price of electricity is basically the same for everyone and is made up of two components: the procurement costs for electricity on the market and the surcharges that suppliers and the state add. Procurement costs are quite high in Europe – in Germany because a lot of electricity is still produced in coal and gas power plants and fuel prices have skyrocketed since Putin’s attack on Ukraine. The surcharges, on the other hand, are little influenced by world events. This includes electricity taxes, network fees, retailers’ profit margins and various levies (such as the EEG surcharge, which was added to the expansion of renewable energies until last summer).
In fact, private consumers usually have to pay all surcharges. Trades and industries with high consumption, on the other hand, have long been relieved of billions; For example, they pay less taxes, network fees, levies or costs from European emissions trading. Around 9,000 companies have so far benefited from the so-called “peak equalization of electricity tax”. Particularly hungry electricity consumers such as steel or chemical plants have also usually negotiated better purchase prices on the electricity market; Nobody knows how cheap these are – a trade secret.
According to Eurostat, the European statistics authority, the local industrial electricity price is in the middle range within the EU. In some neighboring countries such as Belgium, Denmark or Italy it is significantly more expensive. In France, on the other hand, it is cheaper because the state-owned company EDF has to sell a large amount of electricity at regulated prices. French industry in particular benefits from this subsidy.
Difficult to answer because there is no secure database. The International Energy Agency (IEA) says roughly: The German megawatt hour cost an average of 117 euros in the second quarter of this year. In France it was just under 84 euros, in Japan it was the equivalent of around 59 euros, and in the USA it was just under 35 euros. In China, it is said, industrialists only pay a quarter of the German price because of massive state subsidies. Gunnar Groebler, head of the Salzgitter steel group, is calling on the state to set a price range of 40 to 60 euros per kilowatt hour in the long term. No one can really answer which company will ultimately have to pay which price for electricity. In addition to surcharges, there are also open and hidden subsidies everywhere.
A legitimate question before thinking about new subsidies. But unfortunately there are only average values. According to BDEW, small to medium-sized industrial companies pay an average of just under 25 cents. For large customers (160,000 to 20 million kWh), the kilowatt hour costs around 26.5 cents. For comparison: Households currently have to transfer a good 46 cents (basic monthly fee included).
For private households, according to BDEW, around 27 percent of the electricity price is collected by the state through various levies and taxes (the share has fallen; it was already at 57 percent in 2018). For small and medium-sized businesses it accounts for around eleven percent, and for large consumers it accounts for around five percent.
There are different views. While the lobby associations demand subsidies for all bakeries, even though they are not in international competition, scientists are more cautious. In a new study, the German Institute for Economic Research (DIW) recommends against subsidized industrial prices for electricity procurement. Even if prices rise, only a few companies are threatened with a “cost shock” because they can usually pass on the higher prices to their customers. Large relocations of companies abroad are not to be expected. However, the DIW advocates reducing the electricity tax because this would benefit all electricity consumers.
Depending on whether you use six or even four cents per kWh, 30 to 50 billion euros would probably have to be invested.
If Germany (after France) were to open this floodgate, other EU states would want to follow suit. Critics fear a restless subsidy race that will devour billions without getting any closer to the EU’s actual goals: the massive expansion of renewable energies from wind, sun and water and the increase in European electricity production. Because one thing is clear: only green electricity can reduce electricity prices in the long term. However, even then, EU states that are blessed with many renewable sources, such as Spain or Norway, will benefit excessively. Germany will be less competitive against them. That is why experts recommend that the industry rethink and re-appreciate the blessing of the European internal market. Why shouldn’t German industry buy its primary products more often from cheaper EU countries in the future so that they can be assembled at home? This would make these products more attractive to the global market.
Yes. Those who receive cheap electricity for free make less effort to save energy. Studies show that there is still a lot of room for improvement in German companies when it comes to efficiency. This also applies to the commitment to driving forward the energy transition: According to studies by the state development bank KfW, only one in four companies has so far invested in climate protection.
