Prior to the February general election in Germany, the country’s industry leaders raised the alarm. He urged the new German government to do something against high power prices and warned companies shutting down and transferred abroad when nothing happened.His concerns seem to resonate under the chairmanship of Chancellor Frederick Merz along with the new coalition government of Conservative CDU/CSU Party Alliance and Social Democrats (SPD).Only after a few weeks in the office, it is planning significant relief measures, but some experts are warning of potential downside.How high is electricity prices for the German industry?It is difficult to indicate a single figure, as the cost of electricity varies depending on the size and area of the company.According to a study by the Bavarian Business Association (VBW) in Munich, Germany’s industrial electricity prices were around the European average in 2022. However, in February 2022, the impact of Russia’s Ukraine’s entire-scale invasion was affected in the energy markets, making it difficult to compare year-to-year.Recent European Union data suggests that Germany is third in the block about electricity prices for non-Houshold consumers-a category that includes not only industries, but also public institutions such as schools and government offices, thus it is difficult to conclude the impact on the industry, thus.When it comes to the price of wholesale power – before taxes and fees – Germany is in the midst of international comparisons, Brono Burger, Energy Specialist of Frounhofer Institute for Solar Energy Systems recently said while speaking to the German Daily Frankfurt Rangschau.Germany plans to live with America and ChinaOne thing is clear, however, companies in the US and China make much less payments.In 2023, according to the German IFO Institute Think Tank, and about 8 cents in China, according to the VBW data show, in 2023, industrial electricity prices were about 7 euros cents (about 8 cents) per kWh-hour. In Germany, however, industrial firms pay about 20 cents, IFO says.The plans of the coalition government in Berlin include extensive-based relief measures to reduce industrial electricity prices.In Germany, the price of electricity is made of bulk price, as well as an electricity tax, surcharge and grid fees. The grid fees are fees to use the power network, while overloads meet specific government initiatives.Berlin is now planning to reduce the price of electricity in 5 cents per kW-hour for businesses by reducing power tax up to the European Union’s minimum and cutting overload and grid fees.The government wants to expand and expand the price compensation program of electricity, which reimburse the energy-intensive industries for the costs generated from CO2 pricing. The price of CO2 applies to discourage fossil fuels in Germany and emissions in the European Union.Is this plan a good idea?Energy and Climate Policy Specialist Andreas Fisher at the Cologne-based German Economic Institute (IW) told DW that “from the consumer’s point of view, there is widespread-based relief.”Max Jankovsky, CEO of Lossanitz Foundry and Chairman of Chambitz Chamber, Industry and Commerce, agree, in a statement to DW tells that the urgency of reducing electricity prices for the industry is “recognized”.But the plan is also criticizing.“The reduction in a blanket in electricity prices refutes the needs of a system based on renewable energy,” called Swantje Fidler, the scientific director of the forum for forum for ecological-social market economy. Instead, the German energy system would require encouragement for energy storage and flexibility, he explained DW, as Akshaya is bound to ups and downs in power supply, abundant supply in summer and rare in winter.“At the same time, it is important to consider how flexible a company can be,” IW expert Fisher says, because all firms may not be quickly suited to the power supply or pricing change.Cheap electric professionals and oppositionLyonhard Probest of the German -based Fronhoff Institute for Solar Energy Systems in Frebberg believes that low power prices may reduce the incentive to use electricity more efficiently for companies.Probest, which manages energy-charts.The Lössnitz Foundry will be one such case at this point, as the company’s CEO Max Jankovski plans to switch to an electric smelting furnace from Coke. So far, however, high power prices are catching him back: “It seems that it is going on in a Bazsaw,” he said, permanently referring to the risk of high power prices.Will Brussels thwart Berlin’s plan?The coalition agreement of the ruling parties of Germany also mentions more relief for energy-intensive companies. It is unclear whether it involves reducing the price of bulk electricity, although some experts believe it is intended.As shown in the price breakdown, taxes and overloads are already responsible for only a small portion of the final power cost.Fraunhofer scientific probests have warned that artificially prices can be reduced: “If the power is in low supply, but sold cheaply, the scattering intensifies and increases prices,” he argued.The German Chamber of Industry and Commerce (DIHK) sees another problem for the government on Energy, Environment and Industry, the head of Energy, Environment and Industry.“A price cap will interfere with market pricing and possibly not permissible under the European Union’s State Assistance Rules,” Bole told DW.In addition, a price cap can also be expensive for taxpayers, Probest said, many companies do not require relief, as energy costs make only a small part of their value construction, “will be unnecessarily benefitted.”‘Silated measures’ makes more understandingSwantje Fidler is sure that a sharp rollout of renewable energy in Germany will be “lower prices in long periods”.Meanwhile, Probest said, “targeted subsidy” are more effective than a decrease in blanket value, and can include special electricity rates for the use of heat pumps.Jankovsky is also saying that he said “sewn measures”, especially to help small and medium -sized businesses (SMEs), given that many existing subsidies do not apply to them, which will have to change, “and need to be faster.”
