Germany plans industrial electricity tariff to undercut US, China
Berlin is planning to introduce a special industrial electricity tariff ranging between €0.05 and €0.09 per kilowatt-hour in order to boost the country’s competitiveness and push back against US and Chinese subsidies.
Electricity has always been pricey in Germany – a 2015 study by the Fraunhofer Institute found that the power bill of German companies is on average more than double that of their competitors in the US and China.
Electricity is a key input for several clean technologies like the production of polysilicon which is at the heart of solar panels.
Faced with pressure from the US Inflation Reduction Act and years of low electricity prices in China, Berlin is now preparing to hit back.
“The advantages of renewable energy installations, which produce electricity at a cost of €0.05 to €0.09 per kilowatt-hour” should be passed on to companies depending on the “geographical circumstances,” Germany’s minister of economy and climate action Robert Habeck declared on Monday (6 March) after a two-day government retreat.
While the EU supports companies in making capital intensive expenditures – or CAPEX – the US has decided to support operating expenses (OPEX), Habeck explained.
In order to address this mismatch, a special industrial electricity tariff is under preparation, he added. Passing cheap electricity from generators to companies would be “a component” of such a scheme functioning via “the market,” the minister added.
“Offshore wind, in particular, will provide large amounts of energy that can then benefit the companies through so-called direct Power Purchase Agreements,” he explained.
But until sufficient quantities of renewable energy is available, the German government is currently considering a cap on industrial electricity prices.
“Whether further caps are possible or necessary” is subject to discussion, Habeck responded when asked by journalists on Monday, adding that his ministry was looking to do its part. “We will design that [industrial electricity tariff], we will get that going,” he told reporters.
While data on Chinese electricity prices is sparse, a figure commonly referred to by the solar industry is that Beijing keeps the power price for its PV industry at around €0.07 per kilowatt-hour.
Wacker Chemicals, the last remaining producer of polysilicon in Germany, recently complained that Chinese competitors were paying half the price for electricity than German companies.
Any government intervention on electricity prices would have to be vetted by the European Commission, which enforces state aid rules in the EU. Habeck’s ministry was not available for comment.
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