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Relief for manufacturing and energy-intensive companies

Electricity prices remain at a high level, harming the competitiveness of German companies. The ‘electricity price package’ presented by the Federal Government is to offer additional relief to energy-intensive and manufacturing companies. A brief overview of the key points.

At present, the industrial sector accounts for more than a quarter of Germany’s energy consumption. This makes it the most important final consumer of energy, together with households and the energy sector. But energy continues to be expensive ever since the beginning of the war in Ukraine and the ensuing energy price crisis, threatening many companies’ competitiveness.

Introducing the new electricity price package:

Electricity duty will be lowered drastically for all manufacturing companies, namely to the minimum rate permitted by the European Union: 50 cents per megawatt hour (MWh). At the same time, the number of companies eligible for relief is being increased. So far, this has applied for approx. 30,000 companies.

A change concerning electricity price compensation is to provide additional relief to approx. 350 German companies facing very intense international competition. These will see their electricity providers reimburse them for up to 75% of the carbon price incorporated in the electricity price. The excess that currently applies (one gigawatt hour per installation) will be abolished, providing for further relief. So far, this excess had to be paid for by the companies themselves.

Super cap rule to be extended by five years

Furthermore, the existing super cap rule in electricity price compensation is to be extended by five years. At present, around 90 highly electricity-intensive companies in Germany benefit from this rule, which limits the amount of carbon costs they have to shoulder to a maximum of 1.5% of the gross value added they create. So far, this has applied with the exception of a minimum amount of five euros per tonne of CO2 or 5% of the cost of the certificate, which had to be paid by companies themselves. This minimum amount will now be abolished, granting companies further relief.

Minister Habeck commented: “For the next few years, these measures are creating an electricity price bridge for highly energy-intensive industries and the manufacturing sector. Together, these instruments form a competitive solution for significant portions of the group of highly energy-intensive companies. The reduction in the electricity duty payable by the manufacturing sector provides broad-based relief for companies. These are good steps.”