Industrial electricity price – Federal government wants to take price risks away from large electricity consumers

Industrial electricity price – Federal government wants to take price risks away from large electricity consumers

offshore wind power

At a future industrial electricity price, companies could directly buy electricity generated by offshore wind farms.

(Photo: AP)

Berlin The high electricity prices represent large consumers from industry has been an immense burden for years. The energy crisis triggered by the Ukraine war made the situation even worse. Now the federal government wants to take countermeasures. The Federal Ministry of Economics is already working on corresponding concepts.

According to a concept that the consulting companies Consentec, Enervis, Ecologic and the Fraunhofer Institute for Systems and Innovation Research, which specialize in energy market issues, have developed for the Ministry of Economic Affairs, the benchmark for the level of a future industrial electricity price is the electricity production costs for offshore wind energy. The aim is a model for an industrial electricity price that has “the least possible complexity” and can be implemented quickly.

As a “market maker”, the state should bring together the supply of electricity with the demand from industry and bear the risk of failure. The “historically high level of electricity prices in Europe” threatens the “international competitiveness of the electricity-intensive industry in Germany”, according to the concept.

The electricity price for industrial companies counts in Germany for years among the highest in Europe. Compared to countries like the USA or China, the difference is even greater. Since the beginning of the Ukraine crisis, the price difference between Europe and the USA has increased significantly.

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The traffic light coalition with the price brakes for electricity and gas Regulations agreed at the end of last yearwho help the companies. However, this is an acute rescue operation that is limited in time. In addition, the granting of aid is subject to certain conditions. For many companies a claim is therefore out of the question. Now a fundamental and permanent regulation is to be established.

Offshore wind power is to go directly to companies

The traffic light coalition attaches great importance to the topic. The Ministry of Economic Affairs has said that a competitive industrial electricity price is a prerequisite for the transformation of industry to climate neutrality. The topic must be dealt with in 2023, which was also made clear to the EU Commission. The energy-intensive industry has been fighting for appropriate regulations for years.

Steel production at Thyssen-Krupp in Duisburg

Energy-intensive companies have been suffering from the high level of electricity prices in Germany for years.

(Photo: imago images / Rupert Oberhäuser)

The Wind Energy at Sea Act (WindSeeG), which was passed last year, offers a starting point for the introduction of an industrial electricity price. Paragraph 96a contains an ordinance authorization for the introduction of industrial electricity prices. This makes it possible to distribute electricity generated on certain areas of the sea to companies directly or via a financing system. In return, the companies can be obliged to provide certain services, such as implementing projects to reduce greenhouse gas emissions.

The concept of the consulting company envisages bringing supply and demand together via contracts for difference. On the supply side, a maximum value is defined for the offshore wind power offered. An auction is held on the demand side. The award is based on “objective, comprehensible, non-discriminatory criteria”.

The maximum amount for a company’s bid “is limited on the one hand by the volume of the tender and on the other hand by the amount of the company’s electricity consumption to be proven in the previous year,” says the concept. Only industrial companies that meet certain minimum requirements are allowed to participate for example the EU guidelines on energy and climate aid. They define which energy-intensive companies are entitled to certain state benefits.

The model would not take effect until 2029

According to the concept, the state should be the “central contractual partner on the supply and demand side”. It covers the risks: the state pays the difference between the contract price and the reference price on the supply or demand side.

The tenders are to be carried out on the supply and demand side by the Federal Network Agency. The “financial fulfillment” is to be carried out by the operators of the electricity transmission grids. Ultimately, all electricity consumers would be asked to pay, because the transmission system operators are financed by the network fees that all electricity customers pay for the use of the electricity network.

>> Read here: Germany is stuck in an energy price trap – “In key industries, companies will close down in rows”

According to the concept, legal implementation is possible “at the earliest in 2024”. The first tenders could therefore take place “2024 to 2025”. However, the offshore wind turbines still to be built would not go into operation until “2029 to 2030”.

The authors themselves point out various weaknesses in their paper. The amounts of electricity that could be generated on the available sea areas are too small to cover the needs of the energy-intensive industry. In addition, the electricity will be available too late if the systems are commissioned after 2029. In addition, the consideration that may be demanded from the companies thwarts the goal of remaining internationally competitive.

More: Endgame for German industry – three scenarios for the future

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