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(Bloomberg) — German Economy Minister Katherina Reiche said she expects the government’s new mechanism for subsidizing electricity costs for energy-intensive industries through 2029 can be rolled out at the start of next year.
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Reiche told reporters in Berlin that negotiations with the European Commission on the “industry power price” are in the final stages, and she expects the measure — which could cost as much as €5 billion ($5.8 billion) — to be introduced on Jan. 1.
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She was speaking alongside Stéphane Séjourné, the European Union commissioner for industrial strategy, ahead of talks with EU counterparts to discuss ways to strengthen the continent’s industrial base.
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Germany’s export-dependent economy has been struggling since Russia’s invasion of Ukraine, with sectors including cars, chemicals, steel and paper still suffering from the rise in energy costs triggered by the war.
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US trade tariffs and rising competition from China have intensified the pain and Chancellor Friedrich Merz has said addressing a long list of challenges for German manufacturers is a top priority.
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Merz is due to host a meeting with representatives of the steel industry and Germany’s 16 regions at the chancellery on Thursday to discuss additional measures to support the sector.
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Reiche called the planned industrial electricity price “an important building block” for improving the competitiveness of Germany’s steel industry.
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Exact details of the instrument still have to be decided. A proposal by leading think tanks, including the state-owned German Energy Agency, suggests a power price of 5 cents per kilowatt-hour for about 2,000 companies, which would cost as much as €5 billion over three years.
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The government has already made provision in next year’s draft budget for the new subsidy, Sepp Müller, a lawmaker for Merz’s conservative CDU/CSU bloc, said in September.
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Reiche’s ministry presented a separate package in September designed to reduce energy costs, including a reduction in power levies and €26 billion in relief over four years on grid fees.
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—With assistance from Petra Sorge.
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