Cabinet's Electricity Plan: Unraveling the Origins of Discharges
The federal government of Germany has announced a series of relief measures aimed at reducing electricity prices for consumers and businesses. The planned subsidies and reductions are expected to provide significant relief to electricity customers over the next four years.
One of the key aspects of the relief package is a reduction in grid fees, which account for around 28% of the total electricity price. This reduction is expected to be made possible through a subsidy of 6.5 billion euros for the operators of transmission networks in the coming year.
In 2027, the government plans to provide significant subsidization for the offshore network surcharge, but this requires approval from the EU Commission. The offshore network surcharge helps finance costs from the grid connection of offshore wind farms.
The electricity grid is divided into transmission networks (for long-distance power transport) and distribution networks (for regional distribution). The subsidy for electricity grid fees is planned to benefit all electricity customers, including private households.
The actual relief effect in individual network areas may vary, but it is estimated that the relief to grid fees could potentially decrease grid fees for household customers by up to 2.4 cents per kilowatt hour on average. This could result in a family being relieved of up to 100 euros per year in electricity costs due to the subsidy.
In addition to the relief for grid fees, the federal government is also planning to make the electricity tax relief permanent for potentially over 600,000 companies in the manufacturing sector and agriculture. This decision, however, has been met with criticism, with Marie-Christine Ostermann, president of the Family Entrepreneurs, accusing the coalition of breaking its word and Jörg Dittrich, president of Handwerk, speaking of a "massive breach of trust".
It's worth noting that only a maximum of 15 percent of businesses in Germany are estimated to benefit from the reduction in electricity tax. The relief for businesses in the manufacturing sector and agriculture is intended to be permanent, while the relief to reach customers by January 2026 requires necessary legal decisions to be made by October 10.
The federal subsidy for electricity grid fees will be financed from the Climate and Transformation Fund, a special fund of the federal government. The total relief planned for the next four years is 26 billion euros.
Industry associations continue to criticize high electricity prices compared to international standards, but the relief measures announced by the federal government are a step towards addressing these concerns and providing much-needed relief to electricity customers in Germany.
