Cabinet's Electricity Plan - Understanding the Origin of Discharges

In a bid to ease the financial burden on electricity customers, the German federal government has announced plans to provide a subsidy of 6.5 billion euros to transmission network operators starting from next year. This move is part of a larger initiative aimed at reducing network charges for households and businesses.

The subsidy, financed from the Climate and Transformation Fund, is set to benefit all electricity consumers, including private households. On average, network charges for household customers could decrease by up to 2.4 cents per kilowatt-hour, potentially saving a family up to 100 euros per year in electricity costs.

However, it's important to note that the relief effect in individual network areas can vary due to various cost structures and the age of the infrastructure. Older network infrastructure has higher maintenance and repair costs, which can affect the extent of the relief.

The expansion of renewable energies also impacts network charges due to costs for integration into the networks. The subsidy for transmission network charges does not reach all electricity customers evenly, and some businesses, such as those in the steel industry, have criticised the lack of planning security for energy-intensive companies.

Criticism also persists regarding high electricity prices compared to international competitors, with some accusing the coalition of breaking its word. The IG Metall union has demanded an internationally competitive industrial electricity price for the energy-intensive industry to prevent permanent job losses.

The electricity tax relief down to the EU minimum tax rate is to be made permanent for over 600,000 companies in the manufacturing sector, agriculture, and forestry, including craft businesses like bakeries and metalworkers.

In addition to the subsidy for transmission network charges, another component of the electricity price, the offshore network surcharge, helps finance costs from the grid connection of offshore wind farms. A "significant subsidy of the offshore network surcharge" is aimed for by 2027, but this would require approval from the EU Commission.

The power grid consists of transmission networks and distribution networks, with private households supplied via the distribution networks. The relief in network charges, which account for around 28 percent of the total electricity price, will be a welcome respite for many households and businesses.

Despite these efforts, it's clear that the issue of high electricity prices remains a complex one, with various stakeholders voicing their concerns. The federal government continues to work towards a balanced solution that addresses the needs of both consumers and industry.