From KlimaNachrichten

By Fritz Vahrenholt

Dear Ladies and Gentlemen,

the global temperature continued to decline in November. The exceptional warming of the years 2022-23 is declining significantly and now reaches 0.43 degrees Celsius compared to the long-term average. The cooling trend remains intact.

The German government is failing to solve the electricity price crisis for industry
 

The rising electricity prices year after year are a major cause of the death of industry in Germany. Word has spread all the way to the federal government. Instead of defending itself against the escalating increase in electricity prices due to the high CO2 levy for power plants, capacities of lignite, hard coal and even CO2-free nuclear power plants were shut down. The word nuclear energy no longer appears anywhere in the coalition agreement between the CDU and SPD. In order to prevent the worst, the electricity price for industry is now to be subsidized by the federal budget. This is to happen in three places: the electricity tax, the industrial electricity price and the grid fees are to be reduced. And in all three cases, the federal government fails.

The electricity tax reduction does not achieve anything 

The electricity tax is to be reduced from 2.05 €ct/kWh to 0.05 €ct/kWh. This relief is intended to benefit industry and commerce. Private households are now not to benefit from this, contrary to what is explained in the coalition agreement. The tax cut is expected an amount to €3 billion. For the energy-intensive industry, however, this is old hat. This is because the traffic light government had already decided in November 2023 that the electricity tax for energy-intensive industry would be reduced to 0.05 €ct/kWh by the end of 2025 and had already announced at that time that this reduction should be continued. The annual expenditure was previously €2 billion and will now increase by €1 billion through the inclusion of other commercial companies. The measure is therefore at best a preservation of the status quo for the energy-intensive industry.

Apparently, however, the Merz government has even worsened the conditions for the energy-intensive industry. According to the regulation, which will now apply from 1 January 2026, the industry must first pay the electricity tax in the full amount of €2.05 ct/kWh – in some cases differently than before – and can then only get it back many months later in a bureaucratic application process. This federal government is really industry-friendly and very big in reducing bureaucracy. The liquidity losses for the energy-intensive industry amount to millions of euros for large companies, not to mention the bureaucratic effort.
 

The reduction in the price of electricity does not apply to energy-intensive industry
 

As early as July, Chancellor Merz announced: “We want to further reduce electricity costs,” said the Chancellor. ” This federal government will act with honesty.” In November 2025, Merz spoke of a target price of 5 €ct/kWh for the electricity-intensive industry, which is in international competition. €5 billion should be made available for this purpose. But in the meantime, great disillusionment has set in in the executive floors of the electricity-intensive industry. At the centre of the criticism is the fact that a discount of 50% on the electricity price is only granted for half of the electricity purchased. (see paragraph 120 of the EU regulation CIAAF). With a current exchange electricity price of around 10 €ct/kWh, an electricity price of 7.5 €ct/kWh is achieved. In addition, half of the rebate must be put into decarbonization investments by the company that are not economical. If this “retention” is deducted, the proclaimed 5 €ct/kWh becomes 8.25 €ct/kWh. In this way, honest action (Merz) becomes a sham.

But the biggest cheating is yet to come. In the publications of the Federal Government, it is avoided to point out that the EU Commission does not allow an electricity price reduction for industrial companies that already receive electricity price compensation. However, this is the overwhelming majority of German energy-intensive companies. These are 350 industrial companies in the metal, paper, glass and chemical industries, which have a high share of energy costs and are at the same time in international competition. In order not to throw them out of international competition, the EU Commission had already allowed these companies to be reimbursed up to 75% of the CO2 costs hidden in the electricity price in 2013. (However, since this does not include all electricity volumes, many companies only get a refund of 50% or less for the costs actually incurred). And according to the EU Commission, these energy-intensive companies must not be supported again by a reduction in electricity prices. If this remains the case, the German energy-intensive basic industry will not get a penny from the much-heralded electricity price reduction. As I said: deceptive packaging.
 

Grid fees will become unaffordable
In 2026,
the German government will make €6.5 billion available from the Climate and Transformation Fund, which is fed by the CO2 levies of citizens and companies, to reduce grid fees. This amount will be made available to the four transmission system operators Amprion, Tennet, 50Hertz and Transnet BW, which operate the supra-regional high-voltage grid. The aim is to dampen the rising grid costs for the energy transition due to grid expansion. The reduction has initially only been decided for 2026. But the exorbitant costs of grid expansion year after year will either have a massive impact on private households and companies or on the federal budget. According to a study by the Institute of Energy Economics in Cologne, the costs of grid expansion will amount to €732 billion by 2045, €302 billion for the high-voltage grid and €430 billion for the regional low-voltage grids.

According to the study, the increase in grid costs would be around €18/kWh for households, €15/kWh for commerce and €7/kWh for industry. These amounts add up to today’s grid costs of about €11/kWh for households, €9ct/kWh for commercial and about €5/kWh for industry. If the additional 7 €ct/kWh for industry is passed on to German industrial companies, a basic industry in Germany is excluded. If the federal budget takes over, the financing is in question. This is because around €20 billion is already spent annually on the promotion of renewable energies, so that a higher double-digit billion amount has to be raised year after year for the energy transition with the grid costs. This is because the cause of the excessive increase in grid costs is the expansion of volatile renewable energies. In order to absorb their fluctuations, the nets have to be oversized to accommodate overproduction (light breeze). In the event of underproduction (dark doldrums), the grids are then no longer economically utilised. Therefore, the escalating costs are a consequence of Germany’s goal of managing Germany’s energy supply with 100% volatile wind and solar energy.

Economics Minister Katharina Reiche is to be regretted. It has recognized the flawed construction of the energy transition (“The energy transition must become affordable”), but the SPD does not allow a course correction. E.ON CEO Leo Birnbaum has summed up the demand for a moratorium and the abolition of the EEG in one sentence: “We are building renewables that we don’t need into a grid that can’t tolerate it” (minute 16:00 of the podcast).

Against this background, it is worth taking a look at the report of the U.S. National Security Strategy, which was published in November and much maligned in Germany in it, people are worried about the future of Europe. There you will also find the simple truth that cheap energy based on oil, gas, coal and nuclear energy “creates well-paid jobs, reduces costs for consumers and companies, drives reindustrialization and helps to secure the lead in future technologies such as AI”. If you look at the German coalition agreement, the only new energy technology mentioned there are “high-altitude wind power plants”.

Our energy policy has become truly ridiculous.

Sincerely,

Fritz Vahrenholt