Czech energy-intensive industry urgently needs government support with energy prices following Germany’s announcement of a power price cap, which will disrupt the European single market and hurt Czech competitiveness, according to the Czech and Slovak steel association, Steel Union.
The German government plans to cap electricity at 5 euro cents (6 US cents) per kilowatt hour from January 2026 through end-2028 at a total cost of €6.5 billion ($7.5 billion), Kallanish notes.
Trinecke zelezarny (TZ), currently the Czech Republic’s sole crude steel producer, consumes approximately 1 TWh of electricity per year. While German steelmakers are set to pay €50/MWh as a result of the subsidies, those in the Czech Republic pay around double, meaning a cost disadvantage for Trinecke zelezarny of some CZK 3-4 billion ($140-190 million) annually, the association points out.
“We understand the support of the German government as an effort to stabilise the industry at a time of high costs and uncertain energy policy. Without comparable conditions … the Czech steel industry will be unsustainable in the long term. If the government does not come with clear support, there is a risk that crude steel production will disappear from the Czech Republic. This would mean the loss of not only jobs, but also part of our industrial self-sufficiency,” says TZ chief executive Roman Heide.
Brussels has opened up the possibility for member states to adopt temporary national measures to support industry, including energy subsidies and investment incentives, as part of the new Clean Industrial Deal.
“However, this gradually shifts responsibility for industrial policy from the European to the national level, and the stronger a state is in terms of budget, the more it can protect its companies. The original ambition of the European Green Deal was to create a level playing field across the Union. However, these rules are now fragmented according to the possibilities of national budgets,” Steel Union notes.
“Thanks to the new tariff, German industry will have energy approximately half as cheap as Czech companies. For such a closely interconnected region as Central Europe, this represents a systemic risk,” concludes association chair Marcela Kubalová.
Adam Smith Austria
