Germany misses chance to ease power costs: conference

The threat of high electricity prices rendering Germany’s manufacturing industries uncompetitive in international markets was a key theme at the annual “Zukunft Stahl” conference, hosted by business daily Handelsblatt in Essen this week.

According to Georgsmarienhütte chief executive Alexander Becker, the German government could and should have given a signal in the form of an incentive that would have provided a “bridge power price” for a transitory period. The idea of a temporary bridge price was touted last year by several energy-intensive industries in Germany to offer relief from higher energy costs.

On the sidelines of the conference, Becker told Kallanish that in 2021, Olaf Scholz, before becoming German chancellor, quoted the price tag of €40 ($44) per megawatt hour as being suited for manufacturing industries. More recently, economy minister Robert Habeck suggested a price tag of €60/MWh. “And we would have been happy with that,” Becker said during a panel discussion.

Instead, the price is now at €80/MWh, leaving industry players hurting. Becker believes that a subsidy of €2 billion would have been sufficient to bring down the price by €20, given a total annual consumption of 100 terawatt hours by the main energy-intensive manufacturing industries. “That would have been feasible in view of a total state budget of €1,000 billion, and it would have been quite a signal of encouragement,” he noted.

In the panel, thyssenkrupp Steel chief technological officer Arnd Köfler concurred, stating that “we need affordable power, also in view of the hydrogen production of the future”.

One extra factor that has compounded the impact of high power prices is the hike of grid fees that occurred in mid-December. “That was on a Friday afternoon, and our competitors in, for example, Italy and Poland will have cheered on in their Christmas markets when they heard that,” Becker concluded.

Christian Koehl Germany