The European Commission has approved the planned German industrial electricity price. The German government can now subsidize electricity costs retroactively from 1 January 2026 and until the end of 2028. A total of 3.8 billion euros has been earmarked for this.

The electricity price for eligible companies will be capped at five cents per kilowatt hour. The difference to the actual market price will be covered by the state - a model that Federal Minister for Economic Affairs Katherina Reiche described as removing a "brake pad" for Germany as an industrial location.

Up to around 9,500 companies in 91 (sub-)sectors across Germany are potentially eligible for aid, including the manufacture of rubber and plastic goods, the manufacture of chemical products, metal production, surface finishing, semiconductor production and mechanical engineering.

The aim of the industrial electricity prize is to strengthen the competitiveness of German manufacturers, prevent relocation and thus safeguard value creation and employment structures in strategically important sectors. At the same time, the measure is intended to support companies in asserting themselves in global competition.

There are conditions attached to the funding: Companies must reinvest at least 50 percent of the aid amount received in more climate-friendly production processes. Eligible measures include the installation of renewable energy systems on company premises.

The industrial electricity price can be combined with the existing electricity price compensation. In practice, this is handled by the Federal Office of Economics and Export Control (BAFA): Applications will be submitted retroactively for the entire year 2026 from the beginning of 2027. The amount of the subsidy will then be based on actual consumption and the average electricity prices for the year in question.

VCI: Relief too low

Criticism came from the German Chemical Industry Association (VCI). It criticized the relief as being too low. Matthias Belitz, Head of Sustainability, Energy and Climate Protection at the VCI, emphasized: "The Commission's approval is an important step. It can provide additional relief for the industrial electricity price. However, it is also clear that the current EU requirements are so strict that little will reach the companies. According to our calculations, the relief would amount to less than ten percent of electricity procurement costs for most companies. The instrument alone will not solve the energy cost problems."

The industrial electricity price is massively restricted by numerous requirements from the EU state aid framework. It should be possible to apply it to half of companies' electricity costs - although grid fees, taxes and levies would still have to be paid in full. The VCI also criticized the fact that the electricity costs eligible for relief may be reduced by 50 percent, but not by less than 5 cents per kilowatt hour, and that half of the relief amount must be invested in ecological compensation. According to the VCI, these requirements, the time limit of three years and the expected bureaucratic effort will severely limit the relief effect.

Overall, Belitz believes that the industrial electricity price can only be a small piece in the mosaic to make electricity costs in Germany internationally competitive again. In addition, tangible structural changes to the energy transition are urgently needed. Belitz: "The ideas of Federal Economics Minister Reiche to reduce system costs are a step in the right direction. Now is the time to implement changes quickly and effectively."