Germany is planning considerable electricity price support for its companies, possibly offering rates at half the usual cost in Central Europe, according to Karel Havlíček, the likely future Minister of Industry adn Trade.
As EuropeS largest economy and the Czech Republic’s primary trading partner, Germany’s economic performance significantly impacts Czech businesses.
The support focuses on reducing the cost of power transmission – the charge for delivering electricity from plants to homes and businesses – and currently comprises the unregulated portion of the total price. The remaining, regulated portion covers network maintenance, development, and renewable energy support.
From January, Germany intends to cut electricity transmission fees by 57 percent and reduce the electricity tax from €20 to €0.50 per megawatt hour. Deloitte’s chief economist, David Marek, estimates this could lower the total price for customers by €55-60 per megawatt hour (CZK 1,330-1,460).
Moreover, the german government aims to lower the wholesale electricity price to €0.05 (CZK 1.20) per kilowatt hour, allowing companies to access cheaper electricity for half their consumption, according to Štěpán Křeček of BH Securities.
The initiative carries a important price tag. The industrial tariff is projected to cost €1.5 billion (CZK 36 billion) annually, with cheaper transmission support adding another €6.5 billion (CZK 158 billion), funded by national climate funds. The plan requires approval from the European Commission.
However, this move poses a challenge for the Czech Republic. “It will be a big problem for the Czech Republic.Prices for energy-sensitive industrial producers are already higher than in the decisive countries of the European Union,” says Michal Macenauer, strategy director of EGU.
Adding to the disadvantage, German companies no longer bear the cost of supporting renewable energy sources, unlike their Czech counterparts. Macenauer notes that the Czech Republic is falling behind major industrialized nations in subsidizing the transition away from fossil fuels.