German economy ministry considers new instrument to stabilise electricity prices

The German economy ministry is considering to stabilise electricity prices with a new instrument designed to reign in rising grid fees. "I want us to protect private households and companies from a sharp rise in grid fees," the Green politician told weekly newspaper Die Zeit, according to a report in business daily Handelsblatt. "To this end, we in the federal government are examining a kind of amortisation account - like for the planned hydrogen network." Habeck said the electricity grid needed to be expanded now, but if costs were passed on to customers immediately, it would be very expensive. "That's why I would like to spread the costs so that they are distributed more evenly across the generations."

An amortization account serves to spread out the costs for the use of a long-term asset over the expected use period. Habeck said that various models were now being examined, adding that he was aiming to have a solution to stabilise grid fees by next year. Electricity grid fees, which are added to users’ bills, have become a decisive cost factor for electricity prices in Germany. They often account for more than a third of the total electricity price. Habeck’s government coalition partner, the pro-business Free Democrats (FDP), are critical of the plans, according to the report. "Mr Habeck can propose a debt-based concept to his party conference; he doesn't need to propose it to a coalition with FDP participation," said Michael Kruse, energy policy spokesperson for the FDP parliamentary group in the Bundestag.

The idea of setting up an amortisation account first arose in connection with the financing of Germany’s planned hydrogen core network, the report said. The government wants to use this to compensate for the initially low income of the network operators resulting from too few users of the hydrogen network. This will prevent very high network charges and still allow the operators to operate economically.