Germany considers subsidising offshore wind electricity for industry users

The German economy ministry is working on a proposal to subsidise offshore electricity for industry customers through an auction scheme in order to shield companies against rising costs, business daily Handelsblatt reported. A consortium of consulting firms including Consentec, Enervis, Ecologic and the Fraunhofer Institute for Systems and Innovation Research (ISI) in a joint paper proposed to use so-called ‘contracts for difference’ and auctions. The government would then step in to pay the difference between winning bids and the power price. However, the introduction of such a system could take time, with legal implementation possible "in 2024 at the earliest,” said the consultancy paper. Accordingly, the first tenders could take place at some point in "2024 to 2025". However, the offshore wind turbines, still to be built, would not go into operation until "2029 to 2030,” writes Handelsblatt.

Amid the energy crisis, fuelled by Russia’s war against Ukraine, both private and commercial consumers have faced drastically rising prices. The government has introduced support schemes to help industry, but these are temporary. The power prices paid by industry are one of the most contentious aspects of Germany's energy transition and its economic impacts. Business lobby groups routinely call the price of electricity a central threat to industry competitiveness. Yet the sweeping claims in this debate hide the fact that there is no single power price for industrial consumers, but instead an exceptionally broad range of prices. Due to a complex system of taxes and levies, energy prices depend on how much power companies need, when they need it, how they source it and whether they compete with rivals abroad, among many other factors.