Germany has agreed to subsidize electricity for its heavy industries, capping prices at about \u20ac0.05 per kilowatt-hour from 2026 through 2028\u2014a major policy move aimed at keeping its industrial base from eroding under the weight of Europe\u2019s soaring energy costs.<\/p>\n
Chancellor Friedrich Merz said Thursday that Berlin\u2019s coalition partners reached the deal after months of debate, and that discussions with the European Commission for approval were \u201clargely complete.\u201d The measure will target energy-intensive industries such as steel, chemicals, and automaking\u2014sectors that have warned repeatedly they cannot compete globally with power costs nearly double those in the U.S.<\/p>\n
Germany\u2019s power market is the largest in Europe, consuming roughly 500 terawatt-hours annually, and it\u2019s been under severe pressure. Since the 2022 energy crisis, power prices have remained volatile\u2014spiking again this fall as renewable generation faltered and gas-fired output surged to its highest level since 2021<\/a>. Low wind speeds, weak hydro output, and grid bottlenecks forced Germany to burn more natural gas and coal to stabilize supply.<\/p>\n Those dynamics have made energy security a central political issue. Forecasts of a cold winter have already driven German power futures near \u20ac100 per megawatt-hour<\/a>, reigniting public anger over industrial competitiveness and household affordability.<\/p>\n Industry groups say the temporary subsidy is essential to prevent production from shifting overseas. But critics warn it only papers over deeper structural problems\u2014aging infrastructure, slow permitting, and unreliable renewable output\u2014that have left Germany dependent on fossil fuels despite its ambitious climate targets.<\/p>\n