a planned industrial electricity price and a comprehensive power plant strategy.. The announcements, delivered late Thursday, represent a significant shift in the government’s approach to energy security and industrial competitiveness, but also raise critical questions regarding long-term sustainability and EU compliance.
The industrial electricity price, slated to take effect between 2026 and 2028, aims to alleviate the burden on energy-intensive industries facing intense international competition. The targeted price of approximately 5 cents per kilowatt-hour is presented as a vital measure to lower production costs. While Merz expressed confidence in securing approval from the European Commission, the proposal has already drawn scrutiny from Brussels, with concerns raised about potential distortions to the single market and adherence to EU state aid rules. Critics argue that such a subsidized rate could create an uneven playing field for businesses across Europe.
Complementing the industrial electricity price is the power plant strategy, a response to concerns regarding Germany’s reliance on intermittent renewable energy sources. The strategy proposes the construction of new power plants capable of bridging gaps in electricity supply when wind and solar generation is insufficient. The government intends to auction off a total of eight gigawatts of new, controllable capacity by 2026, with the facilities expected to be operational by 2031. These plants, initially powered by natural gas, are envisioned to be adaptable to hydrogen fuel in the future.
While proponents frame this as a pragmatic step to ensure energy security, the move has triggered debate regarding Germany’s commitment to its climate targets. Environmental groups have voiced concerns that increased reliance on fossil fuel-powered plants, even those with hydrogen compatibility earmarked for the long term, will undermine efforts to transition to a carbon-neutral economy. The sudden emphasis on “controllable” power represents a potential backtracking on previous ambitions for exclusively renewable energy.
Furthermore, the scale and speed of the planned power plant expansion raise questions about the government’s strategic planning and risk assessment. Securing the necessary permits, supply chains and workforce to execute such a sizeable infrastructure project within the stated timelines will present considerable logistical and political hurdles. The decision also potentially locks the nation into substantial investment in infrastructure which may become obsolete if hydrogen technology does not mature as rapidly as anticipated.
The announcement from the coalition underscores a growing divergence in economic and environmental policy, highlighting the complex challenges inherent in balancing industrial competitiveness with long-term climate goals.