Federal authorities plan to alleviate financial burdens on gas consumers
The German government has announced a package of measures aimed at reducing energy costs for consumers and businesses, while balancing the need for infrastructure investment and adhering to climate commitments.
The proposed plans include a reduction in network charges, a permanent reduction in the electricity tax for the manufacturing industry from 2026, and the abolition of the gas storage surcharge. These measures are expected to lower electricity prices by at least five cents per kilowatt-hour and reduce energy costs for all consumers by around €10 billion annually from 2026, translating to savings of up to €150 per year for private households.
To ensure grid reliability during the transition to renewables, the government intends to subsidize and build up to 20 gigawatts of new gas power plants acting as backup capacity, mainly concentrated in southern states with lower renewable production. This capacity will be auctioned with a "south bonus" to encourage construction there. However, the financing of these gas plants is expected to come from a new levy on all electricity customers to pay for a capacity mechanism, estimated to add around two cents per kWh in surcharges. The Green party has criticized this surcharge as expensive and opaque, arguing it contradicts the coalition’s pledges to lower electricity prices.
The government is also pushing structural reforms and reducing bureaucracy to encourage investments. This includes easier procedures for renewable energy projects and tax incentives to promote electromobility. Additionally, a planned €11.3 billion subsidy program will shield energy-intensive industries from electricity price shocks.
Despite these relief measures, there is criticism over the costs passed on to consumers via surcharges to fund gas backups and the perceived lack of transparency about the exact financial impact. Nevertheless, the plans remain aligned with Germany’s climate goals, targeting net-zero emissions by 2045 and an increase of renewables to 80% of electricity production by 2030.
| Area | Government Plan | Impact on Costs/Subsidies | Criticism | |-----------------------|-------------------------------------------------|----------------------------------------------|-----------------------------------| | Electricity prices | Cut electricity tax to EU minimum; reduce grid fees; abolish gas storage levy | Price lowering by at least 5 cents/kWh; €10 billion annual savings from 2026; up to €150/year savings for households | Partial backtrack: relief smaller for households; surcharge for gas plants may raise costs | | Gas power plants | Subsidize new 20 GW gas plants with capacity payments funded by levy on consumers | New surcharge (estimated ~2 cents/kWh) likely for all electricity customers to cover capacity payments | Green party warns surcharge is costly and lacks transparency | | Industry subsidies | €11.3 billion by 2030 to subsidize energy-intensive industries | Shield industries from high electricity costs | None specifically noted | | Bureaucracy & reform | Digital simplification, tax incentives for electromobility | Cost savings and investment incentives | None noted | | Climate targets | Achieve net-zero by 2045, 80% renewables by 2030 | Long-term energy transition goals | Tensions between fossil backup and renewables ambitions |
Overall, the German government aims to balance energy price relief with infrastructure investment and climate commitments, facing some political and consumer criticism over the additional levies related to gas plant subsidies. The reforms reflect both short-term relief efforts and long-term transition strategies.
The German government's plan to reduce electricity prices includes a permanent electricity tax reduction for the manufacturing industry from 2026, which might lead to savings of up to €150 per year for private households. However, the financing for new gas power plants, acting as backup capacity, is anticipated to come from a new levy on all electricity customers, potentially raising costs and facing criticism from the Green party.
In an effort to ensure grid reliability during the transition to renewables, the government plans to subsidize up to 20 gigawatts of new gas power plants, primarily in southern states, while pushing for structural reforms and reducing bureaucracy to encourage investments. Critics argue that these measures, particularly the levy for gas plant subsidies, contradict the coalition's pledges to lower electricity prices.
