Transmission Grid Costs, Electricity Tax, and Electricity Price Compensation (SPK)

Following the Bundestag’s resolution on November 13, the Bundesrat approved the subsidy for transmission grid costs. The subsidy of 6.5 billion euros in 2026 will be financed by the Climate and Transformation Fund (KTF) and will benefit the four major transmission system operators, who must take the subsidy into account when calculating grid fees. Furthermore, the coalition approved a lower electricity tax for approximately 600,000 manufacturing companies; this relief will cost the government about 3 billion euros in tax revenue annually.

Currently, energy-intensive industries benefit in particular from the SPK, which offsets the indirect costs and those caused by the CO2 price associated with electricity procurement. This instrument is now to be expanded, and the range of industries eligible for aid is to be broadened. The key factor driving this is an update to the state aid guidelines by the European Commission, which the federal government will subsequently incorporate into an amended SPK funding guideline. Specifically, 20 new sectors could be added to the list of eligible industries, including, for example, battery cell manufacturing and large parts of the chemical industry. Currently, approximately 350 companies benefit from the SPK.

Industrial Electricity Price and the EU State Aid Framework (CISAF)

As a supplement to the SPK, the coalition government has also agreed to introduce an industrial electricity price effective January 1, 2026. This is subject to the EU-established state aid framework, the Clean Industrial Deal State Aid Framework (CISAF). The CISAF was adopted by the European Commission in June 2025 and, among other things, allows member states to temporarily provide relief to their energy-intensive industries. Specifically, the CISAF stipulates that an energy-intensive company may claim a maximum of 50% of its annual electricity consumption under the industrial electricity price. A discount of up to 50% of the wholesale electricity price may then be applied to this amount of electricity. In addition, there is an obligation to provide countermeasures amounting to 50% of the aid received in the form of investments that contribute to the energy transition and, in the medium to long term, to reducing the costs of the energy system.

Specifically, this means the obligation to invest in new or modernized facilities that make a measurable contribution to reducing the costs of the electricity system without increasing the consumption of fossil fuels. Eligibility for this instrument is based on Sublist 1 of Annex I to the Guidelines on Climate, Energy and Environmental Aid (CEEAG). Additional (sub)sectors may be eligible, provided that the European Commission approves compliance with the eligibility criteria set forth in paragraphs 116 and 117 of the CISAF. The industrial electricity price is limited to a period of three years and will be implemented in Germany for the years 2026–2028. Payment is made ex post, i.e., the discount for 2026 will be paid out in 2027.

Limited Impact and Misplaced Expectations

The CISAF prohibits the cumulation of the SPK and the industrial electricity price (double funding), which is likely to significantly reduce the pool of beneficiaries. Under a strict interpretation, this would mean that an eligible company would have to decide in the future whether to claim the SPK or the industrial electricity price. However, it remains unclear whether a company may claim electricity volumes to which the SPK does not currently apply for the industrial electricity price. If this option is not included in the final draft of the subsidy guidelines for the industrial electricity price, it would significantly limit the effectiveness of the new instrument. Against this backdrop, the BDI is advocating for the SPK and the industrial electricity price to be combinable.

Notwithstanding these restrictions, misleading media coverage on the topic created the impression that the entire industry would be paying an electricity price of 5 ct/kWh starting next year. In fact, however, this is merely a target price cited by the federal government, which is not guaranteed by the CISAF’s limitations mentioned above.

Consequently, media coverage of the new instrument has created false expectations among many corporate customers and investors, which now need to be corrected. Against this backdrop, it is now all the more important to quickly clarify the exact structure of the industrial electricity price in order to provide industry with the necessary planning certainty. Accordingly, the federal government should finalize the exact functioning of the instrument with the European Commission before the end of this year.

The Need for Targeted Design at the EU Level

The BDI recognizes the German government’s clear commitment to providing targeted and rapid relief to those sectors of industry that are currently suffering particularly from high electricity costs. Negotiations at the European level are crucial to the effectiveness of the industrial electricity price in particular; here, existing restrictions must be lifted as far as possible to ensure the instrument is effectively structured.

In addition, the right course must be set as soon as possible to offer industry competitive electricity prices even after the three-year relief program expires. The SPK should also be expanded swiftly, as planned by the federal government. While this will not permanently resolve the problem of high electricity costs in Germany, the relief measures will open a strategic window of opportunity for structural adjustments.