Companies for electricity price subsidies: “Do not endanger the transformation of the industry”

Status: 06.09.2023 08:02

The discussion about capped electricity prices for energy-intensive industries is in full swing. Company representatives see climate change in danger without state aid.

Römheld & Moelle consumes 18,000 megawatts of electricity on an annual average. “It takes 1,400 degrees Celsius to melt metals,” explains Managing Director Christoph Althausse. The medium-sized iron foundry from Mainz produces, among other things, pressing tools for the automotive industry and large cast parts for mechanical engineering. “We compete with other companies on the European market. The success of our orders depends heavily on our energy costs. Because of course we have to pass the energy prices on to our customers.”

Subsidies only emergency solutions

Managing Director Althausse therefore finds an electricity price of five cents per kilowatt hour (kWh) imperative, ideally through cheap generation, he explains. In Althausse’s eyes, subsidies – regardless of whether they are capped industrial electricity prices or tax reductions – are only emergency solutions. In his estimation, however, they are probably the only solution for a limited time to avert permanent damage to Germany as a business location. “As an energy-intensive medium-sized company, we need relief when it comes to energy costs, otherwise we will lose customers to the competition abroad, and at some point that would also cost jobs here.”

Althausse is convinced that if there were to be a cap on industrial electricity prices, energy-intensive medium-sized companies would also benefit. Around 70,000 people worked in the German foundry industry alone. Most of these companies are medium-sized. And: “But it is also important that no other burdens on the economy come through the back door. We don’t want any sham.” Althausse is skeptical about a reduction in the electricity tax, which is also being discussed: It is unclear whether a similar level of relief could be achieved at all as with a capped electricity price. After all, the price of electricity is subject to fluctuations on the electricity exchange.

Competitors have lower electricity costs

Schott AG in Mainz is also part of an energy-intensive industry. The international company produces special glass, for example glass vials for medicines and vaccines, glass ceramic cooktops and special optical glasses. Glass melting processes require continuous temperatures of up to 1,700 degrees Celsius. In order to make production more climate-friendly, Schott has initiated several electrification projects – based on green electricity and hydrogen. At the Mainz site, for example, tests were carried out to determine how melting tanks can also be heated with hydrogen.

The CEO of Schott AG found a cap on electricity prices to be unavoidable because of the international competition. “We demand a competitive price, between four and six cents/kWh,” says Frank Heinricht, who is also President of the Glass Industry Association. If the electricity prices in Germany remained high in an international comparison, Schott believes that this would mean considerable disadvantages in the global market. “Our competitors in the USA, Asia and other European countries have significantly lower energy prices,” explains Heinricht.

Preventing or accelerating the transformation?

Marcel Fratzscher, President of the German Institute for Economic Research, is fundamentally skeptical about a capped industrial electricity price. Most recently, the economist had emphasized several times that, in his opinion, a subsidized industrial electricity price would prevent necessary transformation processes and cement old structures.

At Schott AG in Mainz, they judge things quite differently. The company has set itself the goal of producing climate-neutrally by 2030. Schott wants to move away from fossil fuels, so far the glass manufacturer has mainly relied on gas. However, Schott AG needs planning security for the transformation process: “If we are going to operate our melting tanks with hydrogen or green electricity in the future, we will need significantly more electricity for this,” emphasizes CEO Heinricht. “We need clear guarantees here that future prices will be competitive.”

The transformation will entail high investments. “We would therefore see the subsidization of the electricity price as security and motivation to continue this process.” Heinricht doubts that a reduction in the electricity tax would be just as helpful as a cap on industrial electricity prices. The lever is less effective and therefore not so useful from the company’s point of view.

No more green electricity without subsidies

Since this year, the iron foundry Römheld & Moelle has deliberately relied on 100 percent green electricity from hydropower because of the CO2 balance. Managing Director Althausse is also concerned with the question of how the costs for green electricity will develop in the future. “We definitely want to stay on course and thus make our contribution to climate protection.” The medium-sized iron foundry wants to secure sustainable industrial jobs in Germany with sustainable production. “Climate-friendly castings ‘Made in Mainz’ are in great demand, but only if they can be manufactured at internationally competitive costs.”

Althausse therefore hopes for his iron foundry that politicians will soon agree on reducing the electricity price for energy-intensive companies. If there were no cap on industrial electricity prices, this would have consequences: “First of all, it could be that we have to do without green electricity due to economic constraints. A permanent loss of orders means a danger for jobs.” Althausse also demands from politicians that the generation of sufficient quantities of renewable energy must now progress as quickly as possible.

“The perhaps secretly cherished thought of some politicians, that high prices force energy savings and that relieves the burden on the environment, will not get us anywhere.” Römheld & Moelle have already made considerable efforts to save energy. Physically, however, there will be an end at some point. Iron cannot be heated to 1,400 degrees Celsius without energy. The only option would then be to stop producing at all. Then another 150 jobs would be lost in Mainz.

source site