Green Light for Germany’s Industrial Electricity Price

Energy-intensive industrial companies in Germany face significantly higher energy prices than their international competitors in the U.S., China, and France. Recent geopolitical events in the Middle East have only exacerbated this challenge. Now, in a significant development, the European Commission has approved Germany’s industrial electricity price under EU state aid rules.

Background

For years, energy-intensive industries have urged German and European policymakers to provide relief from high energy costs. For these companies, energy prices represent a significant—and often decisive—cost factor affecting competitiveness. In 2023, then-Federal Minister for Economic Affairs Robert Habeck proposed a temporary “bridge electricity price” of 6 cents/kWh that would have subsidized 80% of these companies’ base consumption. However, his proposal failed to gain traction.

The new federal government has taken a fresh approach through its coalition agreement. After the coalition committee agreed on key points for an industrial electricity price in November 2025, the Federal Ministry for Economic Affairs and Energy (BMWE) presented a draft national funding guideline in January 2026. On April 16, 2026, the European Commission approved the industrial electricity price under the “Clean Industrial Deal State Aid Framework” (CISAF)—the EU’s new state aid framework for clean industries.

The industrial electricity price aims to reimburse energy-intensive companies for a portion of their electricity costs. The objectives are threefold: strengthening the competitiveness of German manufacturers, preventing relocations and the associated “carbon leakage,” and securing employment and value creation in strategically important sectors.

The program will run for three billing years (2026–2028). Applications to the Federal Office for Economic Affairs and Export Control (BAFA) are submitted retroactively, with the first applications for 2026 beginning in early 2027. Companies already applying for the Special Compensation Scheme should generally face no additional administrative burden.

State Aid Framework

The industrial electricity price is based on the new EU State Aid Framework (CISAF), published by the European Commission in June 2025. Valid until 2030, it allows member states to grant electricity price relief to energy-intensive companies. For such state aid to comply with European law, it must meet certain conditions. In particular, the Commission will approve aid for companies in sectors that face a heightened risk of carbon leakage—and thus relocation. This applies to sectors listed in Annex I, Partial List 1 of the Guidelines on State Aid for Climate, Environmental Protection, and Energy (the KUEBLL list).

The 91 subsectors listed there—potentially affecting up to 9,500 companies—encompass key segments of Germany’s traditional energy-intensive industries. These include chemicals, glass, food production, and metalworking, and the framework also covers small and medium-sized enterprises (SMEs).

Additional subsectors may also qualify for the industrial electricity price, pending European Commission approval, provided they meet the state aid criteria for sufficiently high electricity and trade intensity. The BMWE has launched a call for industry associations to submit evidence on this matter.

Aid recipients must also commit to investments that contribute to the green transition and, over the medium to long term, reduce energy costs (more on this below).

How the Industrial Electricity Price Works

The industrial electricity price functions as a differential subsidy: the government partially compensates for the difference between the actual electricity price and a target price. The maximum relief is 50% of the wholesale electricity price, which serves as the reference price. This reference price is determined based on the previous year’s electricity prices (one-year futures), with a price floor of 5 ct/kWh. The specific subsidy amount depends on actual electricity consumption and prevailing market prices, and is paid retroactively. For example, assuming a (hypothetical) reference price of 8.75 ct/kWh for 2026, the subsidy would amount to approximately 3.75 ct/kWh for 50% of electricity consumption (after applying the 5 ct/kWh price floor).

Eligible Entities in Germany

Companies must demonstrate that both the applicant (the entire company) and the relevant consumption site are listed in Annex 1 of the KUEBLL. If these criteria are met, the company’s electricity consumption at that site is eligible for aid—regardless of whether additional non-eligible activities are also conducted there. In this respect, the German funding authority follows the approach established under the Special Compensation Scheme pursuant to the Energy Financing Act (EnFG).

Green Investments

Companies seeking relief under the industrial electricity price must take concrete action to support climate goals. Specifically, aid recipients must invest at least 50% of the aid amount in decarbonization measures within 48 months of receiving the funds. The BMWE considers the following measures eligible:

• Investments in renewable energy expansion;
• Energy efficiency improvements, such as modernizing existing facilities;
• Flexibility measures, including battery storage or power-to-heat systems;
• Infrastructure modernization or expansion, such as internal grid upgrades;
• Electricity procurement costs through newly concluded Power Purchase Agreements (PPAs), provided these finance new or modernized facilities;
• Development of electrolyzers for producing renewable or low-carbon hydrogen;
• Electrification investments;
• Integration costs for electricity from new or modernized renewable energy plants, including construction cost subsidies to expand connection capacity.

These investment measures may be implemented by the applicant or by third parties, but must be carried out within Germany.

Companies can receive a 10% increase in their grant amount by demonstrating that at least 80% of their matching contribution is invested in measures to increase demand flexibility. At least 75% of this flexibility bonus must be allocated to decarbonization measures.

Violations of the funding conditions may result in revocation of the aid.

No Double Funding

The industrial electricity price applies solely to the energy charge—that is, the consumption price per kWh. Other common relief measures target different components of the electricity price, such as the Special Compensation Scheme, so there is no apparent overlap. From a state aid perspective, partial cumulation with other subsidies may be possible, provided it does not cause applicable maximum aid intensities or amounts to be exceeded.

However, one relevant subsidy also targets the energy price: electricity price compensation. In a press release dated April 16, 2026, the BMWE confirmed that companies can receive the industrial electricity price for electricity consumption at eligible production facilities for which no electricity price compensation application is submitted. This means combining the industrial electricity price with electricity price compensation is permitted across different supply points or production facilities—but double funding of the same electricity consumption is prohibited under state aid law.

Outlook

The national funding guideline is still being coordinated among federal ministries and will subsequently be submitted to the European Commission for final approval. Nevertheless, companies should assess now whether they are eligible and what investment obligations participation would entail.

Our team has extensive experience advising at the intersection of energy law and EU state aid law. We can support you in assessing eligibility, submitting applications, and navigating implementation—all while keeping a close eye on political and regulatory developments. Please do not hesitate to contact us.

Please do not hesitate to contact us for further information. We would be happy to help.