Germany is significantly reducing electricity prices for industry. Can Czechia keep up?

Europe has a problem with competitiveness, and high electricity prices are a major contributing factor. The German government has therefore decided to take fundamental steps to significantly reduce the price of electricity for energy-intensive industries.

The first measure is to reduce the transmission fee from EUR 66.5/MWh to EUR 28.6/MWh, financed by the Climate Fund. The second step is to reduce the electricity tax to the EU minimum (from 2.05 cents to 0.05 cents per kWh), which should reduce the total price of electricity by approximately EUR 20/MWh. The third step is to introduce state support for the price of electricity for energy-intensive companies – the target "industrial" price should be €50/MWh, while current contracts for 2026 are trading at around €90/MWh on the exchange.

The current end price of electricity for energy-intensive industries in Germany is therefore approximately: 90 (power) + 66 (transmission and distribution) + 20 (electricity tax) + 10 (system services and others) + 0 (POZE, abolished in 2022) = EUR 186/MWh.

After the introduction of the above measures, the price should be as follows: 50 (power electricity) + 29 (transmission and distribution) + 0.5 (electricity tax) + 10 (system services and others) + 0 (POZE) = 90 EUR/MWh.

The difference of almost EUR 100/MWh represents a dramatic relief for German industry. This raises the questions: Will Czech companies be competitive? Will they not have significantly more expensive electricity? Will the problem of loss of competitiveness not be transferred from Germany to other European countries?

For comparison: the final price of electricity in Czechia is currently composed as follows: 90 (power electricity) + 40 (transmission and distribution) + 3 (electricity tax) + 10 (system services and others) + 20 (POZE) = 163 EUR/MWh.

What options does the Czech government have? One measure already under discussion is for the state to cover the costs of supporting renewable energy sources. These costs are estimated at CZK 18-20 billion per year. Such a step would reduce the final price of electricity by about EUR 20/MWh, i.e. to EUR 143/MWh.

However, this is still significantly higher than the intended level in Germany. The only way to truly eliminate the difference would be to subsidize the price of electricity for energy-intensive industries, as is done in Germany. The fiscal impact would depend on the definition of the sectors concerned, but it would certainly not be low.