This article was the Topic of the Week in the newsletter of KW 21 in 2025.

The new Federal Minister for Economic Affairs and Energy, Katherina Reiche, has announced that the affordability of energy and supply security would be at the center of her policies. To achieve this, the Federal Government plans to lower electricity prices and announce tenders for new gas power plants with a capacity of 20 gigawatts, which should be operational by 2030.

Electricity Price Reductions Overdue for Businesses

The electrification is intended – as has long been the political will – to enable the path to operational climate neutrality for companies. However, politics has long forgotten that the electricity for this must also become cheaper. Germany has traditionally been a country with high electricity prices. The black-red coalition now intends to counteract this: lowering the electricity tax to the European minimum, capping grid fees, and reducing levies. If this program is implemented promptly, it could help many companies with electricity prices.

Subsidized Gas Power Plants Increase Energy Costs

But new costs are already looming elsewhere. Additional burdens for the economy would arise, among other things, from the up to 20 gigawatts of new gas power plant capacities that the Federal Government wants to bring online by 2030 with state subsidies. On the one hand, this would increase the prices for gas and CO₂ certificates, as power plants demand both in large quantities. Corresponding price increases would be felt especially by the industry, which competes directly with power plants for gas and certificates. Additionally, state subsidies, which would likely cover both construction and operation, would have to be borne by electricity consumers through a levy – this is stipulated by European state aid law. The industry would also be particularly affected, as its electricity consumption cannot be flexibly reduced at short notice. This is because the levy is primarily based on the hours with the highest prices – for technical reasons, the industry can hardly reduce its electricity consumption during such times.

Secure Supply Even Without Operating Power Plants

Power plants currently provide a large part of the so-called system services, ensuring the reliable functioning of the electricity grid. For example, this includes power plants ramping up or down when the frequency in the electricity grid deviates from the permissible value of 50 hertz. However, with the expansion of renewable energies, the hours are increasing in which these fully take over the supply. While there will always be times when wind and sun hardly contribute to the supply due to lack of availability, the supply must still be secure even when no or few power plants are online. This is made possible by storage systems, which are increasingly market-driven coming online, but also by solar and wind energy plants. These can and must be increasingly used for this in the future.

Keeping Risks with Providers

State-subsidized gas power plants increase the energy costs of the economy and do not alone address the actual challenges of the electricity system. Additionally, the economic risks of supply are shifted to consumers through the levy of electricity costs – and thus to a good part on companies. More sensible is the determination that electricity providers must fundamentally and verifiably secure their contractually guaranteed deliveries in the future. This is prescribed at the European level and must therefore also be incorporated into German law. How electricity providers secure themselves is flexible: whether classically on the forward market, through their own power plants and storage or through variable contracts with flexible demanders – this is best decided .