German Cabinet approves $1.4 billion subsidy to reduce 2025 electricity network fees

The German cabinet approved a proposal to provide a subsidy of 1.3 billion euros ($1.37 billion) for electricity network fees that consumers will pay next year. This was announced by the Economy Ministry on Tuesday.

High energy prices are straining household budgets in Europe's largest economy and affecting industrial production.

The ministry stated that the subsidy would be funded by federal funds. It is expected to reduce the network charges, which make up approximately 20% of the electricity bill.

The network fees will continue to increase to fund the significant investments needed to modernise Germany’s electricity grid in order to support renewable energy expansion. According to the German BDEW utilities lobby, grid charges for industrial clients have nearly doubled since 2012.

"The German industry is under pressure and we must do all that we can to improve its competitiveness. "With this proposal, we have taken an important step", Economy Minister Robert Habeck stated in a press release.

After the fall of the German governing coalition, the subsidy will be subject to approval by the parliament.

Habeck argues that, in the medium-term, the cost of expanding Germany’s electricity network should be spread across generations to encourage the decentralisation of solar and wind energy. This expansion is funded by consumer energy bills. It's estimated to cost 450 billion euro by 2045. ($1 = 0.9499 euros) (Reporting by Riham Alkousaa; Editing by Kirsten Donovan)

(source: Reuters)