German Mid-Sized Groups Warn of High Energy Costs

Germany's medium-sized industrial groups on Monday warned that high energy costs caused by the country's shift towards green power would harm their competitiveness over the next two years and called on the government to keep a lid on prices.
 

Nearly three out of four companies have a negative view on energy price developments in Europe's biggest economy, according to a report commissioned by consultancy PwC and industry lobby BDI which was published on Monday.
 

"Germany's medium-sized industrial companies depend on safe energy supply. The energy shift, however, makes it difficult to predict how costs will develop. Concerns about Russian gas supplies are a further issue," Peter Bartels, head of medium-sized businesses at PwC, said in a statement.

"Both factors are already impacting investments," he added.

The survey of nearly 800 German medium-sized industry groups found that nearly 40 percent of companies had either cancelled or delayed investments due to high energy and raw material costs.
 

Germany has embarked on an ambitious shift away from nuclear power and towards renewable energy sources, a decision triggered by Japan's Fukushima disaster three years ago and one which has boosted power prices significantly.
 

Wind and solar power still depend on subsidies, ultimately shared by households and companies, which now have to pay the highest power prices in Europe, Eurostat data shows.

Companies with particularly high energy use enjoy exemptions from some of the costs, but they still face higher power prices compared with their peers in the United States, where a shale gas boom has slashed power prices.

Germany's dependence on Russian gas has also been a cause for concern among companies, fearing potential Western sanctions could disrupt flows. Russia accounted for about 39 percent of Germany's natural gas imports last year.

(Reporting by Christoph Steitz; editing by Jason Neely)