2023-09-05 18:26:19
Paris In the debate about the industrial electricity price planned by Federal Minister of Economics Robert Habeck (Greens), reference is repeatedly made to the measures in France. Last year, the government in Paris decided on extensive help for companies in the energy crisis. The French approach has little to do with Habeck’s plans.
The industrial electricity price that is being debated in Germany is about capping the electricity price for energy-intensive companies at a low and flat rate per kilowatt hour. “There is no concrete and current construct in France that would fit this reference,” writes the scientific service of the Bundestag in an analysis.
The prices of electricity and gas for private households in the neighboring country were generously capped: suppliers were only allowed to increase electricity prices by four percent in 2022 and by a maximum of 15 percent in 2023, with the French government paying them the difference. However, the “bouclier tarifaire” does not apply to companies, with the exception of micro-enterprises with fewer than ten employees and an annual turnover of less than two million euros.
Nevertheless, the government in Paris also softened the price shock in the energy crisis for the economy and provided at least ten billion euros for this. Among other things, the state pays subsidies to energy-intensive companies. Companies can apply if the costs for electricity and gas correspond to more than three percent of their turnover and their energy costs have increased by at least 50 percent compared to the pre-crisis period.
The amount of support depends on other factors and varies from company to company. The aid can amount to a third of the increased energy costs, but is capped at a maximum of 50 million euros per company.
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The government in Paris is also counting on companies with long-term electricity contracts to reduce their energy costs. The state-owned energy group EDF is also planning a new offer for large industrial customers with a term of five to ten years. This long contract period should not only enable lower tariffs, but also protect companies from fluctuations.
Structurally lower electricity prices – also because of nuclear power
A complicated mechanism also helps to cushion electricity prices in France, in which EDF has to sell part of its cheap nuclear power to other suppliers below the market price. This mechanism goes back to a law from 2010. In addition, not only companies but also private electricity customers benefit from this.
In its analysis, the scientific service of the Bundestag writes that in France there are “historically and structurally lower electricity prices for industry due to a different power grid structure and lower duties and taxes”.
>> Read here: Habeck demands industrial electricity price again
In the second half of 2022, the electricity price without taxes and levies for energy-intensive companies in France was a good 13 cents per kilowatt hour (KWh), in Germany it was around 17 cents. With taxes and duties, the price difference between the two countries was even greater: a good 15 cents per kWh in France, a good 24 cents in Germany.
The measures taken for companies during the crisis are controversial in France. Economists criticize that the actual problem of expensive energy is by no means solved. “These aids have a short-term effect,” says energy expert Thierry Bros from Sciences Po University in Paris. “But if you don’t really treat the sick person, they will eventually die.”
Criticism by economists of short-term aid
What is needed is a ramp-up of domestic energy production, especially nuclear power in France, and a reform of the electricity market in the European Union, which is heavily dependent on expensive gas prices. Otherwise, you either accept high national debts or the exodus of companies, says Bros.
Jean-Michel Gauthier, professor at the Paris business school HEC, also doesn’t think it’s a good idea to “link the French state budget to the international energy markets” in a certain way with the aid. He warns: “This could prove disastrous for France.”
Companies are concerned about the moment when the energy aid will eventually run out. “The uncertainty remains as far as the future of energy prices is concerned,” said the head of the employers’ association Medef, Patrick Martin, to the newspaper “Le Figaro”.
Currently, the prices have fallen to “a more bearable level”. But for companies, the situation could become more difficult again as soon as the price cap is abolished. “And in view of the cost of state finances, there will be no other option than gradually reducing the aid,” said the employer president.
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