Germany's Coalition Unveils Subsidized Electricity Rates for Industry

By Rachel More and Andreas Rinke

BERLIN (Reuters) -Germany's ruling parties have agreed to introduce a subsidised power price for energy-intensive industries until 2028 to reduce costs and boost Europe's largest economy, Chancellor Friedrich Merz said on Thursday.

German companies, including automakers and steelmakers, have long complained that high energy prices put them at a competitive disadvantage.

Conservative leader Merz said the subsidised electricity price for industry will be set at 5 euro cents per kilowatt hour until 2028, following coalition talks with his Social Democrat coalition partners.

"The aim is to significantly relieve the burden on our economy and reduce production costs," Merz said.

The EU must agree to the scheme under rules regulating state aid.

"Discussions with the EU Commission are largely complete, and we expect to receive approval for this," Merz said.

The VCI association representing the chemicals industry called the measure useful but said the government needed to do more to make Germany competitive for industry.

"We now need relief across the board - in energy, taxes and bureaucracy," VCI head Wolfgang Große Entrup said in a statement, warning that the situation for companies was "becoming more acute every day".

German voters elected Merz in February on a promise to boost German industry during a prolonged economic malaise.

The chancellor and his coalition partners also agreed on Thursday to tender 8 gigawatts of capacity for gas power plant construction and to reduce air traffic control fees — saving the aviation sector 350 million euros ($408 million).

($1 = 0.8575 euros)

(Reporting by Rachel More and Andreas Rinke; Editing by Mark Potter and Lisa Shumaker)