Germany to ease burden on electricity consumers from 2026

German electricity consumer prices are set to ease next year due to a €6.5 billion ($7.55 billion) government subsidy to finance transmission costs, sources in the Economics Ministry said on Thursday.

The aim is to soften the impact of network charges on electricity consumers, the sources said, adding that the ministry has introduced a draft bill for internal government consultation.

Structurally high electricity prices are a significant challenge for Germany's embattled economy and a burden on consumers. The subsidy is to be financed from a special government fund for climate and energy transformation.

The subsidy for transmission network costs will now be implemented for the year 2026, with further relief in future years to be funded to the tune of €6.5 billion from the government pot, according to the ministerial sources.

Details of how the relief will be passed on to consumers are still to be discussed by the conservative-led government coalition under Chancellor Friedrich Merz.

The coalition agreement states that the goal is to permanently cap network charges.

The reduction of network charges is part of a package of government measures.

The Cabinet has already set plans in motion to relieve gas customers. Specifically, companies and consumers are to be exempted from the cost of building up gas reservoirs, the so-called gas storage levy.

There are also proposals to make an electricity tax reduction for the manufacturing industry, agreed earlier this year, permanent from 2026.

However, a reduction in electricity taxes for all, as pledged in the new government's coalition agreement, is not to come for now.

The decision to limit the tax reduction to industry, due to budgetary constraints, sparked widespread criticism.

Network charges, which help finance the costly expansion of electricity networks, have risen significantly as a component of the electricity price.

The charges are incurred for the use of the electricity transmission network. They are then passed on to consumers by energy suppliers.

The subsidy for transmission network costs is intended to dampen the increase in network charges related to the transition to green energy sources, according to the draft bill.

"The relief must be passed on to customers through the network operators," Economic Affairs Minister Katherina Reiche told dpa last month of the planned measure. "My clear expectation of the industry is: The relief must reach the customer."