Germany’s government has approved draft legislation aimed at reducing electricity costs, which are currently the highest in Europe, by cutting power grid fees and the electricity tax. These costs are driven up by transmission charges, levies, and taxes, placing a significant burden on energy-intensive industries and the broader economy.
Under the first draft bill, network usage fees will be lowered for all consumers over a four-year period starting in 2026, supported by €6.5bn in annual government subsidies to be allocated to transmission system operators. A second bill proposes reducing the electricity tax to the EU minimum rate, but this measure would apply only to specific sectors, such as manufacturing industry, agriculture, and forestry. Finally, the costs of the gas storage levy will be balanced in late 2025 with a €3.4bn financing from the Climate and Transformation Fund (KTF), and the levy will no longer be levied as of 2026.
Both draft bills must still pass through the Bundestag (lower house) and the Bundesrat (upper house) before entering into force in 2026.