Europe’s industrial electricity prices: can the EU learn from the UK?

Germany: industrial electricity price as a lifeline

In Germany, the debate around a state-subsidised industrial electricity price has gained significant momentum. From January 1, 2026, until the end of 2028, EIIs will receive a state-subsidised wholesale price of “five cents” (0.05 EUR/kWh) for about half of their electricity consumption. However, this relief is tied to conditions: at least half of the subsidy must be invested in efficiency measures, greater demand flexibility, or the integration of renewable energies. The package also includes a permanent reduction of electricity taxes for industry, targeted grid fee subsidies, and the elimination of the gas storage levy.

The five cents per kilowatt-hour price is significantly below the average 11–19 cents per kilowatt-hour that industrial customers were paying in 2025, according to the Monitoring Report of the German Federal Network Agency. Nevertheless, Germany remains a high-cost location in a European comparison, although tax relief already reduces the burden. The EU Commission has generally approved such interventions, but under strict conditions: support may only cover part of consumption and is time-limited. This is a narrow design, as it could prevent companies from combining different support instruments effectively.

The German example shows that state price interventions may remain necessary if no market-based solutions emerge to ensure competitive end-customer prices. The goal should therefore not be to replace one relief program with another. It should create a long-term framework that promotes investment in new generation capacity, while ensuring competitive electricity prices for energy-intensive users.

Italy: price relief as an investment lever

Italy also provides relief for energy-intensive companies, but with a different focus. The reformed “Energy Release” program combines short-term price stability with binding investment commitments. Specific companies receive electricity at 65 EUR/MWh for three years. In return, they commit to financing new renewable generation capacities that significantly exceed the pre-financed volume which must be realised within a defined timeframe.

Italy uses price relief not as a pure subsidy but as a lever to stimulate additional investments in renewable energy. This approach links short-term competitiveness with long-term supply expansion, which is going in the right direction.

France: state price stability through nuclear power

France has pursued its own path on this topic for years. Thanks to its strong nuclear share, industrial electricity prices under the ARENH mechanism (Accès Régulé à l'Électricité Nucléaire Historique) were long below the EU average. Through this model, the state-owned energy provider EDF had to sell up to 100 TWh of nuclear power per year at a regulated price of 42 EUR/MWh.

However, this system expired at the end of 2025. From January 1, 2026, it will be replaced by the “Versement nucléaire universel” (VNU). The principle differs slightly from the previous system, as it no longer sets an administrated price. Instead, it redistributes a portion of the revenue from nuclear sales to consumers once certain price thresholds are exceeded. However, even this new system does not solve the issue that companies still need to be relieved through such redistribution.

The European framework: CISAF as a regulatory umbrella

At the European level, the Clean Industrial State Aid Framework (CISAF) provides the overall outline for national support programs. CISAF allows member states to specifically relieve EIIs, but under clearly defined conditions and often linked to decarbonisation and transformation goals.

CISAF is less a funding instrument in itself and more a regulatory umbrella that enables short to medium-term relief measures. It creates room for manoeuvre but does not solve the structural problem that European energy-intensive companies face a competitive disadvantage due to higher energy prices.

United Kingdom: structure rather than a temporary solution?

In the UK, relief mechanisms for EIIs, such as the “Energy Intensive Industries (EII)” Exemption Scheme, are already well-established. Qualifying businesses are partially exempted from both grid fees and climate policy costs, receiving exemptions (up to 85%) from their Contract for Differences (CfD), Renewables Obligation (RO), and Feed-in Tariff (FiT) costs.

The British government also plans to introduce the “British Industrial Competitiveness Scheme,” a complementary measure for energy-intensive manufacturing companies (e.g., automotive, aerospace, chemical) starting in 2027. Unlike the European CISAF approach, the UK model focuses more on a structural reduction of politically induced electricity cost components. Instead of temporary price caps, like in Germany, the cost structure is adjusted to sustainably improve international competitiveness.

From an industrial policy perspective, this approach appears more convincing, but it still does not represent a final or fully developed solution which can fully alleviate the competitive disadvantage faced by European EIIs in a sustainable way. Continuously introducing new relief packages to bridge acute price problems risks merely “patching holes” without solving the underlying problem. A more sustainable approach would be to promote investment in generation, grids and flexibility so that competitive electricity prices are permanently achievable without the need for continuous subsidy rounds.

EII subsidies as more than just crisis management

The variety of national programs demonstrates the seriousness of the situation for energy-intensive industries. Short-term relief may be necessary to secure sites and prevent production relocations. In the long-term, Europe’s competitiveness will not be decided by the level of individual subsidies, but by the ability to create a market-based, investment-friendly and cost-efficient energy system.

Europe now stands at a crossroads: between transitional measures for stabilisation and structural reform that addresses the problem at its root.