The German Mittelstand

The German Mittelstand is in need of a reform of the law on renewable energy (Erneuerbare Energien  Gesetz – EEG)

A supply of energy at internationally competitive prices with no short- or mid-term problems – this is the request Mittelstand industry has put to the Federal government. The data emerge from a survey carried out among industrial concerns in the Autumn of 2013 on behalf of BDI the German Federal Industry Association. The German small- to mid-size industries are already complaining about the increase in the price of electricity that derive from the so-called Energiewende (the shift from fossil and nuclear power towards alternative forms of energy). In point of fact, things could get worse. Dispensation from the EEG payment (the compensatory contribution towards the higher price of renewable energy embedded in the price of electricity charged to the end-user) granted to German industries with high energy needs is still being picked up by free competition watchdogs in Brussels.

Apart from the issue as to whether or not subsidies are a distortive factor in applying the principle of competition, Karl-Ludwig Kley, chair of the VCI, the  Association of German Chemical Industries, states that the EEG law now stands in urgent need of radical reform. The approximately 2100 small- to mid- size chemical companies for whom, by definition, energy consumption is extremely high are under serious threat. According to VCI, 90 percent of the chemical companies in Germany pay the full tariff, contribution included, which, incidentally, will increase substantially in 2014.

The effects of the increase, however, will be felt mainly by the small- to mid-size companies who because of this will be unable to afford other investments such as renewing production machinery, or hiring manpower and creating jobs. The consequences could have dire repercussions for those competing on the international market. These fears stand out clearly in the BDI survey – indeed approximately a fourth of those interviewed believes that Energiewende has been a drawback to investment in Germany. This number increases to one third among companies that employ more than 100 staff.