Germany’s industry continues to lose ground because the promised lower electricity prices have failed to materialize, and the energy transition is driving up costs ever higher. This trend has been underway for years but is now affecting key industrial sectors. The trigger is an energy policy that was supposed to deliver climate targets, security of supply, and affordable electricity simultaneously, but has failed to deliver on this promise. The decisive risk factor lies in persistently high electricity costs, rising grid fees, and a system that can only remain stable with government subsidies. The consequences range from a lack of investment and production relocations to the loss of industrial value creation. Large corporations, medium-sized businesses, and the national budget are all equally affected.
Cheap electricity remains a political promise
For years, politicians have been promising lower electricity prices through the expansion of renewable energies. For many companies, this has not materialized. Electricity remains expensive, and system costs continue to rise. Grid expansion, reserve capacities, and interventions for stabilization further increase the cost of doing business.
For industry, however, it’s not the announcement that counts, but the actual burden. Companies need reliable energy at competitive costs. This very foundation is increasingly lacking. While other countries offer more favorable conditions, Germany is losing its appeal. As a result, companies are shifting investments or building new capacities abroad.
Loss of Substance Due to Expensive Subsidies
The energy transition is not economically sustainable, which is why the government is intervening more and more. Support programs, price controls, and compensation mechanisms are intended to limit the burden. These measures have a short-term effect but do not solve the structural problems. A system that permanently requires government subsidies will not be sustainable; it will only become more expensive.
A current example is the recently introduced industrial electricity price. From 2026 onward, primarily energy-intensive companies will benefit, but only within a limited circle. The majority of the economy will not receive this support, even though high electricity costs are also hindering investment there. At the same time, the costs are distributed across the state budget and the energy system. Therefore, many companies and citizens bear the burden, while only a portion receive direct relief.
Companies are reacting with relocation and investment freezes
Energy-intensive industries such as chemicals, metals, and glass react particularly quickly to rising costs. These industries cannot simply absorb high energy prices; instead, they must operate economically. If the location becomes permanently more expensive, companies relocate production or build new plants abroad.
But small and medium-sized enterprises (SMEs) are also adapting. Businesses are postponing investments, reducing capacity, or halting expansions. This development affects not only individual companies but entire supply chains. Suppliers lose orders, and regions lose their industrial base. As a result, the location loses further substance, while policymakers cling to their chosen course.
An expensive energy policy weakens the location
The energy transition was supposed to enable economic progress. In reality, it has not made electricity cheaper or stabilized industry. Instead of creating competitive conditions, policymakers rely on interventions, subsidies, and constant adjustments. This fails to create a reliable framework for long-term investments.
Industry, however, needs planning certainty and stable costs. If these factors are lacking, a location loses strength and ultimately its substance. This is now becoming clearly evident. Companies invest where energy is cheaper and more reliable. As a result, Germany is losing industrial depth, technical expertise, and economic dynamism. (KOB)