Electricity and gas prices have recently fallen significantly.
The tariffs for new contracts are now below the electricity and gas price brake.
That saves the federal government billions, calculates Prof. Jens Südekum in the guest article.
In the fight for the energy transition in Germany, the resulting financial leeway could become the decisive trump card, writes the economist from the University of Düsseldorf.
Düsseldorf – In the traffic light coalition, a dispute is raging about the next federal budget.
Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) write angry letters to each other.
There is a joker.
The so-called "double boom" will be much cheaper than planned, because the electricity and gas prices have currently fallen sharply.
If this money is used intelligently, it will stabilize the economy and clear the traffic light.
Let's look back to late summer 2022, the peak of the energy crisis.
Vladimir Putin had just shut down the Nord Stream 1 pipeline, and gas prices shot up to astronomical heights.
New contracts for private customers were almost 50 cents per kilowatt hour, for electricity even 70 cents.
Panic reigned in the economy.
The specter of de-industrialization haunted us, because profitable production is unthinkable at such prices.
voice of economists
Climate change, corona pandemic, Ukraine war: Rarely before has interest in the economy been as great as it is now.
This applies to current news, but also to very fundamental questions: How do the billions in corona aid and the debt brake go together?
What can we do about the climate crisis without jeopardizing our competitiveness?
How do we secure our pension?
And how do we generate the prosperity of tomorrow?
In our new series,
Voice of the Economists,
Germany's leading economists provide guest contributions with assessments, insights and study results on the most important economic topics - profound, competent and opinionated.
"Double boom" with electricity price brake and gas price cap
Everyone looked to the federal government.
They had already put together three relief packages.
But for a long time she didn't want to know anything about energy price caps, because she was under the illusion that the debt brake could be observed despite the economic war.
Then, on September 29, came the turnaround.
Completely surprisingly, Chancellor Olaf Scholz (SPD) appeared with Lindner and Habeck in front of the press and announced the double boom that had been designed in a small circle the night before: 200 billion euros were to be parked in the Economic Stabilization Fund (WSF).
Around half of this was earmarked for support for the now nationalized gas importer Uniper.
The electricity price brake should finance itself by skimming off excess profits from the producers.
This left around 100 billion for the gas price brake, roughly two thirds of which for industry and one third for private households and small businesses.
After that everything went very quickly.
A commission of experts worked out the details of the price brakes.
For private gas customers, it applies at 12 cents per kilowatt hour, in the electricity sector the cap is 40 cents, each for quotas based on the proportionate consumption of the previous year.
The brakes will apply from January and will be paid out retrospectively in March.
Double boom: What should be done with the money saved?
But at the same time, market prices began to fall, favored by eager energy saving and mild winter weather.
In the meantime, a kilowatt hour of gas for new contracts costs an average of only 11 cents, i.e. below the cap.
It's the same with electricity, currently 36 cents.
The price brakes for industry are also no longer effective.
As a result, the federal government will have to spend far less.
Currently there is only talk of a single-digit billion amount, much less than the originally estimated 100 billion.
also read
Dependence on China: diversify and learn from mistakes
Dependence on China: diversify and learn from mistakes
Location ranking: Germany's decline is worrying
Location ranking: Germany's decline is worrying
Why new EU debt is irresponsible
Why new EU debt is irresponsible
This raises the question of what to do with the money saved.
Technically speaking, these are approved credit authorizations from the WSF that could be drawn in the future without being counted towards the debt brake.
Almost an ace up the sleeve of the Federal Minister of Finance.
Of course, you shouldn't spend the reserve created in this way immediately and on anything.
That would also not be legally permissible.
But one should keep the option in reserve and not just let it expire unused.
The decisive factor is the connection with the stabilization of energy prices, because the Bundestag approved the double boom for this.
In this way, industry could be guaranteed a low electricity price in the long term so that it would remain in Germany and pay taxes here as part of the transformation towards climate neutrality.
The Minister of Finance would also be pleased about this.
About the author: Jens Südekum is Professor of International Economics at the Institute for
Competition Economics (DICE) at Heinrich Heine University Düsseldorf and a member of the Scientific Advisory Board of the Federal Ministry for Economic Affairs and Energy.