eco Alliance on the electricity price brake: German federal government must not neglect digital infrastructures

In Germany, the amendment to the electricity price brake is expected to be passed in today’s cabinet meeting. eco and the Alliance for the Strengthening of Digital Infrastructures, initiated by the Association of the Internet Industry, are strongly critical of the amendment introduced by the Federal Ministry of Economics: In the current amendment, data centres are not regarded as an energy-intensive industry and are thus not comprehensively protected by the electricity price brake and relieved from rising energy costs.

Furthermore, there is a threat to the economic viability of so-called Power Purchase Agreements (PPAs) and thus to the expansion of renewable energies. The framework conditions for energy supply on the basis of PPAs should be improved in order to strengthen the cost efficiency of the expanded renewable energies, beyond the dominant funding schemes.

Dr Béla Waldhauser, Spokesperson of the Alliance for the Strengthening of Digital Infrastructures, has the following to say: 

“Data centres give data a home and ensure trustworthy and powerful digitalisation in Germany. Since the storage and processing of data in Germany consumes energy, it would therefore only be logical if the electricity price brake would also apply to the data centre industry to the same extent as to other electricity-intensive companies. While the EU Commission in its final report on Growth, Structural Change and Employment has long put the energy consumption of data centres on a par with electricity-intensive industry, the German federal government is making cuts here.

“As I see it, this is the wrong approach to dealing with an industry of the future. Electricity is already quite expensive in Germany compared to other European countries: France, for example, supports all energy-intensive companies, including data centres. For us in Germany, this even further elevates the difference in electricity costs and is a significant competitive disadvantage for German data centres. Instead of recognising the importance of digital infrastructures for Germany as a business location and accordingly taking the sector into account in the electricity price brake, this unfavourable position will also have a negative impact on other economic sectors in Germany. Unfortunately, the electricity price brake does not make a significant contribution to safeguarding critical digital infrastructure.

“The planned regulation regarding the levying of crisis-related special profits will also have a negative impact on the expansion of renewable energies: Power Purchase Agreements are a central pillar for the financing of new wind power and solar plants. Due to the current regulation, there is now a danger that PPAs will no longer be economically viable.  The new regulation is therefore counterproductive for private-sector investments in renewable energies in Germany. This removes an important anchor for the expansion and availability of green power and jeopardises the goals set out in the German coalition agreement regarding the climate-neutral operation of digital infrastructures.”

Background: Prior to the revised amendment, a draft on the electricity price brake had already become known in November last year, which was already the subject of criticism by the eco Alliance. A German-language statement on the draft at that time can be found here.

Bela Waldhauser