Industrial Electricity Price and AgNes: Why Flexibility is Now the New Gold

Germany is among the European countries with the highest commercial electricity prices in the EU. The comparison with the USA and China is even more pronounced. For energy-intensive industries, this represents a significant competitive disadvantage compared to international locations.

The German government is now responding with two key regulatory instruments to financially relieve energy-intensive companies:

• The Industrial Electricity Price from 2026 as a short-term relief measure for energy-intensive companies
• The AgNes grid fee reform from 2029 as a long-term structural shift towards a flexible electricity system

But how exactly do these regulations work, and how are they interconnected?

What is the Industrial Electricity Price?

The Industrial Electricity Price 2026 (lit: “Energiestrompreis”) is a state-funded instrument designed to temporarily relieve energy-intensive companies in Germany of their electricity costs. From 2026, companies are planned to receive a portion of their electricity consumption at a reduced price, benchmarked against a target price of approximately 5 ct/kWh. The subsidy is provided via state grants and is limited to a share of annual electricity consumption. The Industrial Electricity Price is also subject to conditions.

Key aspects of the Industrial Electricity Price:

• Duration: 3 years (2026-–2028)
• Target price: ~5 ct/kWh
• Subsidy level: 50 % reduction of the reference price
• Reference price: Average of the previous year’s base futures
• Subsidy volume: Up to 50 % of a company’s annual electricity consumption
• Payment: Ex-post, with the first payment expected in 2027

Which companies benefit from the Industrial Electricity Price?

The Industrial Electricity Price targets around 2,000 energy-intensive companies in Germany. Eligible companies belong to 91 energy-intensive sectors, as listed in Annex I, Part 1 of the KUEBLL. Typical examples include food processing, metalworking, and the paper industry.

What conditions must companies meet for the Industrial Electricity Price?

The subsidy is deliberately linked to investments in the energy transition. Companies must reinvest at least 50 % of the received subsidy within 48 months of application, for example in decarbonisation measures, energy efficiency projects, or electrification initiatives.

Additionally, companies can receive a flexibility bonus of up to 10 %. To qualify, 80 % of the subsidy must be invested in measures to increase demand flexibility, such as load management, energy storage, or intelligent energy management software for electricity consumers.

A reinvestment obligation also applies here as well: At least 75 % of the flexibility bonus must be reinvested in corresponding measures. This creates targeted economic incentives for companies to make render their electricity demand more flexible and actively contribute to stabilising the electricity system.

Current uncertainties around the Industrial Electricity Price

The Industrial Electricity Price has been politically announced but is not yet fully implemented. Open issues include:

• The BAFA application process (forms and online portal are still missing)
• The final subsidy guidelines
• Formal EU state aid approval
• Details on retroactive payments

What is the AgNes Grid Fee Reform?

With the Allgemeine Netzentgeltsystematik Strom (AgNes) (German link content; set expression, but could be translated like ‘general grid fee system for the electricity sector’), the Federal Network Agency plans a fundamental reform of grid fees in Germany, set to take effect from 2029. The goal of AgNes is to adapt the grid fee system to an electricity system increasingly characterised by renewable energies—and thus by greater volatility in availability.

Previously, the grid fee structure was based on rigid consumption profiles. Companies with constant electricity consumption often benefited from grid fee reductions, for example through the band load privilege (lit: “Bandlastprivileg”). However, as the share of wind and solar energy grows, the logic of the electricity system is changing: electricity is not as easily longer available constantly due to a change in power generation, but fluctuates depending on weather and grid utilisation.

AgNes aims to create new economic incentives for grid-serving behaviour. Companies will benefit more if they adapt their electricity consumption flexibly to generation, for example by shifting loads or using energy storage systems like BESS ("Battery Energy Storage System").

The AgNes reform pursues several objectives:

• Improve integration of renewable energies
• Reduce grid bottlenecks
• Strengthen flexibility on the demand side
• Limit grid expansion costs in the long term

For companies, this means that flexible load profiles will become economically more attractive in the future, while classic band load consumers with no control options may see fewer benefits.

Industrial Electricity Price and AgNes: transitioning to a flexible electricity system

The Industrial Electricity Price is not only a short-term relief measure for energy-intensive companies but also part of a larger transformation of the electricity market. It can be seen as a bridge to the AgNes grid fee reform from 2029, which will reward flexibility in the electricity system more strongly.

The connection between the two instruments lies particularly in the flexibility bonus. Companies investing in flexibility measures can benefit from lower electricity costs in the short term while strategically preparing for the future grid fee system. In parallel, the German government plans to introduce a capacity market from 2032, which will secure the availability of controllable capacities after the coal phase-out.  

The market design is set to be legally anchored from 2027 and is expected to be operational from 2032. This will not only remunerate reward generation but also the provision of capacity for grid stabilisation, for example through industrial flexibility. Companies can thus generate additional revenue in the future if they are willing to shift or reduce their electricity consumption as needed.

For companies, the development of the electricity market means above all:

• Electricity costs will become more time- and grid-dependent
• Flexibility will become an economic competitive advantage
• Energy management will gain strategic relevance

How industrial companies can prepare now

The developments surrounding the Industrial Electricity Price, the AgNes grid fee reform, and the capacity market clearly show: flexibility will become a central economic factor for industrial companies. Those who begin aligning their energy consumption with these changes early on can both utilise short-term subsidy instruments and benefit from new market mechanisms in the long term.

Below, we outline how your company can prepare specifically.
Alternatively, we’d be happy to advise you personally on how you can save up to 20 % of your energy costs. Simply reach out via our contact form to get started.

Short-term measures

• Conduct load profile analysis or potential analysis to identify existing flexibility potential in consumption
• Check flex-readiness: Which systems can be controlled flexibly in the future?
• Plan for the Industrial Electricity Price 2026: Assess the impact on electricity procurement and investments
• Run simulations: Analyse cost-effectiveness through energy or battery simulations, or simulations of power-to-heat systems

Mid- and long-term measures

• Integrate investments into a holistic energy concept
• Automate control of energy-intensive consumers via intelligent energy management to utilise existing flexibility
• Expand flexibility through energy storage systems
• Use flexibility as a strategic lever for operating costs

Conclusion

The Industrial Electricity Price helps secure the competitiveness of energy-intensive companies in the short term. The AgNes grid fee reform, on the other hand, will fundamentally transform the electricity system in the long term, making flexibility economically attractive and even marketable from 2032. Companies should consider all developments together and align their energy strategy early with a flexible electricity system. Partners like encentive support at every step of this transformation process.