7 September 2026 – Germany is cutting its subsidy for transmission grid fees by almost €1 billion per year. The German Steel Federation wants the full amount restored, permanently. For €50 million in additional costs of its own, taxpayers are supposed to shoulder €1 billion. The Indonesia Morowali Industrial Park reported a drought related decline in production of 30 to 40 per cent last week.
Drought Slows the World’s Largest Nickel Producer
The Indonesia Morowali Industrial Park reported a drought related decline in production of 30 to 40 per cent last week. Water shortages in the region are significantly affecting the park’s energy generation. NPI and ferronickel production are particularly affected. According to the operator, coke producers at the site are currently running at only 50 to 60 per cent capacity.
Philippine Ore Fills the Gap
Indonesia imported 11.4 million tonnes of Philippine nickel ore between January and July 2026, compared with 6.82 million tonnes in the same period last year. That is an increase of 67 per cent. Utilisation of the RKEF lines most recently stood at just 76 per cent.
What the Shortfall Means for the Surplus
An Indonesian economist has done the reverse calculation: with annual production at the park of between 500,000 and 700,000 tonnes, a 35 per cent decline would amount to around 196,000 tonnes, which is likely to reduce the nickel production surplus forecast for 2026.
Germany: Less Subsidy for Grid Fees
On 2 September 2026, the German federal cabinet adopted the draft amendment to the Energy Industry Act. Two days later, it was submitted to the Bundesrat as an urgent proposal. The new Section 24d EnWG grants the four transmission system operators €5.525 billion annually for 2027 to 2029, instead of €6.5 billion. That is almost €1 billion less per year, financed from the Climate and Transformation Fund. Following 2023 and 2026, this is the third subsidy of its kind.
Half a Step
In principle, we consider it right to reduce or withdraw subsidies. What we criticise is that, once again, only half a step is being taken instead of addressing the problem with greater openness and technological freedom. The draft says it itself. Under the heading “Alternatives”, there is one word: “None”.
Affordable energy is one of Germany’s most pressing problems. A temporary subsidy reduces a bill. It does not permanently reduce costs.
Out Comes the Begging Bowl
It is therefore hardly surprising that the German Steel Federation (Wirtschaftsvereinigung Stahl) immediately jumps out of its corner and starts demanding permanently high subsidies. The €6.5 billion budget subsidy “must be maintained in full“, says Managing Director Kerstin Maria Rippel, and permanently.
What associations should actually be doing, namely demanding sustainable reforms and improvements to Germany as an industrial location, is not happening. Of course, that is more uncomfortable and requires more effort in the political debate than constantly holding out the begging bowl or bleating for market protection.
€50 Million for €1 Billion
The association itself provides the calculation. In July, it put the additional cost of the reduction for the steel industry at around €50 million per year. €50 million out of €975 million, and for that the taxpayer is supposed to continue paying the full billion, indefinitely. The draft does not provide reliability anyway. Funding is secured only for 2027. For 2028 and 2029, it is merely to be given priority consideration.
The German steel association apparently does not even consider that the money might be better spent on grid expansion or on creating new energy sources without ideological restrictions.
The Second Subsidy Calculation Nobody Mentions
Large energy intensive companies, including steel producers, already receive electricity price compensation in addition to the grid fee subsidy and, from 2027, the industrial electricity price. The federal government puts the total relief from 2027 onwards at around €13 billion per year.
Most small and medium sized enterprises and end consumers can only dream of relief on that scale. It is deliberately absent from the association’s calculation. Instead, it would rather keep the billion for itself, and for an indefinite period.
Anyone who wants permanently lower electricity prices must reduce the costs. Not redistribute the bill in socialist fashion, to the detriment of SMEs and consumers. Everything else is a distortion of competition in favour of a small number of large market participants.
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