Germany examines energy system to lower costs

Katherina Reiche, Germany's Economy Minister, said that the government would analyze Germany's energy consumption and supply in order to reduce costs and integrate more gas production.

The impact of energy prices on the economy, industrial competitiveness and the environment were some of the top issues at the federal election in February.

Germany relied for many years on Russian gas that was cheap, but the Ukraine conflict forced it to switch to renewable energy.

The new coalition government promised to take measures to reduce prices. These include cutting electricity taxes, reducing grid fees, and installing gas-powered plants that will protect consumers from price spikes if intermittent renewable energy production decreases.

The system costs have been overlooked or brushed under the rug. We will therefore subject the energy transformation to a reality check", Reiche said at a BDEW conference in Berlin.

She said that the government will examine the expected demand for electricity, the security of supply, grid status and the expansion of renewables to determine if adjustments are necessary.

Reiche expects cabinet to make a decision on the lowering of electricity tax by summer and have a plan in place for implementation before year's end.

Germany and the European Commission are discussing the introduction of tenders for gas power plants of five to ten gigawatts, with the aim of holding a preliminary auction by the end this year.

She told journalists at the Berlin conference that the long-term objective was to have a fair and competitive energy system, which includes backup renewable power in the event that it is not available.

She said that the market shouldn't favour one particular technology and all clean, efficient solutions should be considered. (Reporting and editing by Rachel More, Barbara Lewis, and Riham Alkousaa)

(source: Reuters)