# Factbox-How Germany’s gas price brake is helping reeling industry
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-10
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: German Expert Commission Delivers 96 Billion Euro Plan to
Meta Description: Discover the details of the 96 billion euro package aimed at softening the impact of high gas prices on households and companies in Germany.
URL: https://financedigest.com/factbox-how-germanys-gas-price-brake-is-helping-reeling-industryhtml

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FRANKFURT (Reuters) – A German expert commission that has been charged with drawing up plans to ease the impact of high gas prices on consumers on Monday delivered the outline for a package worth 96 billion euros ($93.2 billion) to the government.

Aimed at households and companies, the plan, which serves as a guideline for Berlin, aims to soften the blow to Europe’s largest economy in the wake of soaring prices for gas, the most vital energy source for the country’s industry.

Below are the key details:

WHAT’S THE SCHEME?

– 70% of annual gas consumption – with 2021 serving as the benchmark year – are subject to a procurement [price cap of 7 euro](https://www.financedigest.com/euro-zone-inflation-eases-in-feb-but-core-prices-pick-up.html "Euro zone inflation eases in Feb but core prices pick up") cent per kilowatt hour, less than half the roughly 16 cents currently

– this is tied to a site guarantee as well as a transformation [plan to make sure that only factories with a long-term](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") prospect are funded

– companies can either use the [gas or sell it on the market](https://www.financedigest.com/gas-insulated-transmission-line-market-expand-at-a-healthy-cagr-of-4-5-over-2021-2031.html "Gas Insulated Transmission Line Market Expand At A Healthy CAGR of 4.5% Over 2021-2031")

– the remaining 30% of consumption are subject to much higher [market prices](https://www.financedigest.com/german-residential-property-market-faces-risk-of-price-drop-diw-study.html "German residential property market faces risk of price drop – DIW study"), effectively creating a substantial incentive for companies to accelerate savings efforts

– in total, the scheme has a volume of 25 [billion euros](https://www.financedigest.com/telecoms-group-orange-signs-sustainability-linked-refinancing-of-6-billion-euros-syndicated-credit-facility.html "Telecoms group Orange signs sustainability-linked refinancing of 6 billion euros syndicated credit facility")

WHO’S ELIGIBLE?

– [firms with consumption of more than 1.5 million](https://www.financedigest.com/exclusive-crypto-giant-binance-moved-400-million-from-u-s-partner-to-firm-managed-by-ceo-zhao.html "Exclusive-Crypto giant Binance moved 0 million from U.S. partner to firm managed by CEO Zhao") kilowatt hours per year, which according to the commission, amounts to 24,000-25,000 companies

– these include heavyweights Covestro, BASF, Heidelberg Materials, [Siemens Energy](https://www.financedigest.com/siemens-energy-signs-7-billion-eur-offshore-power-deal-with-tennet.html "Siemens Energy signs 7-billion-eur offshore power deal with TenneT"), Wacker Chemie, Evonik, Lanxess and Thyssenkrupp, shares in which were all up 2.5%-6.5% following the announcement

– excluded are gas-fired [power plants](https://www.financedigest.com/edpr-brings-iberias-first-wind-solar-power-plant-on-stream.html "EDPR brings Iberia’s first wind-solar power plant on-stream"), large residential units as well as additional consumers that are still to be identified

WHEN DOES IT START?

– the scheme is to kick in from Jan. 1, 2023 and run until April 30, 2024.

– there will be a review by May 31, 2023 on whether the instrument [meets needs and expectations](https://www.financedigest.com/institutions-need-to-consider-spreadsheet-management-to-meet-the-pras-latest-stress-testingexpectations.html "Institutions Need to Consider Spreadsheet Management to Meet the PRA’s Latest Stress Testing Expectations")

($1 = 1.0305 euros)

(Compiled by Christoph Steitz; editing by David Evans)


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