City faces reduced financial aid from power plants - Energy companies reduce urban energy expenditures
In a recent turn of events, Hamburg's energy supplier, Energy Works, has paid less money to the city in the completed fiscal year compared to 2023. This reduction is primarily attributed to the overall decrease in wholesale electricity prices and the evolving dynamics of the energy market in Germany.
The decline in wholesale electricity prices can be traced back to August 2022, when prices peaked, but have since been on a steady downward trend. Although prices remain above pre-pandemic levels, this downward trend means energy suppliers like Energy Works may have earned less revenue or faced narrower margins, consequently reducing the payments they pass on to the city.
The energy market in Germany remains volatile, influenced by factors such as heating demand, renewable generation variability, and fossil fuel price fluctuations. This ongoing price instability can impact the profits and fiscal contributions of energy suppliers.
Industrial electricity prices in Germany have fluctuated but remained relatively contained in early 2025. The major cost components include energy procurement and network charges. This may have led to lower or more stable operational costs but also a reduction in payments related to taxes or fees transferred to city authorities.
Changes or delays in taxation policies related to energy companies (corporate taxes or other levies) might also influence how much money suppliers pay to local governments. Germany has recently been adjusting tax rates and policies affecting corporations, which could affect Energy Works’ fiscal contributions.
Despite these challenges, Energy Works has managed to invest over 480 million euros in 2024, as shown in the documents. The company also serves business customers and has signed contracts with Lufthansa Technik and the airport in the past year.
In a positive note, Katharina Fegebank, Energy Senator and Supervisory Board Chairwoman, stated that Energy Works has closed the fiscal year better than planned, providing additional room for future investments. The company supplies green electricity and gas to approximately 160,000 customers in the metropolitan region.
Looking ahead, Energy Works plans to offer photovoltaic systems, heat pumps, and charging boxes. The company aims to generate district heat without coal by 2030, with a significant portion of the planned 2.5 billion euro investment going towards the conversion of the Heizkraftwerk Tiefstack power plant. CEO Michael Prinz also stated that further debt issuances are planned.
The future of Energy Works and the city's energy supply is promising, with the company continuing to invest in renewable technologies and work on more than 150 major projects, as per Kirsten Fust, spokeswoman for the management.
- Owing to the steady decline in wholesale electricity prices, employment policies for energy sector workers in Hamburg might need to be adjusted to accommodate potential reductions in revenue or narrower margins for companies like Energy Works.
- As the German energy market undergoes significant changes, it is essential for companies in allied industries such as finance and business— including employers like Energy Works — to consider how alterations in energy policy could impact their operations, finances, and contributions to the community.
