Czech industrial producers are facing a growing crisis as electricity costs soar,significantly outpacing those in neighboring Germany and France. The price disparity – with Czech rates 8 percent higher than Germany’s and more than double France’s – is already contributing to production declines and, as of December, the closure of facilities like Lasselsberger’s ceramic tile plant in Podbořany, resulting in job losses. As Germany prepares to implement ample energy price cuts for its businesses in the new year, the situation threatens to further destabilize the Czech economy and raises questions about the long-term viability of key industries.
Czech industrial producers are facing significantly higher electricity costs than their counterparts in Germany and France, a situation that is contributing to production declines and raising concerns about the future of key sectors.
According to EGU strategy director Michal Macenauer, electricity prices for large consumers in the Czech Republic are 8 percent higher than in Germany and more than double those in France. This disparity is putting Czech businesses at a competitive disadvantage as energy costs represent a substantial portion of their overall expenses.
The challenges extend beyond the Czech Republic, with production already declining in other European countries. Daniel Tamchyna, president of the Union of the Chemical Industry, noted that production facilities with a combined capacity of 11 million tons annually have already been permanently closed, impacting companies like DOW and BASF.
Tamchyna warned that approximately 350 businesses across Europe, employing 200,000 people, are currently at risk. Current manufacturing capacity is only being utilized at 70 percent, and an increasing amount of production is being imported, creating a cycle where imports do little to help the EU achieve its carbon emission reduction goals.
“Every kilogram of carbon dioxide saved by closing a facility within the EU is replaced by 1.7 kilograms when production shifts to Asia,” he cautioned.
Lasselsberger, a manufacturer of ceramic tiles and paving, announced it will close its facility in Podbořany near Žatec in December due to high costs, resulting in the loss of approximately 75 jobs.
Energy costs represent 30 to 40 percent of overall expenses in the chemical industry, according to Tamchyna, and roughly 30 percent for ceramics, as stated by Lasselsberger’s managing director, Roman Blažíček. The situation underscores the vulnerability of energy-intensive industries to fluctuating prices.
Blažíček added that the sector has been struggling for years, with ceramic tile and paving production in both the Czech Republic and Europe declining by 30 percent since 2021. Employment in the Czech ceramic industry has fallen by 15 percent during the same period.
Imports from Vietnam, India, and Brazil are increasing, but these products are often of lower quality and have a significantly higher carbon footprint.
German Price Cuts Add Pressure
Further complicating matters, Germany is set to significantly lower electricity prices for businesses in the new year, a move that will put additional strain on Czech industries.
Analyst Macenauer explained that Berlin plans to subsidize the price of power, effectively halving it compared to the Czech Republic. They will also cover a substantial portion of distribution costs, reducing them by 57 percent, and minimize electricity taxes, leading to an overall price decrease of 35 to 40 percent. This would leave Czech electricity prices at double the German rate.
Karel Havlíček, deputy chairman of ANO and the likely next Minister of Industry and Trade, has pledged that the new government will address energy prices. “Germany has harshly and brutally regulated prices, and we cannot simply ignore that. But we cannot stand idly by,” he stated.
As a first step, Havlíček intends to relieve businesses and households of payments for renewable energy sources, with the state taking over these costs, an initiative expected to cost the state treasury 17 billion Czech crowns annually. He believes the benefits will outweigh the expense, asking, “What good is saving 17 billion in the budget if it has devastating economic consequences?”
He also plans to reduce the regulated portion of electricity prices, which he says accounts for more than half of the total bill, utilizing European funds to offset the costs.
Macenauer emphasized that the energy-intensive industry in the Czech Republic generates nearly 500 billion Czech crowns in value annually and contributes 45 billion Czech crowns in taxes.
