Siempelkamp Foundry, the world market leader for hand-moulded casting solutions and an energy-intensive, medium-sized company, has developed an alternative electricity trading model that could massively reduce electricity prices for companies and consumers, fight inflation and save billions of euros in taxpayers' money. The model envisages an adjustment of the existing merit order system for electricity trading, in which the setting of a synthetic electricity price and the introduction of an import levy would drastically reduce electricity costs. The synthetic electricity price should be based on the historical average price plus a surcharge set by politicians. With the help of this surcharge, an incentive to save energy could be created and renewable energy production promoted. In addition, there is an import levy that compensates solidarily for the difference between the synthetic price and the current purchase price of the imported energy raw materials. This levy is charged wholesale on the total amount of electricity supplied.
"The main cause of the exorbitant electricity prices on the exchanges is primarily the import costs for the scarce raw materials natural gas and also hard coal, which currently determine the price for everyone. A fixed price limit based on the pure production costs as well as an import levy on the current additional costs distributed to all wholesale buyers would finally put an end to this incalculable situation and ensure stable conditions on the electricity market once again," explains Dr. Dr. H. Schäuble.
electricity market," explains Dr. Georg Geier, Managing Director of Siempelkamp Giesserei GmbH. With this model, the management of the foundry offers an alternative to the proposals from the third relief package of the German government, which provides comprehensive, quick and sustainable relief for all consumers and especially for medium-sized businesses with regard to electricity costs. Experts from the German Institute for Economic Research (DIW) see the model as an "interesting proposal that deserves to be examined more closely". Siempelkamp Giesserei hopes that the model will help to quickly reduce the enormous financial pressure that currently weighs on companies and consumers and that it will bring a lasting end to the paralysing political dispute surrounding the fight against high energy prices. In this respect, the model also contributes to more energy independence vis-à-vis energy-exporting countries such as Russia and opens up new and strengthened negotiating positions for Germany.
Model with many advantages: Reduce electricity costs, save tax money and promote renewables
Imported energy raw materials only make up a small part of the energy mix in Germany, but they currently determine the high prices which place an enormous burden on both industry and consumers. The import levy proposed by Siempelkamp Giesserei should contribute to a drastic and sustainable reduction of the purchase costs for electricity. Thus, the purchase of energy could become more predictable again. Industrial companies such as Siempelkamp Giesserei, with an annual energy demand of 55 gigawatt hours, could once again plan their electricity purchases on a long-term basis and cost increases in the millions for structural components would no longer apply. In the end, this would additionally benefit consumers and break through energy-driven inflation. The model would also continue to encourage renewable energy providers, as the capped electricity price would still be far above the cost price of wind, solar or biomass, thus maintaining the savings effect on electricity consumers. "Excess or windfall profits for energy producers would thus be permanently restricted. Their complicated taxation planned by the federal government would no longer be necessary with our model, since the energy wholesale would regulate the additional costs itself and no longer pass them on to the consumers. The proven merit order system could thus continue to be used without having to use tax money to combat hardship," Siempelkamp Giesserei managing director Dirk Howe makes clear and adds: "Profit margins of several hundred percent are simply not necessary for the expansion of renewable energies." Instead, once the dependence of the electricity price on the gas price is broken, the use of electricity for the green transformation of the economy would also be strengthened in the medium term.
Siempelkamp Foundry hopes for quick implementation of the new model
The experts at Siempelkamp Foundry expect that their new model could be introduced within a few weeks - ideally as a European solution. "It is crucial that in the current crisis the causes are tackled as quickly as possible and not just the symptoms cured. Consumers and industry must be given breathing space so that a further escalation of the economic situation can be avoided.
situation can be avoided," warns Howe. The additional costs for electricity in 2022 are in the seven-digit range for Siempelkamp Giesserei alone. More and more energy-intensive companies are cutting back their production due to the excessive electricity prices, have to lay off employees or are in danger of losing their leading position on the world market. At the same time, Germany is currently dependent on medium-sized industry in particular to operate without disruptions in order to be able to successfully tackle challenges such as the energy transition or the digital transformation. Impending insolvencies, limited production due to high electricity prices or short-time work could endanger these projects in the long term. In this context, Siempelkamp Foundry has already made a number of proposals in recent months to relieve the burden on medium-sized industrial companies, most recently the introduction of an industrial electricity price. With these proposals and constructive demands, the company is assuming a special responsibility for its customers and employees, who are suffering particularly under the current extreme conditions. "We are not simply complaining about the status quo, but as a socially responsible company we are actively looking for solutions to relieve the market and society and to ensure more solidarity and fairness in the economy," explains Dirk Howe.
Support for the initiative from medium-sized industrial companies
Long-standing customers of Siempelkamp Giesserei also join the company's warnings regarding the current extreme situation regarding energy costs. Sebastian Groos, managing director of the innovative and traditional mechanical engineering company Achenbach Buschhütten from the Siegerland region, supports the initiative of Siempelkamp Giesserei and also emphasises the importance of energy and supply security for Germany as an industrial location: "I hope that politicians will realise as soon as possible that without heavy industry in Germany and Europe soon not a single washing machine or other important goods will roll off the production line. Action must be taken before the external dependencies become incalculable for Germany and Europe."
Siempelkamp is a globally active group of companies with the business units Machine and Plant Engineering, Casting Technology as well as Engineering and Service. Nearly 3,000 employees worldwide ensure that the Siempelkamp Group is represented with its technologies in the world's top league.
The Siempelkamp Foundry in Krefeld specializes in the production of hand-formed large castings of up to 320 tons made of cast iron with nodular graphite. With a casting volume of 50,000 tons per year and 375 employees, it is one of the largest hand-forming foundries in the world. The comprehensive and customer-oriented service package includes the entire production process from design, calculations, pattern making, moulding and casting to mechanical processing, packaging and transport.