GMH Group Halts Production as Electricity Prices Soar to €400/MWh
On January 20, 2025, GMH Group, a renowned German steel producer, made the difficult decision to halt production at one of its electric arc furnace shops. This emergency move came after a sharp increase in electricity prices, which surged to an eye-watering €400/MWh. According to a spokesperson, Anna-Maria Grossmann, the skyrocketing electricity costs made it economically unfeasible for the company to continue its green steel production.
"This is an emergency situation for Germany, a country of engineers and innovators. Monday is usually one of the most productive days for the industry, but the current conditions have forced GMH Group to cease operations," Grossmann stated.
The spike in energy prices is part of a broader energy crisis in Germany, with soaring costs challenging the viability of energy-intensive industries like steel production. The country’s green steel sector, which relies on electricity for electric arc furnace steelmaking, is particularly vulnerable to changes in energy prices.
Energy Price Surge Hits GMH Group’s Bottom Line
Historically, the cost of electricity in Germany was much lower. In 2019, the spot price for electricity was approximately €130/MWh, a far cry from the €400/MWh prices observed in January 2025. For a company like GMH Group, whose operations depend heavily on electricity-intensive processes, such high energy prices represent a major financial burden.
In response to the crisis, GMH Group pointed out that these price increases were symptomatic of systemic problems within Germany’s energy policy. The company emphasized that the phase-out of nuclear power had not been matched with sufficient investment in gas-fired power plants or other renewable energy sources capable of meeting the country’s industrial needs. The lack of stable energy pricing and an increase in network tariffs in recent years further exacerbated the situation, making energy costs unaffordable for many industrial enterprises.
Impact of Energy Policy Failures
The rise in electricity prices and the subsequent halt in steel production underscores the consequences of what GMH Group describes as poor energy planning in Germany. The company specifically pointed to Germany’s decision to abandon nuclear power without providing reliable alternatives as a significant factor that led to the crisis.
Moreover, network tariffs, the charges applied to businesses for electricity distribution, have more than doubled over recent years, further increasing operational costs for industrial companies like GMH Group. These rising costs have made it increasingly difficult for the company to stay competitive, particularly when energy prices fluctuate so dramatically.
"This situation has led to billions of euros in lost revenue, a two-year stagnation in economic growth, and a significant loss of jobs and competitiveness for German industries," said Grossmann.
The green steel sector, which GMH Group represents, is a major contributor to the country's industrial economy, and any disruptions in production have ripple effects on the broader economy. GMH Group’s experience illustrates the challenges faced by industries trying to transition to greener and more sustainable production methods, especially when energy costs become unstable.
GMH Group Calls for Government Intervention
In light of the crisis, GMH Group is calling on the German government to urgently intervene in order to stabilize electricity prices and reduce network tariffs. The company believes that a more balanced and predictable energy policy is essential for the future of industrial production in Germany. Without swift action, Germany risks further economic stagnation and deindustrialization as energy costs continue to rise.
Furthermore, GMH Group has suggested that natural gas should be considered a transitional technology to ensure a reliable and stable energy supply in the short and medium term, especially as the country moves toward renewable energy solutions.
The company is also concerned about the impact of EU climate policies, particularly those that impose stringent renewable energy targets. These targets, though aimed at decarbonizing the economy, could place additional pressure on industries that are already struggling with high energy costs.
