Frankfurt Rail freight transport has a growing problem: Electricity prices have risen significantly, but freight railways cannot pass the additional costs on to their customers. “The impact is massive, we feel the increase clearly. This is the number one topic in the industry,” says Christian Stavermann, Managing Director of the rail freight company Eisenbahngesellschaft Ostfriesland-Oldenburg (EGOO) from Emden. “We were able to negotiate relatively well with most of the customers at the turn of the year, so we can’t add the energy now.”
According to calculations by the Network of European Railways (NEE), the price of traction current on the exchange has doubled in the last year alone. “The significantly increased and probably further increasing prices for traction current are threatening the existence of some of the freight railways,” warns NEE Managing Director Peter Westenberger. Even before the price increase, the cost of energy would have accounted for around 20 percent of the operating costs.
Traction power in Germany is alternating current with a frequency of 16.7 Hertz, unlike the usual household electricity with 50 Hertz. Many rail companies buy the electricity from the Deutsche Bahn subsidiary DB Energie, which acts as a wholesaler. DB Energie secures part of the total capacity of a power plant from power plant operators over its entire service life and feeds the electricity directly into the traction current network.
Some municipal utilities and private electricity providers also offer traction current. To do this, they use converters to bring some “normal” electricity from the normal grid to the right frequency and then feed it into the railway network.
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Some railway companies buy the electricity in the medium to long term, while others secure their needs primarily in the short term via the exchange. The prices have been very high for a long time and will probably remain so. “The longer the current crisis lasts, the more freight railways will be hit little by little – including those who had secured their needs in the long term,” says Westenberger.
“It’s a risk, which is really annoying at the moment”
The Emden-based company EGOO now obtains its electricity from Stadtwerke Tübingen at relatively short notice: “We buy half a quarter, which is currently the best way for our needs, even if we know about the risk,” says Stavermann and adds: “It is a risk that is currently really annoying.”
When discussing future conditions for rail freight transport, customers are increasingly considering switching to the road, reports Stavermann: “We actually talk to smaller customers every day, some of whom only ship individual loads and can hardly score points with rail.”
With a view to the climate protection goals of the federal government, such considerations are counterproductive. SPD, Greens and FDP want to increase the share of freight transport by rail from around 18 percent to 25 percent by 2030. Above all, the limited capacities of the freight forwarders and a shortage of drivers are currently preventing freight transport from shifting back to the road because of lower costs.
In a letter to the Ministry of Economic Affairs and Ministry of Transport, the NEE Association therefore demands that the diesel tax privilege be abolished and that taxes for freight railways be reduced. Although climate protection is important to many customers, the decisive argument for the customer remains the price, says NEE Managing Director Westenberger. Although the price of diesel has also risen significantly, it is far less so than the price of electricity: “The truck, with which rail is already in fierce competition, is becoming more attractive.”
The currently discussed abolition of the EEG surcharge will not change the situation, Westenberger believes: “Their share of the kilowatt hour of traction current has become too small at around two and a half percent this year. The largest block of costs to date, the electricity procurement costs themselves, have exploded since the beginning of 2021.”
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The new government should therefore examine the extent to which it is possible to regulate and control the commercial electricity markets more closely, suggests Westenberger. In the long run, however, the industry will not be able to avoid passing on some of the additional costs for traction current to customers. “A traction current index created by the Federal Statistical Office could provide more transparency and help to enforce higher prices or surcharges on customers,” believes the NEE managing director.
Because the prices for transport by rail will probably rise due to electricity costs, companies are considering switching to the road in some cases.
(Photo: imago images/Jochen Tack)
On the other hand, it is unlikely that the railway companies will now order more diesel locomotives because of the high electricity costs, as some in the industry fear. It would be extremely risky for a company to say goodbye to electric drives just because of the current energy crisis. As with cars, combustion engines on rails are obsolete and locomotives have been in use for many years. In addition, rail freight customers are working on their own climate neutrality and must therefore make the supply chains climate-neutral.
At EGOO in Emden, the four available diesel locomotives are currently not used as often. “The electric locomotives have to drive their traffic. It is also the social goal to drive more traffic in an environmentally friendly manner, so the trend towards diesel locomotives is very disadvantageous,” says Stavermann. Every customer who drives with EGOO in the electric sector automatically receives CO2-neutral electricity.
Nevertheless, Westermann from the NEE sees politics as a duty. “It is crucial that politicians recognize the seriousness of the situation and do not continue to solve the problems because they think it is not that bad.”
It’s not about financial help. “We have always fought for liberalization in the traction current market and are glad that it was implemented,” says Westermann. Calling for subsidies now that prices were going through the roof would be wrong. “But the subsidies elsewhere must finally be dropped, especially the tax privilege for diesel.” The current development is a serious setback for the climate goals that the new government and the EU Commission have set.
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