ISPG and SAG+: New funding incentives for energy-intensive companies

Ministerial draft regarding the Austrian Industrial Electricity Price Act (ISPG) and amendment to the Austrian Act on Securing Business Locations 2025 (SAG+)

Recently, the draft of the new ISPG as well as the amendment to the SAG+ was sent for review. The package of measures is meant to relieve energy- and trade-intensive companies and support their international competitiveness as well as investments in decarbonisation. For the whole package of ISPG and SAG+, 250 million Euro per year each for the years 2027 until 2029 are foreseen. 

The most important innovations at a glance

ISPG – new industrial electricity price

• Eligible companies: The ISPG is aimed at particularly electricity-intensive companies that do not or partly profit from the SAG, such as pharmaceutical, chemical, mechanical engineering, or food industries, and includes around 400 companies.
• Funding period and relief: Funding is granted for the years 2027 until 2029 in form of direct subsidies and amounts up to 50% of the reference price for 50% of the actual electricity consumption. Thereby, the electricity price can be reduced to a value of 50 Euro/MWh (5 cent/kWh).
• Reinvestment obligation: The funding is intended to be paid out annually retrospectively and to be linked to a reinvestment obligation in the amount of at least 50% of the granted funding. The funds are invested in new or modernised facilities that make a measurable contribution to the reduction of electricity system costs without increasing the usage of fossil fuels.

SAG+ – expanded compensation for indirect CO₂ costs

• Expanded scope of application: The compensation for indirect CO₂ costs is to be extended to further carbon leakage sectors and prolonged beyond the previously covered years 2025 and 2026 to the years 2027 and 2029. Thereby, the number of the companies supported under the SAG+ is expected to double from currently around 60 to about 120 businesses according to the Austrian Federal Government.
• Reinvestment obligation: Also under the SAG+, 50% of the granted funding is to be used for investments in energy efficiency, decarbonisation or electrification. Compared to the previous SAG 2025, which requires reinvestment of 80% of the funding, the reinvestment rate is therefore reduced.

What else you should know

• No double funding: Accumulation of funding under the ISPG and the SAG+ is excluded for the same facility in the same accounting year.
• Employment requirement: According to the key points communicated by the Austrian Federal Ministry of Economy, Energy and Tourism (BMWET), companies receiving funding of 2 million Euro or more per year need to maintain basically at least 90% of their staff levels during the respective funding period. If this threshold is not met, a partial reduction of the funding is foreseen. Certain outflows as well as economically justified exceptions are to be considered. The detailed requirements are determined in the funding guidelines.
• Energy price crisis mechanism: Additionally, a mechanism for extraordinary electricity price crises has been announced, which is aimed to provide immediate relief via the electricity bill if necessary. 

What companies should review now

Companies need to clarify at an early stage if their activities and facilities fall within the eligible sectors and if the general funding requirements and obligations are met. It is also recommended that a comparison of the potential relief under the ISPG and the SAG+ is to be prepared in order to optimise the usage of the funding instruments.

Please note: The described regulations are based on the ministerial draft and could change in the course of the legislative process. We are closely monitoring the further development and are happy to assist you with an initial analysis as well as with the preparation of the necessary data basis.

Authors: Cornelia Kalina, Nicole Reisinger