EU launches probe into Germany's energy subsidy system

An energy subsidy system which benefits more than 2,000 key players in Germany's heavy industry sector including BASF and ThyssenKrupp AG is being investigated by the European Union.

EU regulators said they were looking into the German law's exemptions scheme, the so-called EEG-Act, in which companies are granted waiver for a surcharge to fund the country's shift from fossil fuel to clean energy which is instead paid for by consumers.

The surcharge exemption dubbed the "green electricity privilege" is granted when a supplier sources half its electricity portfolio from domestic renewable sources.

If the European Commission considers it necessary, companies could be forced to pay back billions of euros.

However this week German Chancellor Angela Merkel vowed to block any law changes that could endanger jobs in the country.

The exemption forms part of Germany's 2000 Energiewende programme, but regulators are looking into its 2012 amendments.