Germany plans to cut subsidies for renewable energy in a major overhaul of its funding system, as rising solar power production puts a strain on the country’s electricity grid.
From 2027, new renewable generators should receive support “in a way that benefits the market and the system,” according to a draft law published by the Ministry of Economy on Friday. That means rewarding projects that respond more closely to electricity demand and don’t overload the national grid.
The fixed feed-in tariff for new installations will be phased out under the proposal.
The changes could reduce investment in offshore wind and solar projects, where developers are already facing high costs and declining revenues as energy prices turn negative. Still, the ministry is sticking to its goal of increasing the share of renewable energy use in Germany’s total electricity consumption to 80 percent from around 58 percent by 2030, and is planning additional auctions for wind capacity.
Germany’s feed-in tariff, generally offered for 20 years, and recent efforts to reduce rebates have helped renewable capacity expand at a record pace. But the power lines have failed to keep pace, causing bottlenecks and forcing operators to reduce production for a while. Producers can claim compensation for lost results.
The state is expected to spend about 16 billion euros ($18.3 billion) on renewable aid this year, prompting criticism as Chancellor Friedrich Merz’s government tries to rein in spending, including pensions and health care. Additional payments for reduced production of about 3 billion euros ($3.4 billion) have also drawn criticism.
