Germany plans to curb support for new renewables to ease grid pressure and cut costs

The German government has presented a draft reform of the rules governing support for renewable energy and its connection to the grid. The aim is to cut the cost of transforming the energy sector and ease pressure on the overloaded transmission and distribution systems. The planned changes would significantly overhaul the rules for new solar and wind power plants, in response to a situation in which grid infrastructure development has long lagged behind the pace of new capacity construction.

The reform, according to Clean Energy Wire, is also a response to European Union state aid rules, which require mechanisms to limit windfall profits from 2027. The existing system of guaranteed priority access to the grid and feed-in tariffs is therefore set to change.

New grid connection terms and limits on compensation

One of the main measures changes the rules in areas where grid infrastructure has insufficient capacity. New renewable energy installations in these congested regions would be automatically connected to the grid only if they waive their right to compensation for forced output curtailment.

The initially stricter proposals were partially softened after negotiations. One point of contention was a plan to limit the automatic right to grid connection for new installations in areas where it had not been possible to feed at least 3% of the electricity generated into the grid in the previous year. The new proposal raises this threshold to 5%. The government has also shortened the period for which operators would have to waive this compensation. While the original proposal envisaged 10 years, the period would now be just six years.

German Economy Minister Katherina Reiche, according to the outlet, is defending the measure on the grounds that investors should also bear some of the financial risk associated with forced output curtailment in congested locations.

Major changes ahead for small rooftop solar

The small rooftop solar segment is also set for a major shift. From 2027, new installations would still be eligible for fixed feed-in tariffs, but at a lower rate than today and only for the first three years of operation. The system of fixed feed-in tariffs for new installations is to be gradually phased out, with the aim of ending it entirely by 2030.

According to the Ministry of Economic Affairs, small rooftop solar installations have already reached market maturity and no longer need ongoing subsidy support. Earlier proposals even envisaged immediately ending the guaranteed feed-in tariffs, but the government has since backed away from that plan.

The government’s proposal has drawn strong opposition from industry organisations, despite the softening of measures originally under discussion. The Renewable Energy Federation (BEE) and the German Solar Industry Association (BSW-Solar) warn that the planned changes threaten billions of euros in investment and put tens of thousands of jobs at risk.

BEE Chair Ursula Heinen-Esser described the proposals as a major step backwards for the development of renewables in Germany. The associations also criticised the extremely short consultation period: they were given just three working days to submit their comments.