Germany Moves to Cut Renewable Energy Subsidies

The German cabinet has approved legislative proposals aimed at limiting subsidies for renewable energy and reducing the cost of the country’s energy transition.

Economy Minister Katherina Reiche described the changes as a “paradigm shift”, saying the government would no longer support projects that generate returns high enough to make them viable without subsidies.

The biggest changes will affect owners of new rooftop solar installations. Their feed-in capacity will be limited to 50% of installed capacity at peak times, while the fixed tariff for surplus electricity will be phased out over a three-year transition period.

Owners will instead be able to store the power or sell it at current market prices through a trader. Existing installations will retain their current support.

Reiche had initially proposed abolishing the tariff for new systems immediately, but the cabinet agreed to a transition period following opposition from the solar industry. Owners who switch to direct marketing will also receive a bonus for four years to offset the additional costs.

Wind and solar operators in areas affected by grid congestion will lose compensation for up to 20% of their annual output if their facilities have to be curtailed.

The government nevertheless reaffirmed its goal of increasing renewables’ share of electricity consumption to 80% by 2030.

The Bundestag will consider the proposals after the summer recess.

(NZZ, lud)