Germany is preparing major changes to its renewable energy support system as the government seeks to reduce energy transition costs and address growing pressure on the electricity grid.
The government has proposed limiting financial support for new solar and wind projects in areas where electricity networks are already congested. The reforms are part of changes to the Renewable Energy Act (EEG), which must be updated before the current support framework expires at the end of 2026.
Under the proposed changes, small rooftop solar installations would receive reduced financial incentives, while larger renewable energy projects could face lower compensation when their electricity output is restricted due to grid overloads.
Germany’s renewable energy expansion has moved faster than grid development, creating challenges for electricity transmission and distribution. The government argues that the new rules will help align renewable growth with available grid capacity and make the energy transition more affordable.
The revised proposal allows new renewable projects in areas with grid bottlenecks to receive automatic grid connections if they agree to give up compensation payments during periods when electricity cannot be delivered to the network. However, the updated plan includes less strict conditions than earlier proposals, with higher thresholds for affected regions and shorter periods for reduced compensation.
The government also plans to gradually reduce support payments for small rooftop solar systems from 2027. While earlier plans suggested ending guaranteed payments completely, the latest proposal would maintain incentives for the first three years before gradually reducing support until 2030.
Renewable energy industry groups have criticized the planned reforms, warning that reduced incentives could slow investment in solar and wind projects and put thousands of jobs at risk. Industry representatives argue that Germany still needs strong support mechanisms to achieve its renewable energy targets.
Economy Minister Katherina Reiche said renewable projects should take more responsibility for financial risks linked to grid limitations and that mature technologies such as small-scale solar no longer require the same level of support.
Germany aims to generate 80 percent of its electricity from renewable sources by 2030. The proposed reforms are expected to move forward through government approval and parliamentary review as the country works to balance renewable expansion with grid stability and lower energy costs.
