Germany to cut renewable subsidies as grid strain grows

In a significant reform, Germany intends to reduce subsidies for renewable energy due to grid congestion caused by increased solar production. A proposal from the Economy Ministry, released late Friday, suggests that starting in 2027, new renewable energy producers will receive support that aligns with both market needs and system requirements, prioritizing projects that meet electricity demand. Gradually, fixed feed-in tariffs for new installations will be eliminated. These adjustments may hinder investments in onshore wind and solar, as developers confront rising expenses and declining revenues amid negative electricity prices. Nevertheless, the ministry aims to elevate the share of renewables in gross electricity consumption to 80% by 2030, up from approximately 58%, alongside plans for more wind capacity auctions. Germany's current feed-in tariffs, usually lasting 20 years, and recent reductions in bureaucratic hurdles have led to unprecedented growth in renewable capacity, but insufficient power lines have resulted in bottlenecks and compensation claims. This year, the state is projected to allocate around €16 billion (US$18.3 billion) for renewable support and an additional €3 billion (US$3.4 billion) for curtailed generation, facing backlash as Chancellor Friedrich Merz's administration seeks to implement spending reductions.