Germany’s Energy Package Sparks Industry Backlash Over Investment Risks and Solar Subsidy Cuts
Published on 07/24/2026 at 02:20 | Redaktion boerse-global.de
The German cabinet’s decision to approve a major grid connection package and a revision of the Renewable Energy Sources Act (EEG) on July 29 has drawn sharp criticism from industry groups. Following the release of a revised draft by the Federal Ministry for Economic Affairs on July 17, trade associations submitted their formal responses by July 22. A subsequent hearing with industry representatives on July 23 made one thing clear: key new regulations, in the sector’s view, threaten the reliability of investments.
Grid Management Shift Raises Financing Concerns
The draft places greater emphasis on managing existing grid capacity rather than focusing solely on expansion. At its core is a so-called “redispatch reserve” in capacity-limited zones. The ministry raised the threshold for designating such zones from 3 percent to 5 percent of annual redispatch measures. It also shortened the designation period from ten years to six.
But industry representatives see little relief in these adjustments. The German Renewable Energy Federation (BEE) and the Federal Association of New Energy Industries (BNE) warn of serious financing risks. Specifically, operators would have to accept uncompensated curtailments of 10 to 20 percent of their annual output. Starting in January 2027, additional blanket output restrictions will apply: solar installations may feed in only 70 percent of their installed capacity, while wind turbines are capped at 280 watts per square meter of rotor area.
The German Association of Towns and Municipalities (DStGB) welcomed the move away from the “first-come, first-served” principle and the digitalization of grid connection procedures. However, it cautioned that the approach focuses too heavily on managing scarcity rather than on the urgently needed grid expansion.
Small Solar Systems Face End of Feed-In Tariffs
Alongside the grid package, the EEG reform is stirring unrest — especially in the photovoltaic sector. The draft proposes eliminating feed-in tariffs entirely for new solar installations up to 25 kilowatts (kW). In their place, only transitional payments would be available until 2029.
The German Solar Industry Association (BSW) warns of a sharp market slump for residential rooftop systems. An analysis by Agora Energiewende concludes that small PV installations would become uneconomical under the new rules. Industry representatives are calling for longer transition periods and the retention of existing compensation structures. One positive change: a previously discussed halt to feed-in payments after installing smart metering systems has been dropped. Instead, a 36-month transition period applies. However, the planned mandatory direct marketing requirement for systems above 25 kW remains controversial — it is seen as technically and economically burdensome.
Biomass Volumes Plummet as Industry Criticizes Short Consultation Window
Bioenergy is also facing drastic cuts. The tender volume for biomass is set to drop from 1,126 megawatts in 2026 to just 76 megawatts in 2028. The BEE is demanding a stable annual volume of 2,500 megawatts to preserve existing plants and ensure reliable power supply.
Beyond the content, the German Association of Energy and Water Industries (BDEW) sharply criticized the process. A consultation period of only three working days, it argued, is completely inadequate for drafts of such complexity.
Support came from state-level politics. Bavaria’s Economics Minister Aiwanger called for corrections to the EEG to avoid slowing wind power expansion in the south. He is demanding a separate bidding segment for wind energy in southern regions and a special tender of 5 gigawatts for 2027. While he described the easing of the redispatch reserve as acceptable, he sees significant room for improvement in the federal framework for wind power.
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