Germany needs double the public money planned for renewables support in 2024 – report

Low wholesale electricity prices are causing a hefty increase in the federal funds required to pay renewables operators the legally agreed upon support amounts in 2024, show calculations by economist Manuel Frondel from the Leibniz Institute for Economic Research (RWI) in a report by Bild Zeitung. Frondel said that for the full year, the state will have to pay out about 23 billion euros, which is more than twice the amount initially projected. The government had earmarked around 11 billion euros from the federal budget for renewables support in 2024.

Many renewables operators are paid the difference between the market value of the electricity and a pre-agreed amount per kilowatt hour. That means that the lower the market price, the higher the support payments are. The difference between wholesale power prices and the guaranteed remuneration level used to be funded by customers through the so-called renewables surcharge on their power bill. In 2022, amidst the energy crisis in Europe, the government changed the funding mechanism to direct state support to reduce energy costs for households and other electricity consumers.

The large additional funding requirements are likely impacting the ongoing negotiations within the coalition government about the 2025 budget. The budget has already been complicated by a court ruling late last year which declared around 60 billion euros earmarked for funding climate and transformation projects as unlawful. To remain within its allowed budget, the government was forced to quickly reshuffle funds or scrap projects altogether. However, the government reopened budget negotiations for 2025 after advisors to the finance ministry cast doubts on a draft agreement.