Germany's renewable support costs could drop in 2025 amid strong solar expansion – analysis
Clean Energy Wire
Federal funds required to support the expansion of renewable energy in Germany could drop in 2025, according to an analysis by the Institute of Energy Economics at the University of Cologne (EWI). Support costs could recede to 18 billion euros, an increase of almost one billion euros compared to 2023 but lower than 2024 expenses. According to earlier calculations, support costs set under Germany's Renewable Energy Act (EEG) will reach 23 billion this year.
As part of its medium-term forecast, prepared on behalf of the four German transmission system operators, EWI examined how much renewable electricity can be expected in the coming years and what its funding could cost. It looked at the development of installed capacity, annual operation and subsidy payments from 2025 to 2029.
The report anticipates strong growth in open-space solar systems, whose installed capacity could more than triple by the end of 2029 compared to 2023. By the end of 2029, the electricity generation capacity from renewable sources in Germany could then rise to more than 300 gigawatt (GW), roughly double that of 2023.
The amount of electricity generated by these plants under average weather conditions would then be around 380 terawatt-hours (TWh) in 2029, up from 245 TWh in 2023. Subsidy payments could rise to 23 billion euros in the same period despite the withdrawal of 22 GW older of solar and wind energy plants from current subsidies with high remuneration rates by 2029.
The EEG guarantees feed-in tariffs for many renewable operators, paying them the difference between the market value of the electricity and a pre-agreed amount per kilowatt hour. This 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.
