Germany's use of renewables windfall profits to lower power prices was constitutional – court

Germany’s constitutional court has ruled that the government’s use of renewable energy operators' windfall profits to co-finance electricity price subsidies for consumers during the “emergency situation” in the energy market following Russia’s invasion of Ukraine in February 2022 was justified.

“The enormous jump in electricity prices following the gas shortages resulting from the war led to a rise in revenues that far exceeded typical investor expectations, particularly among operators of renewable energy power plants,” said the court in a press release. At the same time, many consumers faced difficulties in paying their energy bills. “In this exceptional situation, the redistribution of the resulting so-called ‘surplus revenues’ establishes a reasonable balance between the interests of the producers and of the consumers,” the court said.

The German government subsidised electricity and gas prices under its energy "price brakes" in a bid to protect consumers from skyrocketing costs. It financed the measure with funds from the federal budget and energy companies' windfall profits. Operators of solar PV, wind and biomass power plants had challenged the imposed redistribution, saying that they bear no particular responsibility for reducing the burdens on consumers, which should be done using solely tax revenues. In total, the surplus levy generated an income of 750 million to 850 million euros, wrote Handelsblatt.