Germany's Cabinet has approved draft legislation that would gradually replace feed-in tariffs with direct marketing for new renewable energy projects
The proposal would end permanent subsidies for new rooftop solar systems under 25 kW while protecting support for existing installations
The solar industry has warned that the reforms could reduce investment and is calling for lawmakers to revise the legislation before it becomes law
Germany's Federal Cabinet has approved draft legislation to amend the Renewable Energy Sources Act (EEG), which would phase out permanent feed-in tariffs (FITs) for new small rooftop solar systems. The proposals, which still require parliamentary approval, have drawn strong opposition from the country's solar industry.
Under the proposed EEG 2027 reforms, all new renewable energy projects will gradually transition to direct marketing, ending permanent FITs for wind, solar, and biomass. The government said the phased approach will allow the market to develop services for smaller projects while ensuring electricity price signals reach generators.
The draft also shifts support toward utility-scale solar projects. It states that ground-mounted solar PV systems benefit from greater economies of scale, while small rooftop systems often remain financially attractive through self-consumption without subsidies.
Therefore, the draft proposes ending permanent FIT support for new rooftop PV systems with a capacity below 25 kW. A temporary transition payment is proposed to ease the move from FIT to direct marketing.
“This new rule applies exclusively to new systems that participate in tenders from 2027 onwards or are commissioned without tendering,” says the draft.
Existing installations will retain their guaranteed support for the duration of their operating period.
The reforms would apply only to new renewable energy installations commissioned under the new EEG framework from 2027 onward. Existing installations would retain their existing support entitlements throughout their operating period.
According to the Ministry for Economic Affairs and Energy, these proposals will make renewable energy expansion more market-oriented and aligned with grid capacity.
The package also introduces measures to better align the expansion of renewable energy with grid capacity. Starting from 2027, compensation for curtailment would be removed in grid congestion hotspots, grid connection procedures would be accelerated, and operators would be allowed to prioritize connection requests and reserve capacity.
The government also plans to add 12 GW of new onshore wind capacity via tenders, while maintaining its target of sourcing 80% of electricity from renewables by 2030.
According to the draft amendment, the annual volume for resilience auctions is set at 4 GW of generation capacity. Of this, 3.5 GW will be allocated to onshore wind and 0.5 GW to utility-scale solar. Together with 2 GW reserved for offshore wind under separate legislation, this would meet the EU Net-Zero Industry Act requirement for Germany to conduct 6 GW of resilience auctions annually (see EU Rolls Out NZIA Rules for Sustainability in Auctions).
Federal Minister for Economic Affairs and Energy Katherina Reiche said the reforms mark ‘a paradigm shift in renewable energy’ by considering grid suitability when planning new projects. She said the changes could reduce redispatch costs by more than €3 billion annually while maintaining renewable energy expansion through “more market forces and competition, greater cost efficiency, and greater responsibility for the overall system.”
The proposals have received mixed reactions from industry groups. The German Solar Association BSW-Solar said the reforms would weaken investment certainty for households and businesses and slow the country's solar expansion.
“The planned cuts jeopardize billions of euros in investments and put tens of thousands of jobs along the solar value chain at risk,” said Carsten Körnig, Managing Director of BSW-Solar. The association argues that the planned new regulations for small PV systems are ‘particularly problematic’. The proposed three-year transitional payment is a ‘sham and cannot even begin to compensate for the elimination of the fixed feed-in tariff that has been guaranteed for over 20 years’.
He added that requiring operators of small solar systems to market surplus electricity directly ‘is foreseeably neither technically nor economically feasible for them’ and warned it could become ‘a massive brake on solar investment’.
The German Renewable Energy Federation (BEE) also criticized the proposals, saying the reforms create uncertainty for investors and warning that replacing the existing support framework without workable alternatives could slow the deployment of renewable energy. The association reiterated its call for changes during the parliamentary process (see German EEG 2027 Draft Faces Strong Renewable Industry Pushback).
German clean energy think tank Agora Energiewende said the government had missed an opportunity to lower costs through better market integration of renewables and had left key grid expansion challenges unresolved. Julia Bläsius, Director of Agora Energiewende Deutschland, said the ongoing blockage of the Strait of Hormuz underscores the importance of expanding renewable energy to reduce Germany's dependence on fossil fuel imports and improve resilience to geopolitical crises.
The German Association of Energy and Water Industries (BDEW) broadly welcomed the package as an important step toward a modern grid connection regime and better coordination between renewable energy expansion and grid development. However, it urged lawmakers to carefully assess whether the combined impact of the proposed measures could undermine the economic viability of renewable projects.
“The detailed regulations on capacity-limited network areas and uncompensated curtailment quotas, as decided by the cabinet, must be reviewed with the industry as quickly as possible with regard to their consequences,” said Kerstin Andreae, Chair of BDEW's Executive Board.
The association also called for a rapid review of the proposed rules on capacity-constrained grid areas and uncompensated curtailment, and urged the government to introduce measures to accelerate the expansion of distribution grids.
