Germany's solar industry says government plans threaten sector

The German solar industry says plans by the Economy Ministry to eliminate subsidies threaten the industry.

The planned abolition of support for new, small solar systems from 2027 in particular could cause investments worth billions to collapse and put tens of thousands of jobs at medium-sized businesses and in the skilled trades at risk nationwide, the German Solar Association (BSW) warned.

The ministry, led by Katherina Reiche of Chancellor Friedrich Merz's conservative Christian Democratic Union party (CDU), published its drafts on Friday evening for a new version of the Renewable Energy Act (EEG) and the Grid Package. 

Under the plans, operators of solar systems with up to 25 kilowatts of installed capacity that are built from 2027 would be guaranteed a payment for a maximum of only 36 months.

After this transition phase, they would have to switch to direct marketing, meaning they would need to sell their electricity on power exchanges via a service provider, where prices fluctuate and are not predictable.

"The plans are completely out of date. They keep private households dependent on fossil energy for longer and put tens of thousands of jobs in the solar industry at risk," said BSW chief executive Carsten Körnig. 

The German Renewable Energy Federation (BEE) agreed. "Instead of reliable investment conditions, the federal government is creating new uncertainty," said BEE President Ursula Heinen-Esser.

Lower compensation if systems are shut down by force

For new solar and wind systems built in regions that already have grid bottlenecks, the plans call for reduced compensation if these systems have to be shut down temporarily to prevent a grid overload. That means large parts of Germany would become exclusion zones for renewable energies, said the BSW.

Environmental Action Germany (DUH) said the government's plan to shift the consequences of inadequate grid expansion onto those who make the energy transition possible in the first place a decisive mistake.  Requirements for grid operators often remained non-binding while operators of renewable systems were being placed under greater obligations, managing director Sascha Mueller-Kraenner said.

The German New Energy Economy Association (BNE) criticized the slowest grid operator still setting the pace of the energy transition. "A modern industrial country needs fast, digital and reliable connection processes nationwide," said BNE chief executive Robert Busch.

Greens and Left Party also criticize

The Left party deputy parliamentary group leader Janine Wissler blamed the CDU economy minister

"The core problem remains that Katherina Reiche is making renewables less economic through the changes to the EEG," she said, referring to Germany's Renewable Energy Act.

"That is a catastrophe for renewable energy providers."

Greens economic policymaker Michael Kellner said the grid package favours grid operators too much, is damaging renewables' expansion and "massively" restricts solar electricity from rooftops.

"That is wrong. We could make good use of the energy, also and especially for cooling with air conditioning," Kellner said.

Reiche sticks to green power target

Expansion of green power in Germany has been promoted by the EEG since 2000. In 2025, renewables accounted for 58% of electricity generation, according to the energy industry. The target is for this to rise to 80% by 2030.

Reiche said she is sticking to the targets - she just wants to make it less expensive for the taxpayers. Social Democrats (SPD) like Finance Minister Lars Klingbeil and Environment Minister Carsten Schneider opposed the plan, fearing the energy transition would be slowed.