Germany will reform subsidies for renewable energies to reduce costs and create uncertainty in investments. The measure involves stopping the payment of premiums in negative prices starting in January. Experts warn about the impact on energy transition and planning. Budget adjustments anticipate a gradual elimination of subsidies by 2027. The government is working on increasing the flexibility of the electrical system and promoting electricity storage.

Germany has made the decision to cut and reform the subsidies it pays to producers of renewable energies, in an attempt to reduce the growing costs to the state resulting from the rapid expansion of photovoltaic energy in the country. This measure, agreed upon by the Council of Ministers, implies that the government will stop paying premiums to medium and large installations when electricity prices are negative starting in January of next year. While this resolution aims to lighten the burden of these subsidies on the federal budget, it is generating uncertainty about future investments. The German state guarantees a minimum price to producers of renewable energies, which means paying the difference when the wholesale electricity price drops, a phenomenon that has become more frequent due to the increasing supply in relation to demand in the electricity market. According to recent data, from May 9 to 16, there were eight consecutive days with electricity prices of zero euros or less in the largest European economy, breaking previous records. This has led the state to project paying up to 20 billion euros to wind and solar operators by the end of this year, double the previous estimate. The proposal to stop remunerating production with negative prices comes from the liberals, members of Olaf Scholz's coalition government alongside social democrats and greens. According to Michael Kruse, the liberals' energy policy spokesperson, every hour with negative electricity prices means double spending for the taxpayer, as the state pays for both production and consumption of electricity. However, renewable energies are essential for Germany to achieve its climate goals, as they are expected to represent around 80% of electricity production by 2030, compared to the current 50%. Despite the importance of renewable energies for the energy transition and the country's climate goals, the decision to modify subsidies has raised concerns among experts such as Claudia Kemfert, an energy specialist at the German Institute for Economic Research (DIW). Kemfert warns that changing the promotion of renewable energies to investment subsidies creates uncertainty in terms of investment and planning, which could hinder progress towards a sustainable energy transition. The German government had already planned to gradually phase out subsidies in case of negative prices by 2027, but the need to balance the budget has led to advancing this measure. The approved budget project includes an expenditure of 480.6 billion euros, with 78 billion euros allocated to investments. Although Finance Minister Christian Lindner assures that it is not a budget of cuts, the projected new debt and the reduction of some items, such as humanitarian aid, reflect an adjustment in public finances. To address the situation of negative prices in the electricity market, the German government is working on increasing the flexibility of the electricity system through various measures, such as expanding the grid to balance supply and demand, installing smart meters in households, and implementing electricity storage systems. Likewise, it is planned to lower the threshold from which renewable energy producers can trade their electricity themselves in several phases starting in January 2025, as established in the recently approved resolution.