German Renewable Energy Law (EEG)

The Erneuerbare-Energien-Gesetz

The Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG) is the cornerstone of German renewable energy policy. First enacted in 2000 as the Stromeinspeisungsgesetz’s successor, the EEG has been substantially amended through multiple versions — EEG 2004, 2009, 2012, 2014, 2017, and 2023. The EEG establishes the legal framework for the promotion of electricity from renewable sources, implementing the EU Renewable Energy Directive (2018/2001) and contributing to Germany’s climate targets under the Federal Climate Protection Act (Bundes-Klimaschutzgesetz, KSG).

The EEG’s fundamental mechanism has evolved from fixed feed-in tariffs (Einspeisevergunstigungen) to a auction system (Ausschreibungssystem). Under the original EEG, grid operators were obliged to connect renewable energy installations, purchase the electricity, and pay a statutory fixed tariff for 20 years. The 2017 amendment transitioned to a competitive auction model for most technologies, aligning with EU state aid requirements.

Feed-In Tariffs and the Transition to Auctions

Under the original EEG model, renewable energy generators received guaranteed feed-in tariffs differentiated by technology and installation size. The tariffs were designed to ensure profitability and stimulate investment, decreasing annually (degression) to reflect technological learning. The EEG surcharge (EEG-Umlage) was passed on to electricity consumers, who bore the cost of the renewable energy transition.

The 2017 EEG amendment fundamentally restructured the support mechanism. For onshore wind, solar, and biomass, the level of support is now determined through competitive auctions (Ausschreibungen). Developers bid for a tariff level, and the lowest bids receive contracts. The auction volume for each technology is specified annually, with adjustments for realised deployment. Auctions are technology-specific, with separate rounds for each technology to ensure a diversified energy mix.

The EEG 2023 (the current version) sets expansion targets: 80 per cent renewable electricity by 2030 and net zero emissions electricity by 2035. Specific capacity targets include: onshore wind (115 GW by 2030, 160 GW by 2035), offshore wind (30 GW by 2030, 70 GW by 2045), and solar photovoltaics (215 GW by 2030). The EEG surcharge was abolished in July 2022, with renewable energy costs now financed from the federal budget.

Grid Expansion and Integration

The Energiewende (energy transition) requires massive grid expansion to transport renewable electricity from the windy north and solar-rich south to industrial demand centres. Grid expansion is governed by the Grid Expansion Acceleration Act (Netzausbaubeschleunigungsgesetz, NABEG) and the Federal Requirement Plan Act (Bundesbedarfsplangesetz, BBPlG), which identify priority transmission projects.

The four German transmission system operators (TSOs) — TenneT, 50Hertz, Amprion, and TransnetBW — are responsible for grid development. The Grid Development Plan (Netzentwicklungsplan, NEP) sets out the required expansion for 20-year periods, approved by the Federal Network Agency (Bundesnetzagentur, BNetzA). Key projects include the SuedLink and SuedOstLink high-voltage direct current (HVDC) corridors from north to south, and NordLink and NeuConnect interconnectors to Norway and the United Kingdom.

Grid integration costs under the EEG include: (1) the grid operator must connect renewable installations to the nearest suitable grid connection point; (2) the grid operator must expand the grid as necessary to accommodate renewable generation; (3) if the grid is congested, the TSO must pay compensation to curtailed renewable generators (Einspeisemanagement). Curtailment compensation costs have increased significantly, reaching several hundred million euros annually.

The Phase-Out of Nuclear and Coal

The Energiewende encompasses both the expansion of renewables and the phase-out of nuclear and coal power. Following the Fukushima disaster in 2011, the German government enacted the 13th amendment to the Atomic Energy Act (Atomgesetz, AtG), accelerating the nuclear phase-out. The last three nuclear power plants — Emsland, Isar 2, and Neckarwestheim 2 — were finally shut down on 15 April 2023, ending over 60 years of nuclear power generation in Germany.

The coal phase-out is governed by the Coal Phase-Out Act (Kohleverstromungsbeendigungsgesetz, KVBG), enacted in 2020. The law sets a binding deadline for coal-fired power generation to cease by 2038 at the latest, with an option to bring forward the deadline to 2035. Phasing-out follows a timeline: by 2022, reductions of approximately 15 GW of hard coal and lignite capacity; by 2030, further reductions to approximately 8 GW; and final closure by 2038. Operators receive compensation payments for premature closure, determined through auctions or direct agreements.

The compensation framework established by the KVBG provides: for hard coal plants, capacity is reduced through auctions from 2020; operators bid for compensation per MW of capacity to be closed. The BNetzA administers the auction process. For lignite plants, closure is based on agreements with the mining companies (RWE, LEAG) with fixed compensation amounts. The Federal Constitutional Court upheld the coal phase-out framework in its decision of 13 January 2022 (1 BvR 1181/22), rejecting constitutional complaints from operators. The court held that the phase-out serves the legitimate purpose of climate protection and that the compensation framework is constitutionally adequate.

The Federal Climate Protection Act

The Federal Climate Protection Act (Bundes-Klimaschutzgesetz, KSG), enacted in 2019 and strengthened in 2021, sets binding annual emission reduction targets for sectors including energy, transport, buildings, industry, agriculture, and waste. The KSG was substantially influenced by the BVerfG’s landmark climate decision (Klimabeschluss) of 24 March 2021 (1 BvR 2656/18). The court held that the KSG’s emission reduction targets for post-2030 periods were insufficient and violated the fundamental rights of future generations under Article 2(1) GG, read with Article 20a GG (environmental protection). The court required the legislature to set more concrete reduction targets for the period after 2030.

The KSG as amended in 2021 establishes: a binding target of greenhouse gas neutrality by 2045, with negative emissions after 2050; annual sector-specific emission budgets managed by the Federal Ministry for Economic Affairs and Climate Action; a compliance mechanism requiring immediate action programmes if sectors exceed their budgets; and annual monitoring and reporting by the Council of Experts on Climate Change.

Offshore Wind and Hydrogen

Offshore wind development is governed by the Offshore Wind Energy Act (Windenergie-auf-See-Gesetz, WindSeeG), which sets targets of 30 GW by 2030 and 70 GW by 2045. Offshore wind areas in the North Sea and Baltic Sea are designated in the area development plan (Flachenentwicklungsplan). Auctions for offshore wind capacity are centrally managed by the BNetzA, with pre-investigation and central preliminary planning conducted by the Federal Maritime and Hydrographic Agency.

The hydrogen strategy (Nationale Wasserstoffstrategie, updated 2023) provides the framework for the transition from natural gas to green hydrogen. The strategy targets 10 GW of electrolysis capacity by 2030, supported by the H2 Global initiative (a hydrogen purchase platform) and the planned H2-Kernnetz (hydrogen core network). The EEG framework facilitates hydrogen production from renewable sources by exempting electrolysers from grid charges and the EEG surcharge.