EEG 2027 – Overview of the Planned Amendment to the Renewable Energy Sources Act

The Federal Ministry for Economic Affairs and Energy (BMWE) has released a working draft for an amendment to the Renewable Energy Sources Act (EEG), which is to come into force as “EEG 2027-Entw.” (as at 22 January 2026). The draft provides for fundamental changes to the current EEG. In accordance with EU requirements, the current subsidy system based on bilateral contracts for difference (CfDs) is to be further developed and the fixed feed-in tariff for new installations abolished. The detailed parameters for revenue skimming within the framework of CfDs are still to be determined. The announced paradigm shift will not only change bidding behaviour and bid calculation in the future but will also subject the remaining tenders under the current subsidy regime to particular competition.

Introduction of Contracts for Difference

Until now, market premium subsidies have functioned as a unilateral model: if the annual average value (monthly average for older plants) is not achieved on the electricity market, the plant operator receives the difference as a market premium. If, on the other hand, the market value is higher, the additional revenue remains with the operator. With the EEG 2027, this system will be further developed into a system with CfDs. The core of the planned change is the introduction of a so-called refinancing contribution with a corridor in accordance with Section 20a of the EEG 2027 draft, i.e. plant operators who receive subsidies under the EEG must make a payment to the grid operator in calendar years in which the annual market value exceeds the applicable value by a certain corridor, which is yet to be defined in more detail. In future, there will thus be a revenue skimming mechanism in the EEG, as has already been established for years [...]. Unlike in these countries, the applicable value will remain fixed for the duration of the subsidy period, as has been the case up to now, and will not be subject to inflation adjustments. As a result, cost increases during construction and operation will be borne by the plant operator.

The payment obligation applies to all plants with an installed capacity of 100 kW or more that are subject to the subsidy regime. In future, this will also include plants that are operated under other direct marketing arrangements (PPAs), as long as they reserve the right to switch to EEG remuneration. According to Section 21a (2) of the EEG 2027 draft, revenue skimming in these cases also takes place for PPAs on the basis of the technology-specific annual market value. However, the prerequisite remains that, depending on the size of the plant, the plant operator has either received an effective surcharge from a tender in accordance with Section 20a (1) sentence 1 no. 1 EEG 2027 or has submitted a declaration in accordance with Section 19 (2) EEG 2027.

Unlike in other countries, the refinancing contribution is to be calculated exclusively on a production basis, i.e. for each kilowatt hour fed into the grid. Settlement is to be made on an annual basis. In addition, the revised Section 26 (2) of the draft EEG 2027 also provides for monthly advance payments in both directions. Periods with negative prices are excluded; in these periods, there is neither a subsidy nor a refinancing contribution (Sections 51, 54 of the draft EEG 2027). Regional certificates (Section 53b EEG 2027) and electricity tax exemptions (Section 53c EEG 2027) have the opposite effect in levy years: while they reduce the operator’s payment entitlement in subsidy years, they increase the refinancing contribution in levy years.

In addition, plant operators with a capacity of 100 kW or more will in future have to notify the grid operator in writing that they wish to claim a subsidy (Section 19 (2) EEG 2027 draft). Without this notification, there is no entitlement to subsidies and no skimming takes place. The notification can also be made for only a certain part of the installed capacity. In this case, the subsidy entitlement and payment obligation are only proportional.

Opt-out option

Until now, plant operators receiving EEG subsidies have been able to switch between short-term compensation for outages, direct marketing with a market premium and other forms of direct marketing at any time. This can generate additional revenue, particularly in the case of lucrative PPAs. With the planned levy also applying to other forms of direct marketing, such models are also becoming less attractive.

A solution here is offered by the so-called opt-out option pursuant to Section 20b EEG 2027 in the draft. This provides a one-time opportunity to irrevocably opt out of the EEG subsidy system. As a result, the subsidy entitlement and payment obligation cease to apply from the first calendar day of the following year. A return to the system is not possible. The withdrawal notification can be made until the end of the tenth calendar year after commissioning.

Abolition of feed-in tariffs – mandatory direct marketing

According to the draft, feed-in tariffs will be completely abolished as a form of sale for new installations. They will be replaced by grid operator purchase as a new form of sale (Section 21 (1) sentence 1 EEG 2027 draft), which no longer has a subsidy character. It comprises temporary market value transmission as a transitional instrument for certain small installations, free purchase for installations with a maximum capacity of 100 kW, and market value transmission for installations that are no longer eligible for subsidies. This makes direct marketing the principle for all new installations. The previous compensation for loss of income pursuant to Section 21 (1) sentence 1 no. 3 EEG- Draft 2023 will also be abolished for new installations, while existing installations will continue to have access to it.

The temporary market value transmission is designed as a transitional instrument that is only available to certain small installations. The power threshold will be gradually lowered: when it comes into operation in 2027, installations with less than 25 kW will be able to access it, and in 2028 only installations with less than 10 kW. From 2029 onwards, the transitional instrument will be completely abolished. For individual plants, the temporary market value transmission ends at the latest at the end of the third calendar month after installation of a smart metering system and a control device, but no later than the end of the 30th calendar month after commissioning (see Section 25 (1a) EEG 2027). The entitlement is determined in accordance with Section 23b EEG 2027, whereby the annual market value may not exceed 10 ct/kWh.

Discontinuation of subsidies for installations under 25 kW

New installations with an installed capacity of less than 25 kW are no longer eligible for the market premium. According to Section 20 (1) No. 1 EEG 2027, only installations with a capacity of 25 kW or more are eligible. As the feed-in tariff is also being abolished, these installations will no longer be eligible for subsidies for electricity fed into the grid. Operators will therefore only have access to the non-subsidised forms of sale described above. However, the tenant electricity surcharge pursuant to Section 21 (3) EEG 2027 will remain in place for systems under 25 kW.

Typical rooftop PV systems for residential and multi-family buildings are therefore likely to only be useful for self-supply in future. In this respect, it is already apparent that there are hardly any direct marketing offers for systems that are no longer eligible for subsidies.

Adjustments for rooftop photovoltaic systems

The draft provides in Section 9 (2b) of the EEG 2027 for a permanent limitation of the maximum active power feed-in from solar systems on buildings to 50 per cent of their installed capacity. In contrast to the previous limitation to 60 per cent, this regulation applies regardless of the installation of a smart metering system and the form of sale. However, it is still unclear which system sizes the regulation applies to (less than 25 or less than 100 kW).

At the same time, the draft introduces a significant shift in tender volumes in favour of ground-mounted solar installations. According to Section 28a (2) of the EEG 2027 draft, the tender volume for each of the years 2027 to 2032 will be 14,000 MW. The previous requirement in Section 4 (2) of the EEG 2023, according to which at least half of the additional capacity should come from rooftop photovoltaic systems, is being deleted.

Resilience tenders

The European Net-Zero Industry Act (Regulation (EU) 2024/1735) obliges Member States to take qualitative criteria into account in certain tenders for the expansion of renewable energies. The relevant principles are enshrined in Section 39n of the draft EEG 2027, while the details are set out in a subsequent regulation (Section 88d of the draft EEG 2027).

Bioenergy

According to Section 20a (2) of the draft EEG 2027, biomass plants are expressly exempt from the payment obligation under bilateral contracts for difference. In this context, the draft points out that a levy is neither provided for in the Internal Electricity Market Regulation nor required under state aid law. In addition, the value to be applied for plants is adjusted. The tender volumes for biomass and biomethane plants will be stabilised and fixed for the years 2027 to 2032.

Financial participation of municipalities

Section 6 of the EEG 2027 revises the financial participation of affected municipalities by operators of onshore wind turbines and open-space installations. The draft provides in Section 6 (2) and (3) of the EEG 2027 draft for a change from the amount of electricity fed into the grid to the amount of electricity actually generated. This means that eligibility for participation is no longer dependent on whether the electricity is consumed before or after the grid connection point. In addition, fictitious electricity quantities according to Annex 2 No. 7.2 of the EEG 2023 will no longer be eligible for participation in future. In calendar years in which plant operators owe a refinancing contribution pursuant to Section 20a EEG 2027, participation payments made pursuant to Section 6 (5) EEG 2027 draft can be reimbursed by the grid operator in the following year. The financing contribution thus has a negative impact not only on the profitability of plant operators, but also on the participation of local authorities. Due to the now diverse range of state laws on the so-called wind or solar euro, it remains to be seen whether changes will also occur in this regard.

Expansion of cross-border cooperation projects

In addition to the two forms of cooperation previously provided for in Section 5 of the EEG 2023 – joint, open national and open foreign tenders – the draft provides for a third option. According to this, it is possible for one or more other Member States to carry out the tender and the implementation of the subsidy. The Federal Republic of Germany participates financially downstream and receives a share of any revenue from the levy. This requires an agreement under international law (Section 5 (4) sentence 2 no. 3 EEG 2027 draft). The transaction is handled by transmission system operators as “paying agents.”

Reducing bureaucracy and simplifying procedures

According to Section 9 (2) sentence 1 nos. 1, 2 and 3 EEG 2027, the requirements for remote control and for limiting active power feed-in do not apply to so-called zero feed-in systems. Furthermore, the term “plug-in solar device” is defined in such a way that a plug-in solar device also covers several solar installations and an electricity storage unit behind the same inverter. The existing privileges – no obligation for remote controllability, no 60% limit and no obligation for the early installation of a smart metering system – remain in place. In addition, electricity from plug-in solar devices can continue to be allocated to free-of-charge purchase.

In the area of system aggregation, the tender-specific regulations on system aggregation contained in Section 24 (2) EEG 2023 are extended to solar systems installed on, at or in structures that are not buildings or noise barriers. The regulatory authorisation for green hydrogen in Section 93 of the EEG 2023 and various reporting obligations are deleted. A new evaluation obligation is also introduced in Section 99a of the EEG 2027: According to this, the BMWE must evaluate whether subsidy entitlements and payment obligations weaken market price signals from markets other than the spot market. A scientifically sound report must be published by 31 July 2029 at the latest.

Criticism of the working draft

The working draft has triggered a predominantly critical broad debate. The most vehement criticism has been directed at the planned elimination of subsidies for small-scale installations and the proposed abolition of feed-in tariffs. The German Solar Industry Association described the draft as a “frontal attack on the energy transition,” and the German Renewable Energy Federation also viewed the cuts to rooftop installations as particularly critical. The main objection is that small systems would only be economically viable without subsidies if they were used for high levels of self-consumption. Furthermore, mandatory direct marketing is currently impracticable due to the lack of processes suitable for mass business and a comprehensive smart meter infrastructure. The smart meter requirement for systems under 7 kW would also increase costs.

Academics also criticise the fact that the draft completely removes the previous electricity volume path of Section 4a EEG 2023. This means that there is no legal corrective measure that would force adjustments in the event of deviations from the 80 per cent target corridor. At the same time, industry associations criticise the lack of key instruments promised in the coalition agreement, including regulations on physical direct supply, regional electricity supply models, a market framework for PPAs, citizen energy and energy sharing. The bioenergy industry also criticises the draft as insufficient. In particular, the adherence to rigid limits on operating hours and the only minor adjustment to the maize cap mean that key economic problems remain. Finally, there are calls across all sectors to combine the EEG amendment with the planned grid package and grid fee reform. Otherwise, without a reliable overall perspective, there is a risk of rising financing costs.

Outlook

As the criticism shows, the legal discourse is beginning at an increasingly early stage. According to this, the working draft has not even been agreed upon by the government yet, let alone in the Bundestag (parliament) or the relevant committees. In addition to the national level, it must be re-notified and approved by the European Commission. Implementation by 1 January 2027 therefore seems ambitious.

This has significant implications for practice. The already struggling renewable energy sector is likely to face even greater challenges. In addition to the CfD model, the increase in flexible grid connection agreements and the planned levying of construction cost subsidies and grid fees are particularly noteworthy. Existing financing structures must therefore be placed on a completely new footing. Overall, the latest announcements give the impression that legislators want to evaluate the limits of what is reasonable. But what happens if those limits are not only evaluated but exceeded? Against the backdrop of ambitious expansion targets and the overarching goal of climate neutrality, the German government must ask itself whether Germany can actually afford an expansion gap that may result from overburdening the industry.

The further course of the legislative process will show which regulations will become law in this form. In any case, it is already clear that there will be a paradigm shift in the EEG that is likely to have a significant impact on the practice of renewable energies in the near future.