Germany Plans End Fixed-Price Contracts Renewable Energy

Germany's economy ministry announced plans to phase out long-term fixed-price feed-in tariffs for new renewable energy projects, shifting toward more market-based support mechanisms in line with European Union guidance. This change aims to balance the country's ambitious climate goals, including 80% renewable electricity by 2030 and climate neutrality by 2045, while addressing concerns about high energy costs and industrial competitiveness. Alternative financing models under consideration include contracts for difference, which provide revenue stability but require payback if market prices exceed thresholds, and clawback mechanisms to recoup excess profits. The ministry emphasized continued support for renewables through a more pragmatic, flexible framework and proposed coordinated expansion of power grids, renewable capacity, and storage with regional incentives. Critics argue the fixed tariffs, though instrumental in building the sector, have become too costly and that the mature renewable industry should now face market forces. Germany also faces structural challenges such as power surpluses during high renewable output and shortages during low production periods, alongside significant grid expansion costs projected through 2045.