The German government is expected to fund renewable energy at €18 billion each in 2025 – PV International Magazine

October 28, 2024
Sandra Enckhardt

From PV magazine Germany

The Institute for Energy Economics (EWI) at the University of Cologne has published a medium-term forecast for Germany’s Renewable Energy Act (EEG), which estimates that funding will reach more than 18 billion euros ($19.48 billion) in 2025 – an increase of almost 1 billion euros compared to 2023.

What the Cologne researchers do not write is that this will likely be a decrease compared to this year. In 2024, by the end of September, almost 15 billion euros had flowed from the federal budget to transmission system operators to maintain EEG balance, as detailed in netztransparenz.dejoint homepage of transmission system operators. Funding requirements set a year ago significantly underestimated costs. They are likely to be just under €20 billion, as seen in the EWI’s medium-term forecast.

The medium-term EWI forecast extends to 2029. The Cologne researchers expect renewable energy generation capacity to roughly double to more than 300 GW by 2029 compared to 2023. Under average weather conditions this will result in a generation volume of 380 TWh. “EEG subsidy payments could rise to almost €23 billion over the same period, despite the fact that by 2029, 22 GW of solar and wind power plants will no longer be eligible for high-reward EEG subsidies,” EWI said.

In the trend scenario that has the highest probability, EWI assumes strong installed capacity growth. “The largest increase in expected capacity is seen in open space solar systems, where expected installed capacity could more than triple by the end of 2029 compared to 2023,” said Fabian Arnold, project manager at EWI. Key drivers of this expected growth are lower technology costs and the regulatory environment, which has improved significantly, he added. These regulatory improvements include higher funding rates and tender volumes, and a reduction in bureaucracy. The EWI scenario assumes that by 2029, installed PV capacity will be around 200 GW, of which almost 124 GW will come from open space systems.

However, the growing number of new installations is not the only factor driving up EEG funding costs. According to EWI, the decline in expected market value is another important reason for the projected increase in EEG payments in the medium term. As market prices continue to fall, the gap from promised subsidy levels increases and so does the overall cost of paying for EEGs. “In particular, the market value of solar systems in our simulation calculations falls due to the high level of simultaneity in their production. As a result, subsidy payments through the EEG increase disproportionately to the expected expansion,” said Philip Schnaars, head of research at EWI.

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