Berlin to End Renewable Subsidies for Profitable Projects, Minister Says
Germany's cabinet approved market-discipline measures for renewables on Wednesday, pairing a subsidy withdrawal with a grid package that could lock congestion designations for six years.
Economy minister Katherina Reiche said on Wednesday (2026-07-29) that Germany will stop subsidising renewable energy projects that can cover their own costs, effective once the revised renewable energy law, the EEG, is enacted. The cabinet approved two separate measures that same morning, combining the subsidy withdrawal commitment with a grid package and a second set of rules designed to align renewables expansion with market forces. Opponents warned the package could stifle green growth.5,4
German power was trading at €126.38/MWh on Thursday (2026-07-31), a price at which many wind and solar projects generate returns without state backing. That arithmetic gives Reiche's position its fiscal logic. But it also makes the policy sensitive to power prices: if German baseload falls sharply from current levels, the pool of projects that qualify as "profitable" under the new law will narrow, potentially stranding capital committed under subsidy assumptions.5
Industry figures read the same policy differently. Plans to ease grid bottlenecks could cause an abrupt slowdown in clean energy investment, industry figures told Montel, with one source warning that the network package shifts investment risk very heavily onto developers.1
The grid package contains the mechanism that worries them most. The netzpaket, approved by cabinet on Wednesday (2026-07-29), includes a provision that would let network operators declare a region congested for up to six years if more than 5% of power generated there was curtailed in the prior year.4 Six years is not a transient operating constraint. Lenders evaluating long-term project debt treat a sustained congestion designation as a real pricing variable, and the banks that fund new builds will adjust their models accordingly.4,1
Germany's green hydrogen scheme adds complexity. The European Commission cleared EUR 1.3 billion ($1.51 billion) in German state support for renewable hydrogen, with approval granted on 2026-05-26 and no public indication since then that the programme is under review.3 That scheme targets projects that competed in tenders but failed to win. The effect is a policy that removes guaranteed support from commercially viable wind and solar while sustaining it for hydrogen capacity that cannot yet stand independently — a distinction the financing community will price differently for each technology.3
The statutory targets set the scale of what must still be built. Germany's revised climate law mandates a 65% reduction in carbon emissions from 1990 levels by 2030, with renewables required to reach 65% of electricity generation in the same period.2 Removing subsidy floors from profitable projects is internally consistent with fiscal discipline but does not settle whether the remaining pipeline of new capacity can clear investment hurdles on merchant terms alone.2
Operational assets already generating revenue are not the point of vulnerability. Profitable facilities can absorb the policy shift without distress. The exposure sits in projects approaching final investment decisions that were underwritten with subsidy certainty in the base case. Those developers now need a higher long-run power price assumption before lenders will commit.5,1
The EEG still requires enactment before Reiche's commitment binds. The definition of "profitable" in the final text is the provision developers and lenders need to scrutinise: a threshold calibrated to current elevated prices is a very different test from one set against a long-run average. German power at €126.38/MWh on Thursday (2026-07-31) is a market condition, not a statutory floor. The precise wording of that threshold, once the EEG text is published, will determine what share of the development pipeline loses its safety net.5