Future of German EEG subsidies: is the system still sustainable?

The political debate over EEG subsidies for renewable energy 

If some political parties have their way, the end of EEG subsidies for new renewable energy installations may be approaching. Many critics argue that the German Renewable Energy Sources Act (EEG), particularly its fixed feed-in tariff structure, is outdated and too expensive. More importantly, the EEG account faces a growing refinancing gap due to a lack of self-financing capacity. 

Rising financial pressure on the EEG account 

Historically, shortfalls in the EEG account were bridged by the Climate and Transformation Fund. Now, however, the federal budget is stepping in to fill gaps—raising concerns about whether the EEG is becoming a long-term subsidy burden.  

Solar subsidies dominate EEG spending 

• According to 2023 data, solar power subsidies represent a disproportionately large share of EEG spending: 

• 58% of all EEG subsidies—€9.9 billion—went to solar system operators 

By contrast, biomass and wind received significantly less: €3.3 billion and €3.8 billion respectively 

This distribution has raised questions about whether the EEG is efficiently supporting Germany’s energy transition goals. 

How do EEG remuneration models impact subsidy costs? 

The EEG offers two primary remuneration structures: 

Market premium model – Used mainly by large-scale wind and biomass operators. These producers must sell their electricity on the open market, with the state offering only a minimum guaranteed remuneration. This model encourages responsiveness to price signals (e.g., reducing output during negative prices). 

Feed-in tariff model – A fixed-price scheme mainly benefiting smaller installations such as rooftop solar systems. Operators are paid a set amount per kWh, regardless of market prices, and the grid operator handles marketing. 

The feed-in tariff, while simple and reliable, tends to place a heavier burden on the EEG account—especially during periods of volatile electricity pricing. 

Legacy solar installations and their ongoing impact 

One of the primary reasons for the current financial pressure is the wave of rooftop solar installations between 2008–2012, when feed-in tariffs were relatively high. These legacy systems continue to draw subsidies and account for 49% of total EEG payments. 

Will EEG subsidy costs decline in the future? 

There is cautious optimism. We project that many of these early solar systems will exit the subsidy system between 2028 and 2031, as they reach the end of their 20-year support term. 

This drop-off in “boomer installations” should: 

• Reduce pressure on the EEG account 

• Improve the self-financing capacity of renewables 

• Potentially close the EEG funding gap without major reforms 

Conclusion: reform or natural relief? 

While critics continue to push for EEG reform, especially for solar subsidies, the natural phase-out of early high-cost installations could bring significant financial relief. For now, the future of EEG subsidies hinges on the balance between policy decisions, market pricing structures, and the pace of legacy cost resolution.