EEG 2027 – Overhaul of Germany’s renewable energy subsidy regime

To ensure the continued availability of renewable energy subsidies, the German government must this year prepare a reform of the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, “EEG”) for 2027 and secure state aid approval from the European Commission. It has now presented a draft bill that would fundamentally reshape Germany’s renewable energy subsidy scheme and establish a more predictable, cost-efficient, grid-friendly and market-oriented framework for the expansion of renewable energy in the electricity sector. Key elements include the introduction of a refinancing contribution, which functions as a repayment mechanism, revised auction volumes, resilience auctions, and the gradual phase-out of feed-in tariffs for newly commissioned installations.

Political and regulatory background

The EEG is the principal legislation underpinning Germany’s transition to a greenhouse gas-neutral electricity supply with an increasing share of renewable energy. Renewables are to account for at least 80% of Germany’s gross electricity consumption by 2030. The political foundation for the upcoming reform is the coalition agreement between the CDU/CSU and SPD, entitled “Responsibility for Germany” and signed in May 2025. In that agreement, the coalition commits to accelerating the expansion of renewable energy while ensuring greater system integration and market orientation. It also sets out the long-term objective that renewable energy installations should ultimately be capable of financing themselves entirely through market revenues.

At EU level, the design of the amendment is being shaped in particular by two legislative initiatives. First, Regulation (EU) 2019/943 (the “EU Electricity Regulation”) requires Member States to introduce two-way contracts for difference (CfDs) or equivalent repayment mechanisms in connection with direct price support schemes. Second, Article 26 of Regulation (EU) 2024/1735 (“EU Net-Zero Industry Act”) requires Member States to introduce resilience auctions incorporating qualitative award criteria. Against this backdrop, the draft EEG seeks to fundamentally reshape Germany’s renewable energy subsidy regime.

The proposed amendment is driven by EU law requirements: State aid approval for the currently applicable EEG 2023 is due to expire at the end of 2026, while the new subsidy regime under the EEG 2027 will require fresh approval from the European Commission. In addition, several state-aid measures introduced by Solar Package I, which was adopted in mid-2024 have yet to receive approval and are therefore either not yet applicable or can only be applied under the previous legal framework. The timely entry into force of the reformed subsidy regime, including the refinancing contribution mechanism, on 1 January 2027 is not merely a legislative goal, but a political necessity.

Legislative process to date

After an initial unofficial working draft was leaked in early 2026, the official ministerial draft of the EEG amendment was published in July 2026 and a formal consultation process with industry associations was launched.

On 29 July 2026, the German Federal Cabinet adopted the draft bill for the Act on the Predictable, Cost-Efficient, Grid-Friendly and Market-Oriented Expansion of Renewable Energy in the Electricity Sector (EEG amendment) (cabinet draft).

Centrepiece of the EEG amendment: Introduction of two-way contracts for difference

A central element of the draft is the introduction of two-way contracts for difference, replacing the current market premium mechanism for directly marketed electricity. While the market premium mechanism will formally remain in place, the draft introduces a new production-based refinancing contribution (“RB”) under section 21d EEG 2027 (draft). Under this mechanism, operators of subsidised installations must repay a portion of their market revenues to the relevant grid operator if the technology-specific annual market value exceeds the applicable reference value. Grid operators will have a corresponding claim to the refinancing contribution. The obligation to pay the refinancing contribution also extends to electricity that has been temporarily stored. This effectively transforms the current one-way subsidy scheme into a two-way mechanism. The refinancing contributions are passed on to the transmission system operators and credited to the EEG account.

For installation operators, the following aspects of the new mechanism will be particularly relevant:

• Scope of application: Under section 21d EEG 2027 (draft), the obligation to pay the refinancing contribution generally applies to installations with an installed capacity of 100 kW or more that have received a valid auction award or whose operators have declared, pursuant to section 20(2) EEG 2027 (draft), their intention to claim support under the EEG. That obligation may continue to apply even if the installation switches to another form of direct marketing, but only in years in which the annual market value exceeds the applicable reference value.
• For installations with an installed capacity of 100 kW or more that are not subject to the auction requirement, entitlement to the market premium is contingent on the operator either notifying in text form its intention to claim subsidies or designating the installation for direct marketing with the market premium, in each case no later than six months after commissioning. Where these requirements are met, the obligation to pay the refinancing contribution may continue to apply even during periods of alternative direct marketing.
• Calculation method: The refinancing contribution is calculated annually on the basis of the technology-specific annual market value (section 21d in conjunction with Annex 1, no. 4.1 to EEG 2027 (draft)). As a general rule: refinancing contribution = annual market value – applicable reference value; any negative result is deemed to be zero. The applicable reference value is either prescribed by law or, for installation operators above certain capacity thresholds, determined by means of an auction process, as has been the case since 2017 (section 3, no. 3 EEG 2027 (draft)).
• Cap on revenue clawback where market revenues are low: Annex 1, no. 4.2 EEG 2027 (draft) limits the clawback amount on a quarter-hourly basis to the applicable spot market price less a minimum revenue threshold. Where spot market prices are negative, both the entitlement to subsidies and the obligation to pay the refinancing contribution are suspended for the relevant quarter-hour period.
• Storage and redispatch: The obligation to pay the refinancing contribution also applies to electricity that has been temporarily stored. As a general rule, no distinction is made in calculating the refinancing contribution based on whether the relevant feed-in pattern results from upward or downward redispatch measures.
• Opting out of the subsidy scheme: Following commissioning, installation operators may make a one-time decision to opt out of future EEG subsidies (section 21e EEG 2027 (draft)). Such a decision terminates not only the entitlement to EEG subsidies but also the obligation to pay the refinancing contribution. To opt out, the operator must notify the relevant grid operator in text form, by the end of the tenth calendar year following commissioning, that it is opting out of both the subsidy scheme and the associated revenue clawback mechanism.
• Exceptions: The obligation to pay the refinancing contribution does not apply to installations with an installed capacity of less than 100 kW, regardless of technology, or to biomass installations, with the exception of landfill gas and sewage gas installations (section 21d(1) and (2) EEG 2027 (draft)).

Structural changes to the auction framework: higher volumes, new segments

The basic design of the auction regime remains intact: The applicable reference value will continue to be determined through competitive bidding, segment-specific auction volumes will apply, and the Federal Network Agency (Bundesnetzagentur) will remain the auctioning authority. However, the Bundesnetzagentur’s authority – under section 28(3a) EEG 2023 – to independently adjust auction volumes will be removed. In addition, a number of significant changes, including the following, have been introduced:

• Onshore wind turbines: The draft sets annual auction volumes at 15,000 MW of installed capacity in 2027 and 2028, 12,000 MW in 2029 and 10,000 MW per year from 2030 to 2032.
• Solar energy: The draft provides for a structural shift in auction volumes in favour of ground-mounted photovoltaic (PV) installations (first segment). The corresponding auction volume will increase from 9,900 MW to 14,000 MW of installed capacity, while the volume available to second-segment solar installations (e.g. rooftop PV installations) will decrease from 2,300 MW to 1,500 MW.
• Bioenergy: Auction volumes for biomass installations will initially be increased compared with current levels before being gradually reduced over time: 1,000 MW (2027 and 2028), 750 MW (2029 and 2030), and 500 MW (2031 and 2032). By contrast, the existing biomethane auctions will be discontinued and not replaced (section 28d EEG 2023 will be repealed).
• Special solar installations: The existing sub-segment currently under section 37d EEG 2023 will be discontinued and not replaced. In future, floating PV, car park PV and other special solar installations will be included in the regular first-segment auctions.
• Innovation auctions: Sections 39n to 39q EEG 2023, which establish a dedicated auction segment for innovative project concepts, will be discontinued and not replaced. This is because hybrid project configurations, particularly combinations of ground-mounted photovoltaic installations and battery storage systems, have become established in the market and are now regarded as standard market practice. As a result, a separate auction segment designed to provide additional incentives for such projects is no longer considered necessary.
• Resilience auctions: Innovation auctions will be replaced by resilience auctions. This auction segment is being introduced to implement Article 26 EU Net-Zero Industry Act and will apply to onshore wind turbines and first-segment solar installations (section 39n EEG 2027 (draft)). Unless an ordinance provides otherwise, annual auction volumes of 4,000 MW are proposed for the period from 2027 to 2032, with 3,500 MW allocated to onshore wind turbines and 500 MW to solar energy (section 28e EEG 2027 (draft)). These volumes will count towards, rather than be added to, the respective annual auction volumes. Further details of the resilience auction framework will be specified by ordinance (section 88d EEG 2027 (draft)).
• Maximum bid values for 2027: Under the auction regime, only those bids that do not exceed the price cap specified for the relevant auction or installation (the maximum bid value) are eligible to receive an award. These maximum bid values will be revised for 2027 and increased as follows:
  • Electricity from onshore wind turbines: 7.1 ct/kWh.
  • Electricity from first-segment solar installations: 5.9 ct/kWh.
  • Electricity from second-segment solar installations: 9.9 ct/kWh.
  • Electricity from new biomass installations: 19.43 ct/kWh.
  • Electricity from existing biomass installations: 19.83 ct/kWh. 

Small-scale installations and rooftop PV systems: Shift towards direct marketing

The amendment to the EEG provides for significant changes for small-scale installations, i.e. those with an installed capacity of less than 25 kW.

• Grid operator offtake: The current remuneration regime for electricity fed into the grid and compensation for periods during which electricity is not fed into the grid will no longer apply to new installations and will instead be replaced by the so-called system operator offtake model (Netzbetreiberabnahme). Installations with a capacity of less than 100 kW will generally be subject to uncompensated offtake under section 21(1), no. 2 EEG 2027 (draft) unless their operators opt for “other direct marketing” or, for a limited period, the temporary transitional payment. According to the explanatory memorandum, the rationale is that smaller installations, particularly small-scale solar installations, are often already economically viable without additional subsidies due to falling costs, provided that a significant share of the electricity generated is consumed on site. The previous “produce and forget” model is therefore considered outdated.
• Temporary transitional payment: The newly introduced transitional payment is a temporary measure designed to bridge the transition to the new regime. The mechanism is modelled on the existing feed-in tariff regime but is set at a lower rate: the payment is calculated based on the reference value applicable to the installation, minus 1 ct/kWh (section 53(1) EEG 2027 (draft)), and is granted for 36 months after commissioning of the installation. Eligibility for the transitional payment will be phased out gradually. The mechanism will apply to installations with an installed capacity of less than 50 kW in 2027, less than 25 kW in 2028, and less than 7 kW in 2029. The payment will generally be discontinued as from 2030. After this period, operators may operate their installation as a “zero feed-in installation” or continue to feed electricity into the grid under one of the two unsubsidised marketing options, namely “uncompensated offtake” or “other direct marketing”. The temporary transitional payment is not available to plug-in solar devices, such as balcony PV systems.
• Permanent active power limitation: New second-segment solar installations, such as rooftop PV systems, with a capacity of less than 100 kW will be permanently limited to feeding no more than 50 % of their active power into the grid (section 9(2b) EEG 2027 (draft)). The restriction applies regardless of the marketing option chosen and irrespective of whether an intelligent metering system is installed. Zero feed-in installations and plug-in solar devices are exempt from the requirement. The scheme is designed to encourage investment in storage systems. The aim is to store the electricity that can no longer be fed into the grid at midday and feed it into the grid in the evening instead.
• Direct marketing bonus and technical requirements: Operators of installations with a capacity of less than 25 kW that market their electricity under the “other direct marketing” regime will receive a bonus of 1.5 ct/kWh for a maximum of 48 months (section 50c EEG 2027 (draft)). Going forward, all newly commissioned installations participating in direct marketing, irrespective of size, will have to meet the technical requirements set out in section 10b EEG 2027 (draft). In particular, the installations must be remotely controllable by the direct marketing entity and capable of providing real-time feed-in data. 

Expansion of definition of plug-in solar devices to include storage systems

Under the EEG 2023, plug-in solar devices are currently defined as devices consisting of one or more solar installations, an inverter, a connection cable and a plug for connection to the end user’s electrical circuit.

Section 3, no. 43 EEG 2027 (draft) expands this definition of plug-in solar devices to include electricity storage systems that are operated behind the same inverter. The capacity limits applicable to plug-in solar devices, comprising a maximum installed solar capacity of up to 2 kW and an inverter capacity of up to 800 VA, apply only to the solar installation(s). The storage system itself is not subject to a separate capacity limit.

This change will extend the special rules applicable to plug-in solar devices to eligible storage systems. For example, they will enjoy the same regulatory privileges in relation to grid connection, remote control requirements and the limitation of active power. The obligation to register plug-in solar devices, including the associated storage system, in the Market Master Data Register (Marktstammdatenregister) remains unchanged.

Industry response

Der Gesetzesentwurf stößt in der Energiewirtschaft auf ein gemischtes Echo: Die Reformrichtung findet teilweise Zustimmung, die konkrete Ausgestaltung wird jedoch in zentralen Punkten kritisiert:

• Removal of feed-in tariff for small-scale PV installations: A key concern is that eliminating the feed-in tariff would effectively force operators of small-scale installations into direct marketing models that are not yet scalable, posing a significant threat to continued growth in the rooftop solar segment.
• Refinancing contribution and energy storage: Storage, solar and marketing associations have expressed concerns that the proposed structure of the refinancing contribution for electricity that is temporarily stored could adversely affect the commercial viability of co-location projects. They also argue that the measure may conflict with the objectives of EU law, which seeks to preserve incentives for efficient and market-oriented operation of energy installations.
• PV auction volumes and innovation auctions: Stakeholders have noted that the proposed shifting of auction volumes towards ground-mounted solar projects and the scrapping of innovation auctions undermine efforts to better align local electricity generation with local consumption and to increase the flexibility of EEG installations through the use of co-located storage systems.
• Elimination of the electricity volume pathway: Critics also point to the complete repeal of the electricity volume pathway set out in section 4a EEG 2023, together with the correction mechanism provided for in section 28(3a) EEG 2023. This would, stakeholders argue, remove an established statutory planning and monitoring framework, as well as the Bundesnetzagentur’s ability to adjust auction volumes where necessary.
• Legislative process: A number of associations have criticised the consultation period of just three business days as insufficient in light of the draft’s complexity and far-reaching implications. They also advocate a more coordinated approach linking the EEG amendment with the simultaneously proposed grid connection package and grid charges reform.

Outlook and conclusion

The draft of the EEG 2027 amendment marks a radical overhaul of Germany’s renewable energy subsidy regime. By introducing two-way contracts for difference, phasing out the feed-in tariff for small-scale installations, overhauling the auction architecture and introducing resilience auctions, the federal government is pursuing a consistently market- and system-oriented approach.

Affected companies should closely monitor further developments and consider adapting their projects to the new subsidy framework at an early stage. Installation operators and project developers should, in particular, assess how the refinancing contribution, changes to auction volumes, maximum bid values and resilience criteria affect revenue models and existing project pipelines. Operators of smaller installations should also begin reviewing available direct marketing options and any associated technical requirements.