On 15 September 2025, the Federal Minister for Economic Affairs and Energy Katharina Reiche presented a 10-point plan to recalibrate Germany’s energy transition. The plan is based on a monitoring report assessing the energy transition’s progress – especially in terms of costs, system efficiency and security of supply – and aims to close existing gaps, make the energy transition more efficient and reduce costs for the state, business and consumers.
Ten measures for secure, clean and affordable energy
The 10-point plan aims to achieve climate neutrality while ensuring that Germany remains competitive. Reiche sees reliability, security of supply, affordability and cost efficiency as key to Germany’s future energy policy if the energy transition is to succeed. While the goal of having renewables provide 80% of electricity by 2030 remains in place, the Ministry emphasises the need for a more realistic, pragmatic approach. The expansion of renewable energies is to be more closely coordinated with the expansion of grids and storage facilities and with actual system load.
Honest demand assessment and realistic planning: Expansion strategies for renewable energies and grid infrastructure are to be amended and brought in line with adjusted electricity demand scenarios. The Ministry points out that electricity demand is expected to be lower than previously assumed. The current version of the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz – EEG 2023) still assumes that demand for electricity will reach 750 TWh in 2030, while the monitoring report gives a (rather broad) range of 600-700 TWh. The Ministry apparently wants to take the lower end of this as a basis.
Market- and system-oriented financial support for renewables: The Ministry has announced its intention to reform the subsidy regime for renewable energies. The fixed feed-in tariff is to be abolished completely, and no payment will be made when electricity prices are negative. The current market premium model is to be replaced by more nuanced financing models, such as bilateral contracts for difference (CfDs) and clawback mechanisms. A direct marketing obligation is to be introduced for new installations. Much of this is required under EU law anyway, so the Ministry already has some catching up to do. The tender concept is now likely to be overhauled in the near future, with it becoming clear by early 2026 at the latest what the future model will look like.
Synchronised expansion of grids, renewable energies and decentralised flexibility: Grid bottlenecks and (expensive) overcapacity are to be avoided by more effectively coordinating the expansion of generation facilities and grids. This will also involve increased use of tools such as combining renewable energy plants with storage systems (co-location), installing grid “traffic lights” and cable pooling. Financial incentives will promote the grid-friendly expansion of renewable energy plants and efficient use of existing grid capacities (e.g. capacity-based grid charges and region-specific construction subsidies). Digital queue management systems will make it easier to bundle connection requests.
Rapid implementation of a technology-agnostic capacity market: Germany’s energy policy must be more open to both existing and new technologies so that a reliable power supply can be guaranteed even when solar and wind energy is insufficient. Priority support will be given to gas power plants with hydrogen conversion potential. The Ministry has stated that there should be clarity about initial invitations to tender for gas power plants by the end of 2025.
Increased flexibility and digitalisation of the electricity system: Rolling out smart meters is one of the key measures, as the installation rate in Germany is currently less than 3%. Going forward, responsibility for the mandatory rollout is to be assigned to the distribution system operators and will accordingly fall under their regulated assets. Load management, batteries and other flexibility tools are to be integrated into variable electricity tariffs and grid charges.
Preservation and expansion of uniform and liquid energy markets: The markets for electricity, gas, hydrogen and CO2 are to be free markets, providing favourable conditions for industry, investors and consumers. Market fragmentation and “excessive” intervention in pricing and supply structures are to be avoided.
Review of financial support schemes, systematic reduction of subsidies: All existing support measures and subsidies are to be reviewed and reduced to what is absolutely necessary. Financial support is to be earmarked for energy-intensive companies, research and innovative products and solutions and be granted for a limited time to ensure sustainable competition.
- Promotion of forward-looking research and innovation: New technologies such as deep geothermal energy, fusion reactors, hydrogen, and carbon capture, utilisation and storage (CCUS) are to be developed to ensure long-term cost efficiency and competitiveness. Artificial intelligence will also play a key role, with support being allocated for the rapid construction of data centres.
Pragmatic support for hydrogen ramp-up: Legal requirements relating to hydrogen are to be reduced (e.g. by expanding the definition of “green hydrogen” at EU level). The expansion of hydrogen technology will initially focus on markets where demand already exists or can easily be stimulated (e.g. refineries). The Ministry also wants to push ahead with expanding the hydrogen core network in Germany, while tapping foreign hydrogen potential as well. The current expansion targets for electrolysers are to be replaced by flexible targets.
- Establishment of CCUS as a climate protection technology: The Ministry sees the storage and utilisation of CO2 as vital for the decarbonisation of industrial processes. Sectors with emissions that are hard to prevent, such as the cement and chemical industries, as well as power plants and energy producers, are to be given access to investment aid and infrastructure funding via the amendment of the Carbon Dioxide Storage and Transport Act (Kohlendioxidspeicher- und Transportgesetz).
Summary and assessment
The Federal Ministry of Economic Affairs and Energy has confirmed that climate targets can only be achieved with a high percentage of renewable energies. But the new 10-point plan also demands greater cost efficiency and more realistic planning. The following aspects deserve particular mention:
- Synchronisation of generation capacity expansion and grid expansion: Grid expansion has become the bottleneck of the energy transition. Although renewable energies have priority for grid connection, some regions still have long waiting times. Initial measures have recently been adopted to remedy this, such as the introduction of cable pooling, which allows several systems to be connected to the same grid connection point. The 10-point plan now aims to build on these measures. The expansion of renewable energy plants is to be optimised in line with demand through more targeted site selection. But this in turn means that the choice of site will increasingly depend on grid availability. Site selection could be steered via construction subsidies or grid charges, which could be significantly higher in regions with scarce grid resources than in regions where grid capacity is (still) available. This is another aspect that may need to be taken into account when evaluating projects in the medium term.
- Market- and system-oriented financial support: The Ministry is calling for a move away from flat-rate subsidies towards more nuanced financing models. Fixed feed-in tariffs will be completely abolished, as will any payment when electricity prices are negative. Instead, there are to be bilateral financing models (such as contracts for difference (CfDs)) and possibly another clawback mechanism aimed at preventing excessive subsidisation. The Ministry is already playing catch-up here as the European Commission is reportedly blocking approval of Germany’s Solar Package I partly because the current market premium model does not have a mechanism to regulate excessive subsidisation. For project developers, however, this also means that the financially attractive market-premium model, which sets a minimum electricity payment but not a maximum one, will come to an end in the foreseeable future.
- Electricity demand analysis: The reduction in projected electricity demand from 750 TWh/a to something in the range of 600-700 TWh/a in 2030 will also have a significant impact on how much renewable energy needs to be added and therefore on tendering volumes in the coming years. The Ministry now wants to take the lower end of this forecast as a basis, giving the energy transition a medium-term target of 600 TWh/a in 2030. Given that renewables are supposed to cover 80% of the total electricity required, this means a 120 TWh/a reduction in the power to be obtained from renewable energy sources.
- Increased flexibility in the electricity market: The 10-point plan focuses on gas power plants to give the electricity market the flexibility it needs and promises clarity regarding invitations to tender for gas power plants by the end of 2025. The debate surrounding gas power plants has raged for years in both Berlin and Brussels, and now for several months already under the current Federal Government. It remains to be seen whether a tender concept will actually emerge in the next few weeks. It is already no longer realistic to expect these power plants to be up and running by the target date of 2029/2030, which makes it all the more concerning that the 10-point plan does not clearly signal any intention to ramp up large-scale battery storage systems. This technology is still being left to the market, and the political (market) signals now being sent are negative: The move towards gas power plants diminishes the capacity market relevant for battery storage systems.
The 10-point plan has therefore elicited a mixed response. Energy-intensive industries have welcomed the proposals, especially in light of continuing high electricity prices. Associations such as the German Chemicals Industry Association (Verband der Chemischen Industrie), the German Association of Local Public Utilities (Verband kommunaler Unternehmen) and the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft) have also reacted mostly positively. They see the reforms as the foundation for a much more efficient, business-friendly energy system and are calling for swift implementation.
The renewable energy industry has voiced some sharp criticism, however. The German Association of Energy Market Innovators (Bundesverband Neue Energiewirtschaft), the German Solar Association (Bundesverband Solarwirtschaft) and Environmental Action Germany (Deutsche Umwelthilfe) cautioned that the plan would slow the expansion of renewables. The proposed cuts to subsidies for rooftop PV systems are a particular bone of contention.
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