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Glossary · Energy industry & energy transition

Feed-in tariff

Feed-in Tariff feed-in tariff renewable energies support scheme Feed-in electricity market

A feed-in tariff is a remuneration fixed in advance for every kilowatt-hour of electricity that a plant operator feeds into the public grid. The term became known through the support of renewable energies. Photovoltaic, wind, biomass or hydropower plants received a guaranteed amount per unit of energy fed in over a defined period. In Germany, this principle is not called a feed-in tariff in the law but feed-in remuneration (Einspeisevergütung). In expert discussion and in international comparison, however, "feed-in tariff" is the usual term for the support model with a fixed price.

The relevant unit is the kilowatt-hour. It measures a quantity of energy, not power. A photovoltaic system with 10 kilowatts of installed capacity is therefore not paid for those 10 kilowatts, but for the kilowatt-hours actually fed in. An example: if the system feeds in 6,000 kilowatt-hours in a year and the tariff is 8 cents per kilowatt-hour, this results in 480 euros. The figures are chosen for illustration only. How high the remuneration is depends on the amount generated, the weather, the availability of the plant, the share of self-consumption and the grid connection. What is paid for is the quantity of electricity delivered, not the mere provision of a plant.

Distinction from consumer price, market premium and PPA

The feed-in tariff is not the electricity price that consumers pay. The household electricity price includes, in addition to procurement costs, grid charges, taxes, levies and sales costs. The feed-in tariff, by contrast, is a remuneration on the generation side. It neither shows what electricity customers pay in total, nor does it automatically reflect the current value of the electricity on the electricity market.

In everyday use, feed-in tariff and feed-in remuneration are often used synonymously. More precisely, the feed-in tariff denotes the support principle of a fixed price per kilowatt-hour. To be distinguished from it are the market premium, tender models and private supply contracts such as power purchase agreements. Under the market premium, the operator sells the electricity on the market itself or through a service provider and receives a premium in addition. This premium fully or partly closes the gap between a defined value and the market value. With the classic feed-in tariff, by contrast, the fixed payment is the main feature. In Germany, however, it no longer applies entirely independently of exchange prices (see below).

Why fixed tariffs enable investment

The practical purpose of a feed-in tariff is the allocation of risk: it relieves investors of a large part of the price risk. Anyone financing a solar plant, a wind turbine or a biogas plant must be able to estimate revenues over many years. A fixed tariff makes this calculation easier. Banks can grant loans on better terms, project developers can plan, and private households can assess an investment with manageable risk.

This was important for the early expansion of renewable energies. Many technologies were initially more expensive than conventional power plants and had no established financing. Feed-in tariffs created a predictable market for the output. They did not replace the technical learning curve, but they made series production, market entry and thus cost reductions financeable. In this way, a market emerged for components, planning, installation, operation and maintenance.

What matters is not only the level of the payment, but also how reliable the rule is. A lower but long-term credible remuneration can promote investment more strongly than a higher one whose continuation is politically uncertain. How a tariff actually works therefore also depends on its duration, degression, purchase obligation, metering concept, marketing obligations and the tasks of the grid operators.

Design in Germany (EEG 2023, as of November 2026)

Under section 21 EEG 2023, the feed-in remuneration exists only in certain cases. As a rule, it applies to plants of up to 100 kilowatts of installed capacity whose applicable value (anzulegender Wert) is set by law, and to plants whose support period has ended. Larger plants can use it only temporarily as a fallback remuneration (Ausfallvergütung): for no more than three months in a row and no more than six months per calendar year, and even then only at a reduced level. In addition, for plants below 200 kilowatts there is the "free-of-charge purchase" (unentgeltliche Abnahme), under which the entitlement is reduced to zero. The normal case for larger new plants is direct marketing with a market premium.

Anyone using the feed-in remuneration must hand over to the grid operator all electricity that is not consumed in the immediate vicinity and is transmitted through a grid. In addition, the plant may not participate in the balancing energy market. Electricity that is consumed on site is not remunerated by the EEG through the feed-in remuneration. A separate exception is the tenant electricity surcharge (Mieterstromzuschlag) for electricity that is supplied to final consumers within a building or neighbourhood without use of the grid.

Exchange prices now also affect the feed-in tariff. Since the amendment by the so-called Solarspitzengesetz with effect from 25 February 2025, under section 51 EEG the applicable value falls to zero for periods with a negative spot market price. This applies to the plants covered by this version, with exceptions for, for example, very small plants. For older plants, earlier rules apply depending on the year of commissioning, which required several consecutive hours with negative electricity prices. A compensation mechanism extends the support period by the affected periods. The statement that a feed-in tariff is fundamentally independent of exchange prices therefore no longer holds true for new German plants.

Under current law, the remuneration is paid for 20 calendar years plus the year of commissioning. On 29 July 2026, the Federal Cabinet adopted a draft for an EEG amendment. It provides for largely replacing the fixed feed-in remuneration for new plants from 2027 with a time-limited transitional payment and direct marketing. Existing plants are to keep their support framework. According to the available reports, the amendment had not yet been passed in early November 2026, so the details may still change.

Distinction from support in general and self-consumption

The feed-in tariff does not reflect generation costs. It is a figure set politically or by regulation. In early support regimes, it was deliberately above the market price so that investment would take place at all. Since the costs of renewable technologies have fallen sharply, tariffs are much lower or are replaced by tenders. Unlike a flat-rate subsidy, the tariff is tied to metered quantities of electricity delivered to the grid.

As a result, the calculation for small photovoltaic systems has shifted. In the past, full feed-in at a high tariff was often worthwhile. With low tariffs and high purchase prices, self-consumption now counts for more: every kilowatt-hour used oneself replaces expensive grid electricity. A battery storage system, a heat pump or an electric car can increase the share of solar power used by oneself. The feed-in tariff is then only one building block of the profitability calculation.

System effect: an incentive for quantity, hardly for timing

A fixed tariff mainly rewards quantity. If every kilowatt-hour is paid equally, the short-term market value, grid bottlenecks or the respective residual load hardly matter to the operator, unless the law provides otherwise. For controllable plants, such a tariff without time-based graduation can lead to perverse incentives. Photovoltaics and wind generate depending on the weather anyway. The higher their share in the electricity mix, however, the more the timing of feed-in matters: solar power on a sunny midday is worth less on the market than electricity on a low-wind evening with high demand.

Feed-in tariffs are therefore not fundamentally wrong: they trigger investment and stabilise revenues. In a power system with high shares of renewable energies, however, further instruments become more important. These include direct marketing, variable prices, storage, controllable loads, grid expansion, congestion management and rules for curtailment. A feed-in tariff alone does not create flexibility. The German zero remuneration at negative prices is an example of how price signals are built into the tariff model after the fact.

Costs, responsibilities and distribution

Feed-in tariffs generate payment flows that must be organised: someone has to measure quantities, pay out remuneration, allocate the electricity for balancing purposes and distribute the costs. Grid operators generally do not set the tariff themselves. They implement statutory requirements, connect plants, measure and settle. In Germany, the transmission system operators manage the EEG account for this purpose. Until 30 June 2022, the gap between expenditure and revenue was passed on to electricity consumption through the EEG surcharge. Since 1 July 2022, the surcharge has been zero, and at the end of 2022 it was abolished. Since then, the EEG account has been balanced from the federal budget.

The costs do not disappear as a result; they are merely distributed differently: formerly via the electricity bill, today via the tax and budget system. To assess a feed-in tariff, the tariff amount alone is therefore not sufficient. The support volume, duration, plant stock, market prices, avoided fuel costs, grid costs and the effect on investment also matter. Conflicts over grid connection or curtailment usually do not arise from the tariff itself. They result from the interplay of support law, grid capacity and requirements for safe operation.

Relationship to tenders and direct marketing

Many countries have partly replaced fixed feed-in tariffs with tenders. In these, projects apply for support entitlements, and the award goes to plants with low bids, provided they meet the other requirements. This is intended to bring support closer to actual costs. In return, bidders bear more risks, for example in calculation, permits and deadlines. Large professional players can handle this more easily than small operators.

Under direct marketing, operators or commissioned marketers sell the electricity on the market themselves. They then bear more responsibility for forecasts, schedules and balancing energy, and price signals reach the generators better. Revenues often remain hedged nonetheless, for example via the sliding market premium. The original task of the feed-in tariff, to make revenues predictable without fully exposing the plant to short-term price risk, thus continues in other forms of support. For a system with a large share of fluctuating feed-in, however, a pure incentive for quantity is not enough. The remuneration must then be designed together with market integration, grid operation and flexibility.

Sources

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Edited by eCMS on 11.11.2026 19:42

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