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Glossary · Energy industry & energy transition

Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG)

Renewable Energy Sources Act EEG renewable energies Feed-in Remuneration market premium Priority Feed-in

The Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz, EEG for short) is Germany's central act for expanding electricity from renewable energy sources. The version currently in force is officially called the EEG 2023. It goes back to the EEG of 21 July 2014 and has been amended frequently since then, most recently in December 2025. The act regulates grid connection as well as the purchase, transmission and distribution of the electricity. It also sets out the payment entitlements of plant operators, namely the market premium and the feed-in tariff, as well as tenders, rules for negative prices, reporting obligations and sanctions. It applies to onshore and offshore wind, solar radiation energy, biomass, hydropower, geothermal energy, and landfill gas, sewage gas and mine gas. For offshore wind energy, the Offshore Wind Energy Act (Windenergie-auf-See-Gesetz) additionally contains its own rules.

The EEG does not describe a technical property of electricity but a legal framework. A photovoltaic plant generates energy in kilowatt-hours regardless of what the act says. The EEG determines whether and how these kilowatt-hours are paid for, whether the electricity must be sold directly on the market, which reporting obligations apply, and what happens in the event of negative prices or breaches of obligations. Under Section 1 EEG 2023, the share of renewable energy in gross electricity consumption is to rise to at least 80 percent by 2030. In the long term, the act aims at a greenhouse-gas-neutral electricity supply based entirely on renewable energy. Under Section 2, the construction and operation of the plants are in the overriding public interest. This gives them more weight in weighing exercises by authorities but does not replace a permit.

From fixed tariff to market premium

In its early form, the EEG above all created security for investment. Operators received a statutory feed-in tariff for each kilowatt-hour fed in over many years, typically 20. Grid operators were required to give the electricity priority in purchasing it. This made the risk of wind power and photovoltaics, which at that time had high capital costs, calculable.

Today the EEG 2023 provides several ways to sell the electricity: supported direct marketing with a market premium, the feed-in tariff, which is used mainly by smaller plants, the tenant electricity surcharge, and other direct marketing without support. In direct marketing, the operator or a direct marketer sells the electricity itself on the market. If the market value of the electricity is below the applicable value, the grid operator pays the difference as the market premium. This premium therefore slides with the market value. If market prices rise above the applicable value, it falls to zero. The model currently in force contains no obligation to repay additional revenues. For onshore wind, larger solar plants and biomass, the Federal Network Agency (Bundesnetzagentur) determines the applicable value through tenders. For smaller plants as well as for hydropower and geothermal energy, the act sets it.

The market premium does not guarantee any particular revenues. Operators continue to bear risks, for example from outages, forecast errors, marketing costs and reductions in the event of breaches of obligations. Since the so-called Solar Peak Act (Solarspitzengesetz), which entered into force on 25 February 2025, a stricter rule applies to new plants: if the exchange price is negative, the payment entitlement lapses from the first quarter-hour. The threshold from which plants are affected was significantly lowered to 2 kW. For plants below 100 kW, a transitional rule applies that is tied to the installation of an intelligent metering system. As compensation, Section 51a extends the payment period by the affected periods. For older plants, the rules of the version that applied at their commissioning apply. The aim is that plants no longer feed in unchecked in situations of oversupply and negative electricity prices.

Feed-in priority and its limits

Under Section 11 EEG, grid operators must in principle give priority to purchasing, transmitting and distributing electricity from renewable energy sources. This does not result in an unlimited right to feed in every kilowatt-hour that can be generated at any time. Grids have capacity limits, and grid security comes first. In the event of bottlenecks, plants can be curtailed. Since October 2021, this has largely been handled under the redispatch regime of the Energy Industry Act (Energiewirtschaftsgesetz). Financial compensation is in principle also regulated there. The feed-in priority thus establishes an order of precedence but does not override the physical limits of the grid. In addition, the EEG 2023 now provides for flexible grid connection agreements under Section 8a, which permit a feed-in capacity below the plant capacity.

The more wind and solar power is fed in, the more the residual load fluctuates. This is the part of the load that dispatchable power plants, storage or imports must cover. The EEG pushes up the share of weather-dependent generation and thereby increases the need for flexibility, forecasts and grid expansion. However, it does not by itself regulate how the system is balanced in each hour.

Financing: from the EEG surcharge to the federal budget

From 2000 to 2022, EEG expenditure was financed through the EEG surcharge. Electricity consumers paid it as part of the electricity price. It covered the gap between the payments to plant operators and the revenues from selling the EEG electricity. On 1 July 2022 the surcharge was reduced to zero, and since 2023 it has been abolished. Since then, the Federal Government has covered the gap in the transmission system operators' EEG account. The costs have therefore not disappeared; they simply no longer appear on the electricity bill but in the federal budget.

A common misunderstanding is to equate the former surcharge with the total costs of renewable energy or with the entire electricity price. The end-customer price is made up of procurement, grid charges, taxes, levies, surcharges and sales. Additional wind and solar generation often lowers the exchange price because of its low variable costs. This at the same time increases the need for support, because the market premium has to fill the gap to the lowered market value. Grid expansion, redispatch and balancing energy cause further costs elsewhere. A robust analysis must therefore state clearly whether it is talking about exchange prices, end-customer prices, budget funds or macroeconomic system costs.

Delimitation

The EEG is not the same as the Energiewende. Grid operation, grid charges and market organisation are regulated mainly by the Energy Industry Act. In addition, there are the electricity tax, emissions trading, power plant reserves and separate planning law for lines. Heat, transport and industrial processes need other instruments. For example, the EEG does not support a heat pump. Generating heat with electricity is connected to the EEG only indirectly, namely via the electricity mix. The EEG must also be distinguished from electricity consumption: it supports generation but affects consumers through prices and investment incentives.

Current status: EEG 2027 in the legislative process

The EU Commission's state aid approval for the current support system expires at the end of 2026. For this reason, on 29 July 2026 the Federal Cabinet adopted the draft of an EEG 2027, together with a separate grid connection package. The draft is before the Bundestag as Drucksache 21/7867. The first reading took place on 24 September 2026, and the expert hearing on 5 October 2026. At the end of October 2026 the act had not yet been adopted. It is to enter into force on 1 January 2027; review by the EU Commission is still pending.

According to the draft, the following changes in particular are planned. All details may still change in the parliamentary procedure:

  • For new plants of 100 kW and above, two-sided contracts for difference are to replace the one-sided sliding market premium. If market revenues are below the awarded value, the state covers the gap. If they are above it, operators must repay additional revenues. Biomass plants are exempt.

  • The fixed feed-in tariff guaranteed over 20 years is to be phased out gradually for new plants. For small rooftop photovoltaic plants, a time-limited transitional solution is envisaged, followed by direct marketing.

  • The parallel grid package is intended to tie new capacity more closely to available grid capacity. What is particularly controversial is that compensation for curtailment in overloaded grid areas is to lapse temporarily.

Existing plants in principle retain the conditions of the version that applied at their commissioning. Anyone making statements about the EEG should therefore always specify which version and which year of commissioning is meant.

What the EEG achieves and what it does not

The EEG shows that an electricity system does not consist only of power plants and lines. It also needs rules that trigger investment and allocate risks. Without reliable payment entitlements and connection rights, the early expansion would have been much harder. However, the EEG does not build lines, does not speed up permits on its own, and does not answer what firm capacity is available during a prolonged period of low wind and sun (Dunkelflaute). The debate is therefore less about the question of support versus market. Rather, it is about which risks the state bears, which the operators bear, and which price signals a system with a large share of weather-dependent generation needs. It is precisely this allocation that the EEG 2027 rearranges.

Sources

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Edited by eCMS on 11.11.2026 19:47

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