Germany: Government adopts draft bill for EEG 2027

Why should I read this?

On 29 July 2026, the German Federal Government adopted the draft bill amending the Renewable Energies Act (Erneuerbare-Energien-Gesetz – EEG 2023; going forward, EEG 2027). After several versions of ministerial drafts had already been circulating, this draft now marks the start of the parliamentary process, which must be completed by the end of 2026. The cabinet draft aims to make the energy transition transparent, predictable, and pragmatic, bringing together economic competitiveness, climate protection, and social balance. In addition, an amendment to the EEG 2023 is required in order to comply with several requirements imposed by the EU.

The following aspects are of particular importance for project developers and investors.

What do I need to know?

Introduction of “Contracts for Difference” (CfDs):

• Supplementing the market premium with a refinancing contribution: Article 19d of the Electricity Market Regulation (EU) 2024/1747 requires the German legislator to fundamentally redesign the market premium as of 1 January 2027. The market premium is currently structured as a one-sided support instrument, but must be converted into a two-sided mechanism, that skims off excess revenues from the plant operators (the so-called claw-back mechanism). To this end, the draft bill introduces a so-called refinancing contribution, which operates as a mirror image of the market premium. Where the market price falls below the applicable value (the “strike price”), the grid operator pays a market premium to the plant operator. Conversely, where the market price exceeds the strike price, the plant operator must pay the refinancing contribution. The calculation is generally based on the annual market value, with settlement carried out retroactively on an annual basis. During the year, monthly advance payments in an “appropriate amount” must be made, which may be determined in particular on the basis of the prior year’s annual market value or the monthly market values of the preceding months.
• Calculation: The formula for calculating the market premium is:

market premium = strike price – annual market value

Conversely, the formula for calculating the refinancing contribution is: 

refinancing contribution = annual market value – strike price

The annual market value is the annual average of the spot market price for the respective energy source. The strike price is determined (as before) by statute or through auctions. In addition, the EEG 2027 provides for several adjustment scenarios for the strike price as well as for the market premium or refinancing contribution, as well as a provision that the market premium and the refinancing contribution cannot become negative. As settlement occurs on an annual basis, each calendar year is either a support year or a skimming year.

In order to avoid incentives to curtail generation during low-price phases, an adjustment to the refinancing contribution is applied (so-called dynamic skimming). A low-price phase for the purposes of this mechanism exists when the spot market price in a given quarter-hour is less than or equal to the sum of the refinancing contribution and a technology-specific minimum revenue. The formula for calculating the adjusted refinancing contribution is:

adjusted refinancing contribution = spot market price – minimum revenue

The minimum revenues serve to cover the plant operator’s ongoing costs. The minimum revenue is 0.5 ct/kWh for solar installations and 1 ct/kWh for other installations, with the Federal Network Agency (Bundesnetzagentur) reserving the option to increase these amounts.

• Affected plant operators: Installations with an installed capacity of at least 25 kW are eligible for payment of the market premium. By contrast, the refinancing contribution applies only to installations with an installed capacity of 100 kW or more, with the exception of biomass plants, which are generally not subject to skimming.
• Direct marketing agreements: The model of direct marketing agreements – electricity supply contracts under which the plant operator receives a payment from a direct marketer that is tied to the exchange price – can in principle be retained, but will undergo adjustments in detail to align with the new mechanism.
• Switching between subsidized marketing and PPAs as well as opt-out: Generally, a monthly switch between subsidized marketing in connection with the conclusion of direct marketing agreements and unsubsidized marketing (so-called other direct marketing) via power purchase agreements (PPAs), in particular with industrial and technology companies as offtakers, remains possible. However, the obligation to pay the refinancing contribution continues to apply during marketing under a PPA, as long as no final exit from the support regime has taken place. An opt-out from the CfD is permitted only once and exclusively within the first ten years after commissioning of the installation, i.e. within the first half of the 20-year support period. In order to prevent plant operators that have successfully participated in an auction from initially benefiting from high market prices and only later switching to subsidized direct marketing (including the refinancing contribution), they must notify the grid operator no later than six months after commissioning whether they wish to avail themselves of subsidized direct marketing.

Rules for smaller installations (below 25 kW installed capacity):

• Abolition of the feed-in tariff: The feed-in tariff (Einspeisevergütung), which applies in particular to smaller installations under the current EEG 2023, will be abolished, so that support for installations with an installed capacity of less than 25 kW will cease. The feed-in tariff will be replaced by unsubsidized grid-operator offtake. The grid-operator offtake provides, as forms of sale, free-of-charge offtake (unentgeltliche Abnahme), the temporary transitional payment (befristete Übergangszahlung), and other direct marketing (sonstige Direktvermarktung). An entitlement to the temporary transitional payment exists on a phased basis:
• for new installations with an installed capacity of less than 50 kW commissioned before 1 January 2028;
• for new installations with an installed capacity of less than 25 kW commissioned before 1 January 2029; and
• for new installations with an installed capacity of less than 7 kW commissioned before 1 January 2031. 

The transitional payment is calculated based on the applicable value specified by the EEG, minus 1 ct/kWh, and is granted for a maximum of 36 months after commissioning of the installation. Finally, electricity fed in from new installations commissioned after 31 December 2029 (with extensions until 2032 possible by the Federal Network Agency) must always be directly marketed, without any transitional phase and regardless of their installed capacity, unless the electricity is taken off free of charge. The tenant electricity surcharge (Mieterstromzuschlag) for tenant electricity volumes from new installations with an installed capacity of less than 25 kW will be retained.

• Direct marketing bonus: For installations with an installed capacity of less than 25 kW that directly market their electricity by other means, a bonus of 1.5 ct/kWh will be introduced. The bonus is granted for a maximum period of 48 months after the first allocation to direct marketing.
• Focus on self-consumption: The draft EEG 2027 provides for several incentives to operate smaller installations as so-called zero-feed-in installations (Nulleinspeiseranlagen). With zero-feed-in installations, the operators choose not to feed any surplus electricity into the grid, but instead to temporarily store it for later use or to curtail the installation. It is envisaged that these installations will be subject to reduced technical equipment requirements. In addition, operators of smaller solar installations with an installed capacity between 2 kW and 100 kW must permanently limit their grid feed-in to half of the installation’s capacity.

Auctions:

• Introduction of resilience auctions: Based on Article 26 of the Net-Zero Industry Act (NZIA), resilience auctions will be introduced in the EEG for onshore wind energy installations and ground-mounted PV installations (so-called solar installations of the first segment). The auction volume for the EEG resilience auctions amounts to 4,000 MW per year for the years 2027 to 2032, of which 3,500 MW is allocated to onshore wind energy installations and 500 MW to solar installations of the first segment. The details of implementation and the requirements for participation in the resilience auctions will be set out in a regulation that has not yet been issued. Resilience auctions provide that the award decision will no longer be based exclusively on the lowest bid, but will also take qualitative criteria into account. These qualitative criteria provide for contributions to sustainability (including carbon footprint of the manufacturing, innovative technologies and energy system integration) and to resilience. However, contributions to resilience are required only if, in the prior year, (i) at least 50% of the EU supply (i.e., EU production + imports - exports) of a particular end product originated from a single country outside the EU (as was the case in 2024 for essential components of solar PV systems), or (ii) at least 40% of the EU supply in the prior year originated from a single country outside the EU and this share increased by at least 10 percentage points over two consecutive years.
• Increased focus on ground-mounted PV installations compared to rooftop PV installations: The overarching expansion target of achieving a share of at least 80% renewable energy in gross electricity consumption by 2030 will be retained. The auction volumes, however, will be adjusted. The annual auction volume for onshore wind energy installations will be increased to 15,000 MW for the years 2027 and 2028, and will then decrease to 12,000 MW (2029) and 10,000 MW (2030–2032). The annual auction volume for ground-mounted PV installations will increase from 9,900 MW to 14,000 MW for the years 2027–2032; by contrast, the auction volume for rooftop PV installations will be reduced from 2,300 MW (envisaged for 2026 to 2029) to 1,500 MW (2027 to 2032).
• Abolition of innovation auctions: The separate auctions for innovative installations, typically combinations of solar or wind projects with battery storage systems (BESS), will be abolished. According to the explanatory memorandum of the draft bill, sufficient framework conditions for the economic operation of battery storage systems exist even without these auctions. It remains to be seen, however, to what extent sufficient incentives for combining battery storage systems with new solar and wind projects still exist in light of the obligation to pay the refinancing contribution.
• Abolition of biomethane auctions: The previous auctions for biomethane installations will be abolished without replacement. At the same time, the auction volumes for biomass installations will be increased.
• Restructuring of auction dates: As a result of the introduction of resilience auctions, the auction dates for onshore wind energy installations and ground-mounted PV installations will be changed, with three auction dates and one additional auction date for the resilience auction per year.

Further changes:

• Expansion of cross-border cooperation projects: In the future, support cooperations will be possible not only with EU member states, but also with EFTA states and the United Kingdom. In addition, a third form of cooperation will be introduced, under which another state fully carries out the auction and ongoing support, and Germany participates financially in the support costs and in the revenues during skimming phases.
• Financial participation of municipalities: Municipal participation will be standardized and expanded, as for wind and ground-mounted PV it may in future be linked to the actual electricity generated (rather than solely to grid feed-in). Notional electricity volumes (e.g. resulting from curtailment) will no longer be eligible for participation and, consequently, for reimbursement. The permissible amount of financial participation will be raised from 0.2 ct/kWh to 0.3 ct/kWh.
• Safeguarding the 50 MW threshold: Ground-mounted PV installations that are privileged under building planning law will no longer be aggregated with non-privileged ground-mounted PV installations, in order to prevent a privileged project added at a later date from “aggregating up” an earlier-planned project beyond the 50 MW threshold and thereby jeopardizing its eligibility for support. However, the introduction of the 50 MW threshold (in place of the currently applicable 20 MW threshold) remains subject to state aid approval by the European Commission.
• Rent cap for onshore wind energy installations: The cabinet draft provides for a cap on the fees that plant operators pay to landowners or other parties entitled to use the land for the construction and operation of onshore wind energy installations. The cap applies to awards in auction proceedings with a tender deadline on or after 1 January 2028. The aggregate annual fees must not exceed 3.5% of the product of the annual achievable site yield of the installation and the applicable strike price. If the permissible fee level is exceeded, a penalty of EUR 50 per kW of installed capacity per calendar year is payable to the grid operator.

What does this mean for stakeholders?

The new rules apply to new installations, i.e., to installations commissioned after 31 December 2026, or that have received an award with a tender deadline on or after 1 January 2027.

As a result of the introduction of CfDs, the generation of excess revenues without skimming will no longer be possible in the future. This circumstance – like the construction cost contributions planned as part of the grid package and the limitation of compensation payments for redispatch-related curtailment in capacity-constrained areas (see Eversheds Sutherland: Federal Government Adopts Grid Package) – must be taken into account when assessing the economic viability of projects. On the other hand, CfDs ensure financial predictability for investors and plant operators by applying the strike price as a baseline. Project developers and investors will also need to take into account the obligation to pay the refinancing contribution during periods of marketing under PPAs as well as the possibility of an opt-out when marketing the electricity from their projects, in particular when structuring PPAs.

Direct marketers for installations with a capacity of less than 25 kW are currently scarce, and current offerings are, due to the complexity of the direct marketing processes, usually uneconomical for operators of such installations. The direct marketing bonus at least mitigates this lack of economic viability, although it will ultimately depend significantly on the fees charged by direct marketers. It remains to be seen whether the mandatory direct marketing (where there is no free-of-charge feed-in or curtailment) will bring about any changes or whether the Federal Network Agency will make use of its authority to defer the direct marketing obligation. Ultimately, the comprehensive changes for smaller installations mean that – in line with the legislative approach – the potential savings from the self-consumption ratio must become the focus of the economic considerations. Smaller installations are likely to make economic sense in the future in particular where the generated electricity is used, for example, to operate a heat pump or to charge electric vehicles, or where the installation is installed in combination with a battery storage system.

What should I do next?

Project developers and investors should continue to monitor the legislative process regarding the EEG (as well as the legislative process regarding the grid package and the Federal Network Agency’s proceedings on the introduction of the General Grid Fee System for Electricity (Allgemeine Netzentgeltsystematik Strom – AgNes)). While the introduction of CfDs and resilience auctions appears secure against the background of the EU requirements – possibly with minor adjustments – the proposed abolition of support for smaller installations in particular is likely to be the subject of further political discussion and may be subject to change before the new EEG enters into force on 1 January 2027. In addition, a reform of the Offshore Wind Energy Act (Wind-auf-See-Gesetz) is expected in the near future.