Policy Package for Energy Transition

German Bundestag adopts Policy Initiatives to support the energy transition

At the end of January 2025, the German Bundestag passed significant energy policy initiatives aimed at supporting Germany’s energy transition and the integration of renewable energy sources. These measures are designed to ensure the electricity supply remains secure, affordable, and climate-friendly.

The new energy policy package includes four legislative initiatives to strengthen the market integration of photovoltaic systems, boost digitalisation, and simply the operation of energy storage. The primary objective is to offset fluctuating electricity feed-in from wind and solar energy. Additionally, biogas plants whose initial funding is set to expire are to receive better options for follow-up funding, the expansion of wind energy is to driven forward and the funding of combined heat and power (CHP) systems will be extended. The four initiatives at a glance:

Avoiding surplus production

The legislative package contains measures to prevent temporary overproduction, which occurs when electricity supply exceeds demand, e. g. when there is an abundance of sunlight. In such cases, producers may be required to pay in order for the electricity to be taken off the grid (resulting in negative electricity prices). These surpluses pose a risk to both the financing of renewable energy and the security of the energy system. Renewable energy has become Germany’s primary source of electricity and is entering a new phase. Going forward, it is to gradually sustain the entire electricity supply together with the use of controllable power plants. This requires the full market integration of both large and small systems. The changes introduced specifically focus on the controllability of renewable energy systems, the grid management capabilities of operators, simplifications in the use of photovoltaic storage systems and addressing the issue of negative electricity prices.

Amendment of the Renewable Energy Sources Act (EEG) to enhance the flexibility of biogas plants and secure follow-up funding

The Bioenergy Package creates the conditions for biogas to supplement wind and solar energy and secure supply during periods of low generation (so-called dark doldrums, or Dunkelflaute). By increasing auction volumes, particularly for combined heat and power plants, there are now better future prospects for such systems. The new framework also promotes greater flexibility within the energy system, with funding now being provided for a specific total number of operating hours.

More control and acceptance for wind energy expansion

The process for applying for a preliminary licence for onshore wind energy plants (Section 9 (1a) of the Federal Immission Control Act) will be adjusted to prevent the long-term blocking of unsuitable areas. For repowering projects, where old wind turbines are replaced with more powerful ones, the provisions remain unchanged.

Amendment of the Combined Heat and Power (CHP) Act

The funding for combined heat and power installations will be extended beyond 2026, providing long-term planning and investment security. Rather than requiring commissioning by the end of 2026, it will suffice to have a licence under immission control law or a binding order, provided that the installation begins operation within four years.

Under the CHP Act, unavoidable waste heat will also be eligible to be counted towards the required heat quotas within the framework of district heating network funding. This measure will align with the Heat Planning Act and include waste heat from industries, businesses, and data centres that previously went unused. Additionally, the CHP Act will be amended to comply with EU regulations on energy efficiency. The Bundesrat has approved the package.

(Source: Ministry of Economic Affairs and Climate Action)