States aim to block cuts to solar energy subsidies

A majority of Germany’s 16 states are set to block the federal government’s planned cuts to solar energy subsidies in the upper house of parliament on Friday.

States aim to block cuts to solar energy subsidies
Photo: DPA

According to state government sources, several eastern and southern states want the Bundesrat to hold off passing an overhaul of the Renewable Energy Act with the hope of making fewer reductions in government support for the solar industry.

Environment Minister Norbert Röttgen wants to cut solar subsidies by 11 to 16 percent starting in July. But the states where solar firms are located want cuts of only 10 percent, fearing anything more could hurt the industry and jeopardise jobs.

The Renewable Energy Act, or Erneuerbare-Energien-Gesetz (EEG) in German, guarantees producers of solar energy access to the grid at a set kilowatt price. But in order to account for the fact that technology gets cheaper and better each year, the feed-in tariffs decrease from year to year.

Röttgen believes dramatically cutting solar subsidies will lower energy prices for consumers and boost competition.

Since the Bundestag, Germany’s lower house of parliament, has already approved the reform of the EEG, the states cannot block the cuts forever. They can, however, raise pressure on the federal government by calling up a parliamentary mediation committee in Bundesrat to delay its implementation.

“When people have solar panels on their roofs and they see at the end of the day how much power they added to the grid they begin to develop an idea of what kilowatt hour really is,” said Saarland’s Environment Minister Simone Peter on Thursday. “They start to change their consumption and support larger energy facilities in their region.”

Under the new EEG, subsidies on roof installations will be cut by 16 percent and for solar parks it would be reduced by 15 percent. Panels on so-called conversion sites such as old army bases and rubbish dumps would see a cut of 11 percent. Solar energy units on farmland will no longer receive subsidies at all.

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German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.