The German coalition government is poised to revolutionise energy policy with a planned shift to investment cost subsidies for renewable energy.

The shift is part of a “debt-brake” budget tabled on July 5 2024 and replaces the guaranteed price power producers have received for renewable energy with one-off support for their investment costs.

The current subsidy regime was introduced some 24 years ago and offers a 20-year price guarantee to solar, wind, and biogas energy producers selling their power into the grid. The regime has helped producers make investment decisions and secure favourable loans, boosting Germany’s renewables expansion.

The new scheme seeks to make the industry less dependent on government support. In exchange for one-time grants to build renewable plants, operators will need to sell their electricity based on their own market calculations. As such, they will incur significantly higher financial risks.

Reuters reports that the subsidy shift has been criticised by the renewable energy industry and other partners in the ruling coalition. Germany aims to cover 80% of its electricity needs with renewable energy by 2030. While coverage from renewable energy sources rose to 58% of Germany’s electricity consumption in the first half of the year, Germany’s renewable energy lobby BEE says the shift to investment subsidies “could massively endanger ambitious expansion goals.”