Germany’s federal government is proposing a transition from fixed feed-in tariffs to a system based on contracts for difference (CfDs) as part of broader reforms to the country’s renewable energy support framework, according to a monitoring report published by the Ministry for Economic Affairs and Climate Action.
The report outlines plans to phase out guaranteed payments for renewable electricity generators, including the removal of remuneration during periods of negative power prices. The future regime would instead include two-sided CfDs, clawback mechanisms, and a stronger reliance on long-term power purchase agreements (PPAs). New plants would also be required to sell electricity directly on the market.
Officials said the goal is to align incentives with market conditions while maintaining affordability, reliability, and competitiveness of the energy transition. “The reforms aim to ensure the energy transition remains compatible with Germany’s industrial base,” the ministry said.
The government is also calling for a recalibration of offshore wind expansion and grid connection targets, with the aim of avoiding overcapacity and ensuring development reflects actual electricity demand through 2045. Expansion plans for high-voltage direct current (HVDC) infrastructure would also be adjusted in line with system costs and consumption projections.
The German Offshore Wind Energy Association (BWO) welcomed the government’s review and highlighted the need for a stable investment environment. “Now it’s important to prioritize offshore wind farm revenue targets over pure performance targets,” said Stefan Thimm, BWO’s managing director. “Only if offshore wind farms can be operated efficiently and profitably can they make a stable contribution to security of supply and enable further investments.”
The BWO also noted that offshore wind efficiency could be improved through better site planning and by minimizing shadowing effects, which would increase full-load hours and help integrate the technology more effectively into the energy system—particularly during low onshore wind and solar periods in winter.
Thimm said international cooperation, such as that outlined in Germany’s coalition agreement with Denmark and the Netherlands, could help unlock additional offshore wind potential.
The association also emphasised the need to reform auction design, following a recent failed tender. “Along with long-term power supply agreements, CfDs are a crucial tool for enabling investments in offshore wind,” Thimm added. “They can reduce power generation costs by up to 30 percent and are thus the basis for competitive electricity prices.”
The government intends to implement the reformed support mechanisms in time for upcoming auctions, including those scheduled for 2026.
