Germany's Federal Ministry for Economic Affairs and Energy (BMWE) has released a working draft for a sweeping reform of the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz), set to take effect as the EEG 2027 on 1 January 2027. The draft, dated 22 January 2026, was still under inter-ministerial review at the time of its release and represents the most significant overhaul of Germany's renewable energy support framework in years, replacing long-standing subsidy models with a market-driven architecture centered on two-sided Contracts for Difference (CfDs).
Background
Germany's current EEG funding regime expires at the end of 2026, creating a hard legislative deadline for reform. Under new EU rules, from 1 January 2027, all state-backed renewable support mechanisms - covering wind, solar, geothermal, hydro, and nuclear - must include a repayment clause to prevent over-funding, according to Clean Energy Wire. This EU electricity market reform, adopted in June 2024, has compelled Berlin to restructure the EEG's core support architecture. In 2025, renewables supplied 57.2% of Germany's gross electricity generation, with installed solar capacity rising 11.8% year-on-year and wind capacity climbing 7.2%, according to Energy Monitor. Yet a Federal Ministry report cited by RatedPower indicates the pace of renewable expansion is now outstripping grid capacity - a tension the EEG 2027 draft explicitly seeks to address.
Details
The draft's central structural change replaces the existing one-sided market premium system with two-sided Contracts for Difference, under which operators receive market premiums when electricity prices fall below a reference value but must repay excess revenues through a "refinancing contribution" when prices are high, as described by law firm Orrick. The draft abolishes fixed feed-in tariffs for all new installations and completely discontinues subsidies for new plants under 25 kW, according to Freshfields. The ministry's rationale: falling costs have made small-scale systems, particularly rooftop PV, economically viable through self-consumption alone.
On auction volumes, the draft sets a tender volume of 14,000 MW per year for ground-mounted solar for each year from 2027 to 2032, according to Taylor Wessing's analysis of Section 28a(2) of the draft. That compares to a 9,900 MW annual quota under current rules. The draft simultaneously deletes the existing requirement that at least half of additional capacity come from rooftop photovoltaic systems, shifting the balance toward utility-scale ground-mount development. Auction volumes for biomass are also moderately increased and extended to 2032, according to Freshfields.
On grid integration, the draft introduces a significant change to how connection requests are handled in constrained areas. According to Clean Energy Wire, in grid "hotspots" where more than 3% of the previous year's electricity generation could not be fed into the grid, renewable investors would only be granted immediate grid connection if they waive compensation for future curtailments for up to ten years. Grid operators have yet to formally designate these zones. The draft also imposes a permanent cap of 50% of installed capacity on the feed-in power of smaller solar installations, according to Freshfields, creating a structural incentive to co-locate battery storage. To support direct market participation, the mandatory smart meter rollout threshold is reduced from 7 kW to 2 kW of installed capacity.
To implement the EU's Net-Zero Industry Act, the draft establishes a legal framework for "resilience tenders" for onshore wind and large-scale solar, incorporating non-price criteria to evaluate bids with the goal of strengthening the resilience of the European energy supply chain, according to Freshfields.
Industry reaction has been sharply critical on several fronts. The German Solar Industry Association described the draft as a "frontal attack on the energy transition," per Taylor Wessing, with particular opposition directed at the withdrawal of support for rooftop installations. Legal analysts at Taylor Wessing flagged that calls across all sectors exist to combine the EEG amendment with the planned grid package and grid fee reform, warning that financing costs risk rising without a reliable overall regulatory perspective. The German Solar Industry Association and the German Renewable Energy Federation both criticized the planned cuts to rooftop installation support as particularly damaging.
Outlook
The EEG 2027 is expected to enter into force on 1 January 2027, though legal analysts describe the timeline as ambitious given ongoing inter-ministerial coordination, outstanding parliamentary approval, and required EU state aid clearance from the European Commission, according to Orrick. A scientifically sound evaluation report on the new subsidy framework must be published by 31 July 2029 at the latest, according to Taylor Wessing's reading of Section 99a of the draft. Economy Minister Katherina Reiche has stated a clear intent to move toward a more market-based system, but industry stakeholders warn that reforming EEG support, grid access, and connection procedures in isolation risks sending conflicting signals to developers and financiers at a critical juncture for the Energiewende.
