(Bloomberg) -- Germany plans to narrow the pool of solar producers that are eligible for subsidies after an oversupply of renewable power has led to rising costs for the government.
The country’s rapid solar expansion has led to wholesale power prices frequently turning negative during hours when supply exceeds demand — for instance on particularly sunny days. Since the government ensures producers get paid a minimum feed-in tariff, it has had to shell out the difference, with renewable subsidies estimated in May to hit €20 billion ($21.6 billion) this year, and possibly total €18 billion in 2025.
Policymakers therefore want to lower the threshold for solar producers who must sell their output via direct marketing, according to a draft law from the economy ministry obtained by Bloomberg, which involves selling on the electricity exchange. That means producers above a certain capacity level wouldn’t receive remuneration fixed by the state.
Photovoltaic systems installed before Jan. 1, 2026 with more than 90 kilowatts of capacity will no longer be eligible for feed-in tariffs under the draft law. That threshold will drop to 75 kilowatts until Jan. 1, 2027, and decrease to 25 kilowatts thereafter. It is currently at 100 kilowatts.
A spokesperson for the economy ministry confirmed the plans.
The draft law also implements an earlier decision by the government to cancel payments for mid-size and large renewable projects if electricity prices fall below zero.
The plans risk slowing solar’s expansion, particularly installations on smaller commercial roofs, according to the German Solar Industry Association, which added that it’s important to boost storage capacity.
--With assistance from Petra Sorge.
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