Until now, fixed funding rates applied for the operators of renewable electricity generation facilities. Anyone operating a wind turbine or a solar power installation, generating electricity from geothermal energy or biomass, received a fixed, statutory fee for each kilowatt-hour fed into the grid. This has successfully stimulated the market for climate-friendly electricity generation: the share of renewables in the total of electricity consumed is approximately 32%.

Renewables are no longer niche technologies: they have “grown up” and are more and more capable of surviving on the market.

It is now important to systematically develop the energy transition: with more competition, more predictability, and more cost-efficiency. The 2017 Renewable Energy Sources Act is heralding this paradigm shift with two key reforms:

1. In future, the rate of funding for renewables-based electricity will be set by auction. So the amount of funding for renewables will be determined by the market rather than by the government. This will safeguard an ongoing expansion of renewable energy and can cut the funding costs, assuming there is sufficient competition.

2. The expansion in renewables capacity is synchronised with the pace of grid expansion, so as to ensure that the clean power reaches the consumers. Firstly, for each type of technology – onshore and offshore wind power, photovoltaics, and biomass – specific expansion volumes have been set, in line with the available grid capacity. Also, the new Renewable Energy Sources Act restricts the expansion of onshore wind power in areas with grid congestion. As of 2017, a new ordinance designates areas within which the pace at which wind power capacity is being developed will be limited to a maximum of 58 per cent of the average capacity added over the last three years. This restriction applies until the grid has been sufficiently upgraded. This is necessary because it is pointless to generate electricity which cannot be transported to the customers. Additional installations which cannot be built in areas with grid congestion are built in other parts of Germany instead. The grid congestion areas thus have no impact on the overall expansion of renewable electricity.