Skip to content

New German Government Set To Further Cut Renewable Subsidies

Stefan Lange and Jan Hromadko, The Wall Street Journal

Germany is set to further cut subsidies for renewable energies as it struggles to keep control of the costs related to the switch from fossil and nuclear fuels to “green” energy, according to a working paper authored by Chancellor Angela Merkel’s Christian Democrats and the Social Democrats, seen by The Wall Street Journal.

Under a draft agreement between both the parties that are expected to form the next governing coalition after September’s general election, subsidies for onshore wind farms will fall, while expansion plans for offshore wind will be scaled back.

The plans to overhaul Germany’s renewable energies strategy come amid growing concerns that the high costs related to the “green” push are undermining the country’s competitiveness and are overburdening households and businesses.

Germany isn’t alone in struggling to cope with generous support terms it had once granted to operators of renewable energies. Other European countries, including Spain and Italy, have also radically scaled back financial incentives for wind, solar and biomass in the face of a broader economic downturn and the euro-zone debt crisis that tightened public spending.

Germany alone this year is expected to spend around 20 billion euros ($16.7 billion) on subsidies for renewable energies, which meet around one quarter of Germany’s electricity consumption.

Over the weekend, Ms. Merkel reiterated that the reform of energy policy will be one of the top priorities of her next government and in their draft agreement the parties pledged to pass an amendment to the renewable energies law by next summer.

In contrast to previous subsidy reductions, however, financial support for solar energy will remain unchanged. The German government last year reduced solar power subsidies and pledged to end subsidies once solar capacity has reached a certain level.

Full story