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The new RES Act and grid connection package: key changes

At the end of July, the Federal Cabinet adopted the latest revision of the Renewable Energy Sources (RES) Act and the accompanying grid connection package. The objective is clear: to expand renewable energy more efficiently and with a sharper focus on overall system costs.

The Federal Cabinet has described the move as “a new chapter in the energy transition”. Central to this is a new focus on the overall system and its associated costs. For the first time since the introduction of the RES Act – which revolutionised the use of renewables in Germany – the expansion will place a clear focus on “where new renewable installations make sense,” Federal Minister Katherina Reiche stated in the accompanying press release. By synchronising renewable expansion with grid development, the government aims to curb the high costs of redispatch, which currently amount to more than three billion euros every year.
The ambition remains steadfast: by 2030, 80% of the country’s electricity is to be generated from renewable sources. To support this, existing expansion paths and auction volumes remain virtually unchanged. Furthermore, the new Act will see an additional twelve gigawatts of onshore wind auctioned, while biomass will play a more prominent role alongside wind and solar to provide additional system flexibility.

More market, competition and cost efficiency

The Cabinet decisions aim to provide renewables with a clear outlook for the future and a reliable framework for further rollout, ensuring the achievement of expansion targets. Guided by the principle of “more market and competition, more cost efficiency and increased overall system responsibility”, all new installations will now be required to sell their electricity directly on the market. To support smaller installations, a transition period will be introduced to allow for the development of viable market options. Feed-in tariffs for wind, solar and biomass will be phased out entirely. A central pillar of the grid connection package is the synchronisation of renewables rollout with the expansion of the grid.

The primary goals are as follows:

In regions, where grid capacity is likely to be insufficient to integrate all wind and ground-mounted solar PV output, compensation for curtailment will be suspended for a limited period. This measure is designed to synchronise the expansion of installations with the development of the grid. To manage the risk for operators, an “upper limit” will be introduced. In the future, the grid connection for new wind and solar PV installations will no longer be determined by occasional feed-in peaks, but will instead be aligned with actual grid requirements. This will incentivise the efficient use of scarce capacities and, over the long term, reduce the overall need for grid expansion. In addition, the grid connection procedure will be overhauled, as the “first come, first served” principle is no longer fit for purpose. Grid operators will now have the flexibility to prioritise grid connection requests.

Solar PV: Prioritising ground-mounted installations

The expansion of solar PV will increasingly shift its focus towards ground-mounted installations. As smaller systems already deliver strong returns, new installations under 25 kilowatts will no longer receive indefinite funding. However, the government is ensuring stability for existing installations, which will continue to receive their promised funding throughout their entire lifecycle. The feed-in tariff – distinct from the market premium – will be phased out, with transitional payments available to support operators as they move towards direct marketing.

Parallel to this, the expansion target for installed biomass capacity will be increased to 9.5 gigawatts (GW) and held at that level until 2035. This provides the biomass sector and its numerous existing installations with a reliable and clear long-term outlook.

Two-way contracts for difference (CfD) – ensuring stability for operators and the state

The existing one-sided market premium is being upgraded to a two-way Contract for Difference (CfD) model. This mechanism provides a safety net for operators during low-price years, while ensuring that excess revenues during high-price periods are returned to the state, lowering the total cost of funding. This encourages operators who can secure market financing to develop installations without relying on RES Act funding.

Regarding the regulatory framework for renewables expansion, a strong emphasis is being placed on geographical steering to enhance overall system efficiency. This steering element will be limited to a six-year period, with the financial risk for operators capped at 20% of their annual electricity output. In designated wind energy “priority areas”, this cap is further lowered to 18%.

Further measures for driving efficiency and updating grid connection procedures

To increase efficiency, so-called “feed-in grids” are being used, which cluster connections at a single point of interconnection. This approach avoids the need to connect each installation individually, reducing both time and costs. Online platforms and a shift towards digital communication will streamline and accelerate the application process. Greater transparency regarding available connection capacity will allow project developers to make more targeted requests, effectively curbing speculative applications. Finally, the introduction of fixed deadlines and regular status reports from grid operators will create a more binding framework and reduce application backlog.