WIND + SUN = ELECTRICITY: Trends and developments in the electricity sector

Development of renewable energy expansion

After a new record was set on May 14 in public net electricity generation by photovoltaic systems (PV systems), another record was set on June 13 at around 12:30 p.m., PV systems in Germany fed around 49.35 GW into the public grid^​2.  By way of comparison, in 2024 the maximum PV power fed into the grid was 44.3 GW (on June 25, 1 p.m.).^​3

Despite this increase in output, the expansion remains behind the politically desired expansion path. While net expansion in February was still at 1,718 MW, only 817 MW were added in March and 945 MW in April. The figure recovered in May with PV expansion of 1,113 MW^​4, which is almost the same as last year's level. Despite the temporary decline, expansion remains at the solid level of the previous year. The development shows that expansion is basically on track, even if the volume currently achieved is still only around 60 percent of the monthly expansion required to reach the target of 215 GW by 2030.

The picture for wind power is also mixed. Although the sector experienced a record year in 2024 with over 2,400 newly approved turbines and a total capacity of 14 GW, representing an increase of 85 percent over 2023, the industry expects net expansion of only 4.8 to 5.3 GW in the current year. The monthly figures to date underscore this development: 351 MW were added in March, 246 MW in April, and 384 MW in May. The total output of onshore wind energy in the current year is 65.04 GW.^​4 The main reasons for this are lengthy approval processes and inadequate grid infrastructure. The pressure to act is correspondingly high: if the target for wind power expansion is to be achieved 115 GW by 2030, far-reaching structural reforms are necessary. The new federal government's coalition agreement already included a commitment to revise planning, construction, environmental, and procurement laws and to speed up approval processes for wind turbines. On May 30, 2025, the coalition committee also agreed on an immediate action plan to be implemented before the summer recess. This includes, among other things, an establishment and implementation law for the €100 billion special fund “Infrastructure and Climate Neutrality.” The aim is to significantly reduce the approval process—not only for wind energy, but also for hydrogen and geothermal projects.

Germany-wide electricity generation is also showing a contrary trend. In the first quarter of 2025, a total of 119.4 billion kWh of electricity was generated, a decline of 1.9 percent compared to the same period last year. Particularly striking: the share of fossil fuels rose to 50.5 percent, exceeding that of renewable sources for the first time since 2023. While generation from conventional power plants rose by 19.3 percent to 60.2 billion kWh, electricity production from renewables fell by a significant 17 percent to 59.1 billion kWh.^​5  The decline in electricity generation from renewable energies in the first quarter of 2025 is mainly due to the fact that there was less wind in Germany during this period, resulting in significantly lower renewable electricity production, particularly from wind energy.

Overview of the electricity market

In recent months, there has been a significant decline in market values for renewable energies. In May 2025, the market value for solar power was still 1.997 ct/kWh, reaching its lowest level since May 2020. The market value for onshore wind energy also declined: the average market value fell from 7.314 ct/kWh in April to 6.171 ct/kWh in May.^​6

One of the main reasons for this price decline is the cannibalization effect: when wind and sun deliver high yields at the same time, supply on the electricity market exceeds demand, especially at times of low load. This leads to extremely low prices or hours with negative electricity prices. In May 2025 alone, 112 such hours were recorded in which producers had to pay for their feed-in.

Long-term analyses show that this trend could continue. According to a study by Enervis commissioned by Node Energy, the market value for photovoltaics will fall by around 25 percent to approximately 3.7 ct/kWh by 2028.^​7 Similar developments are also emerging in wind power. The falling market values are leading to an increase in EEG subsidies, as the market premium rises as the difference between market value and tender surcharge value. This places a greater burden on the EEG account, which in turn fuels debates about reforming the subsidy system.^​8  While the market value of solar energy is generally on a downward trend, vertical solar systems are becoming increasingly attractive: in 2024, yields were achieved that were up to 28 percent above the market value.^​9

Overall, these developments illustrate that it is not just a matter of adding new plants, but of integrating them intelligently into a market-driven and stable electricity system. Flexible consumers, storage solutions, market-oriented grid fees, and new contract models such as contracts for difference (CfDs) could make a decisive difference here in the future.​

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Overview of battery storage expansion

The increasing volatility of the electricity market and the growing share of renewable energies make it clear that a long-term stable energy transition cannot be achieved without sufficient storage capacities. In recent months, it has become apparent that politicians and businesses are taking the need for action increasingly seriously and that the expansion of battery storage in Germany is gaining momentum. Significant progress was made in both the commercial and private sectors, particularly in the first quarter of 2025. According to the German Solar Industry Association (BSW), more than 1.7 GWh of new storage capacity was installed in this period alone, an increase of 1.5 GWh compared to the same quarter last year.^​14

Despite this positive development, the BSW is calling for the pace of expansion to be accelerated. A recent study by Fraunhofer ISE shows that the demand is enormous. The institute forecasts that capacity will need to be expanded by 100 to 150 GWh by 2030, including mobile storage solutions.^​15  However, it should be noted that storage solutions, especially battery storage, are often not primarily used with a view to grid-supporting functions. In many In some cases, market-based arbitrage strategies are the main focus: electricity is deliberately stored during periods of low prices and fed back into the grid during periods of high prices in order to exploit price differences economically.

In April 2025, one of Germany's most powerful stationary battery storage facilities was commissioned in Bollingstedt (Schleswig-Holstein). With a capacity of 103.5 MW, the project is a prime example of how large-scale storage facilities can function as system-stabilizing instruments in the future when there is a high feed-in of wind and solar power. But Bollingstedt is only part of a comprehensive development: According to current evaluations of the publicly accessible data platform battery-charts.de, which is operated by the ISEA and PGS institutes at RWTH Aachen University, the total stationary storage capacity installed in Germany in June 2025 was around 20 gigawatt hours. Of this, around 16.5 GWh was accounted for by home storage systems, around 0.8 GWh by commercial storage systems, and more than 2.7 GWh by large-scale storage projects.

At the same time, there has been strong growth in the private home storage market. Compared to the previous year, the number of installed systems rose by around 50 percent to currently around 1.8 million devices with an estimated storage capacity of 19 GWh.^​16 June also brought relevant developments. The energy company RWE announced that it had already commissioned a 220 MW storage facility at its Hamm/Neurath site in February. There are plans to expand capacity by a further 1.2 GWh by 2028.^​17 These large-scale projects underscore the fact that battery storage is no longer considered a niche application, but rather a cornerstone of the future energy infrastructure.

A fundamental decision by the Federal Court of Justice (BGH) on the legal treatment of construction cost subsidies for battery storage facilities was expected on May 27, 2025. However, the decision was postponed and is now expected on July 15, 2025. A comprehensive overview of the current legal framework, as well as subsidy mechanisms and relief measures for electricity storage projects, is provided in an article in the June 2025 issue of the Kursbuch Stadtwerke newsletter published by Rödl & Partner. Once the Federal Court of Justice has made a decision on customer installations, further details are expected in the pending judgment.
 

Overview of political reforms and strategies in the context of renewable energies/the electricity sector

In its coalition agreement, the new CDU/CSU and SPD coalition government commits to the German and European climate targets already agreed upon, as well as to the Paris Climate Agreement. The focus in the area of climate and Energy is being focused on expanding renewable energies in a way that benefits the system and the grid. In addition, industry and private households are to be relieved by a reduction in electricity prices of at least 5 ct/kWh. An overview of the climate and energy sector can be found in this article​.

In her first ten-minute speech in the Bundestag, Federal Minister for Economic Affairs Katharina Reiche calls for a “reality check” in the context of energy policy. The demand for renewable energies and secure and controllable loads should be reassessed. Although the expansion of renewable energies is important, it cannot provide an affordable and reliable supply on its own, according to Reiche. Affordability and security of supply should once again be given greater priority and achieved through the construction of gas-fired power plants with a total capacity of 20 GW. Energy storage, grid expansion planning, and the use of carbon capture and storage/carbon capture and utilization should be considered with an open mind toward technology.^​18

The proposals in the current discussion paper “AGNES” (Incentives for a Fair Grid Fee System) from the Federal Network Agency could have an even more far-reaching impact.^​19 The models outlined in the paper aim to align today's grid fees more closely with consumption behavior, load flexibility, and location factors. Essentially, this involves introducing performance-based components into the grid fee structure that are designed to specifically reward flexible consumers such as heat pumps, storage systems, or controllable charging stations. At the same time, time-variable tariffs are intended to create incentives through price reductions during periods of high renewable energy feed-in in order to consume electricity during off-peak times. For many players in the energy sector, such a system would have a fundamental impact on their business models: grid serviceability would become attractive not only technically but also economically. The paper is currently under consultation, and legal implementation could be targeted for 2026.

 

And what else happened?

On April 28, 2025, a massive power outage occurred on the Iberian Peninsula, paralyzing Spain and Portugal for hours. Around 15 gigawatts of power were lost within five seconds, which is roughly equivalent to the output of eleven large nuclear power plants. The effects were severe: large parts of Spain and Portugal experienced a power outage lasting several hours, which also temporarily affected regions in southern France and Morocco. Mobile phone service was significantly disrupted, and there were also failures in traffic light systems and rail transport.

According to investigations, the cause was not a cyberattack, but a chain reaction of technical and organizational errors: A power surge at a substation in southern Spain led to the failure of several conventional power plants, while reserve capacities were not activated. In addition, there was a lack of sufficient reactive power, which further weakened voltage stability.

Since rotating masses – such as those found in conventional power plants – were largely absent, the power grid reacted much more sensitively to frequency fluctuations.

The economic damage is estimated at up to €4 billion. The incident has triggered a Europe-wide debate on system stability – in particular on the role of storage facilities, grid reserves, and controllable power plants in a climate-neutral energy system. A final report is expected in the fall at the earliest.^​20
 

Conclusion

Despite ongoing uncertainties due to pending legal decisions, particularly in connection with the amendment of the EEG, BKZ, AGNES, and potential changes relating to customer installations, the market remains in flux. The expansion of renewable energies continues to progress, and demand for battery storage remains high. In the long term, creativity and new approaches are needed – traditional business models must be critically examined and, if necessary, realigned to prevent impending unprofitability.
 

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