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

Development of renewable energy expansion / battery storage

In the first half of 2025, domestic net electricity generation from renewable energies amounted to 127.7 terawatt hours (TWh), which corresponds to 57.8 percent of the total electricity generated domestically. Compared to the first half of 2024 (135.6 TWh or 61.6 percent), this represents a decline of 3.8 percent. Due to weak wind conditions, electricity generation from wind energy fell to 60.2 TWh or 27.2 percent of net electricity generation in the first half of 2025 – a decline of 6.2 percent compared to the same period last year (73.5 TWh or 33.4 percent). Nevertheless, wind energy remains not only the most important renewable energy source, but also the most important energy source in German electricity generation overall. Electricity generation from photovoltaics increased significantly in the same period, reaching 39.3 TWh or 17.8 percent (first half of 2024: 30.7 TWh or 14.0 percent). This puts photovoltaics in third place among the most important energy sources, behind wind power and coal.²

In the first two quarters, net photovoltaic capacity additions of 6.7 gigawatts (GW) were recorded (same period last year: 7.4 GW), corresponding to an average monthly increase of around 1.1 GW. In the third quarter of 2025, a further 3.5 GW were added, or around 1.2 GW per month. Net additions to onshore wind energy amounted to 1.9 GW in the first two quarters (same period last year: 0.9 GW) and a further 0.9 GW in the third quarter – thus exceeding the 2.6 GW capacity added in the whole of 2024 after just three quarters.³

With a current total installed photovoltaic capacity (solar DC) of around 112 GW, the expansion target of 128 GW by the end of 2026 is likely to be achievable. Onshore wind energy, on the other hand, is currently at 66 GW, well below the interim target of 84 GW by the end of 2026. Achieving this target would require a significant increase in the pace of expansion. However, from today's perspective, it seems unlikely that the interim target will be achieved.⁴
 
According to Battery Charts, battery storage capacity expansion in the first half of 2025 amounted to 1.9 GW / 2.98 GWh (2024: 2.06 GW / 2.94 GWh). In September, the cumulative output of battery storage systems was 15.32 GW and the cumulative capacity was 22.72 GWh.⁵ In addition, grid connection requests have been submitted for large-scale battery storage systems with a total capacity of over 500 GW.⁶

 

Overview of the electricity market

After the historic lows in the market value of solar in May and June (1.997 and 1.843 ct/kWh, respectively), it stood at 3.832 ct/kWh in August. The average spot market price reached 7.699 ct/kWh in August, and the market value of onshore wind also followed this trend, most recently standing at 6.824 ct/kWh.⁷

The historic lows in the market value of solar power are directly attributable to an oversupply of electricity at certain times of the day. In this context, new highs in the number of hours with negative electricity prices were recorded in May and June 2025: 129 and 141 hours, respectively. By the end of September, the number of hours with negative electricity prices in the current year had risen to 525. In the same period last year, the number was 413 hours.⁸
 

 
Overview of Federal Network Agency tenders

The results of the second and third EEG tender rounds in 2025 continue to show fundamentally positive market dynamics with high participation and competitive bids. In the first segment (ground-mounted solar plants), 258 projects with a total capacity of around 2.27 GW were awarded, with a tendered volume of 2.27 GW (bid deadline July 1, 2025). The award values ranged between 4.00 and 6.26 ct/kWh, with the average volume-weighted award value at 4.84 ct/kWh – a slight increase on the last tender round.⁹ The tender in the second segment (rooftop solar systems) was slightly undersubscribed, with 118 bids totaling 255 MW being awarded (bid date June 1, 2025). The average volume-weighted award value was 9.22 ct/kWh. The upward trend continues here.¹⁰

Participation in the onshore wind energy sector has been particularly high recently: 568 bids with almost 5.0 GW were submitted for the tender on May 1, 2025, with a tender volume of around 3.5 GW. Awards were made to 372 projects. The average volume-weighted award value was 6.83 ct/kWh. Locations in North Rhine-Westphalia and Lower Saxony were particularly successful.¹¹ In the tender on August 1, 2025, 604 bids were received with a bid volume of 5.7 GW. Of these, 376 bids were awarded with a tender volume of just under 3.5 GW. The average volume-weighted award value was 6.57 ct/kWh. Most of the projects are located in North Rhine-Westphalia, Lower Saxony, and Thuringia.¹²

Bids in the innovation tender also continue to increase, although the tendered volume and award values are falling significantly: In the tender on May 1, 2025, 158 bids with a volume of approximately 2.0 GW were submitted. Twenty-nine bids with approximately 488 MW were awarded contracts. The average volume-weighted contract value was 6.15 ct/kWh.

Despite the solid results, the German Association of Energy and Water Industries (BDEW) still sees obstacles to the rapid expansion of onshore wind energy. Insufficient land, lengthy and complex approval and grid connection procedures, and new participation laws in individual federal states are causing uncertainty and pose a risk to the achievement of expansion targets.¹³

​​Overview of policy

The energy policy landscape is currently characterized by a high degree of dynamism. The focus of the discussion continues to be on what the electricity market of the future should look like. At the strategic level, the eagerly awaited monitoring report was presented by Federal Minister of Economics Katharina Reiche, together with ten key measures. In addition, a bundle of further measures is planned that could have a significant impact on players in the electricity market. The future structure of grid fees will be addressed as part of the AgNes process and the planned reform of industrial grid fees. Further changes to energy law concern the planned amendment to the electricity tax (including a reduction in the electricity tax for certain sectors of industry) and the amendment to the Energy Industry Act (including consideration of an energy sharing concept). In the area of electricity storage, there are also specific battery-related innovations due to the specifications in the context of MiSpeL, construction cost subsidies, and instantaneous reserve.

 

Monitoring report on the energy transition and ten key measures

In mid-September, the eagerly awaited monitoring report on the energy transition was published by the Federal Ministry for Economic Affairs and Energy (BMWE). Prepared by the Institute of Energy Economics (EWI) at the University of Cologne and the Consulting Agency for the Transformation of the Energy Industry (BET), the report presents the current status of the energy transition and derives recommendations for action. Among other things, the report emphasizes that the expansion of renewable energies on a large scale is still necessary to achieve climate targets and highlights the importance of market and grid-friendly flexibilities.¹⁴ In addition to the report, Federal Minister for Economic Affairs Katharina Reiche presented “ten key measures that are friendly to the economy and competition.” One key measure concerns the subsidy regime for renewable energies, which is to be “system- and market-oriented” in the future. Among other things, she advocates the abolition of fixed feed-in tariffs, the complete termination of subsidies in the event of negative prices, and a direct marketing obligation for new plants. As has been under discussion for some time and is required under European law, differentiated financing models (e.g., bilateral contracts for difference (CfDs) and clawback mechanisms) are to serve as support instruments in the future (further information can be found in the following article​). In addition, the BMWE advocates more “planning realism” and aims, among other things, to synchronize the expansion of grids, renewable energies, and decentralized flexibilities, to introduce a technology-neutral capacity market in the near future, and to promote the ramp-up of hydrogen.¹⁵ Numerous business and energy associations have commented on the ten key measures presented, some of them with strong criticism. Among other things, they criticize the fact that some of the ministry's conclusions can only be derived from the monitoring report to a limited extent. One point of criticism concerns, for example, the assumptions about the development of future electricity consumption: while the monitoring report considers electricity demand of between 600 TWh and 700 TWh in 2030 to be realistic, the Federal Minister for Economic Affairs assumes that “electricity demand will be closer to the lower end of this range.” Associations see this statement as a lack of political ambition to rapidly advance electricity-based technologies of the future (such as electrolysers, heat pumps, and electric cars) and warn against slowing down the expansion of renewable energies due to an overly low electricity consumption forecast.¹⁶

 

​AgNes​

The last newsletter​ already discussed the AgNes (General Electricity Network Fee System) procedure, with which the Federal Network Agency (BNetzA) is pursuing the goal of revising electricity network fees. The BNetzA's ideas were discussed with industry representatives in a workshop at the beginning of June. The impressions of the dialogue can be read in the following article. Until June 30, 2025, there was also the opportunity to submit comments on the BNetzA's discussion paper. Additional expert exchanges on topics covered in the paper are to take place later this year. The BNetzA is expected to make a decision by the end of 2026.

The BNetzA also wants to revise the topic of industrial grid fees and has published a discussion paper presenting three possible options. 

Industrial grid fees

The discussion paper on the reform of industrial grid fees aims to make industrial loads more flexible and thus contribute to grid stability. The background to this is the expiry of the band load regulation at the end of 2028 – until now, companies with more than 7,000 full utilization hours have benefited from greatly reduced grid fees. However, the regulation is considered an obstacle to the integration of renewable energies.

Three options are ​​​​under discussion:

• Spot market orientation: Companies respond to electricity price signals on the spot market. Advantage: Market-oriented flexibility. Disadvantage: Grid serviceability not guaranteed.
• Grid-serviceable flexibility: Grid operators define time windows in which load adjustments are particularly beneficial to the system. More targeted control is possible, but requires greater coordination.
• Direct grid operator access: In critical situations, grid operators could specify minimum or maximum consumption levels. The degree of intervention would be high, comparable to existing shutdown models in the transmission grid.
  

Further information can be found in this article. The consultation runs until October 21, and an industry workshop was held on September 30.¹⁷

 

Electricity tax amendment

On July 23, 2025, the Federal Ministry of Finance (BMF) published the draft bill for a Third Act Amending the Energy and Electricity Tax Act, which provides for the amendment of electricity and energy tax law. One focus of the law is the permanent electricity tax relief for approximately 600,000 companies in the manufacturing, agriculture, and forestry sectors to the EU minimum tax rate of 0.05 ct/kWh, which was previously limited in time.

In addition to the electricity tax relief, the planned amendments address other practical issues such as the abolition of plant coupling for decentralized electricity generation, electromobility and bidirectional charging, and energy storage.

The latter are now defined in a technology-neutral manner in order to avoid multiple taxation for electricity fed into and withdrawn from the grid. The new Section 5a of the Electricity Tax Act is intended to transfer the end consumer fiction known from energy industry law to electricity tax law. This means that operators of charging points are no longer classified as suppliers within the meaning of the Electricity Tax Act if the electricity is supplied exclusively at a charging point.

In addition, clear legal requirements are to be created for bidirectional charging. The aim is to ensure that users of electric vehicles are not classified as suppliers or electricity tax debtors when feeding electricity back into the grid, for example in the context of vehicle-to-home or vehicle-to-business.¹⁸

 

Amendment to the Energy Industry Act

On August 6, 2025, the German federal government launched six important projects by the Federal Ministry for Economic Affairs. One of these projects is the Act Amending Energy Industry Law to Strengthen Consumer Protection in the Energy Sector and to Amend Other Energy Law Provisions – in short, the 2025 Amendment to the Energy Industry Act. This act is intended to provide consumers with greater protection against non-market-driven price jumps in the supply of electricity. In addition, digitization is to be promoted by planning further accelerations in the rollout of smart meters. Another important point is the promotion of “energy sharing” through the newly created Section 42c. This refers to the shared use of jointly operated renewable energy plants by renewable energy communities, enabling end consumers to actively participate in the energy market.¹⁹

The EnWG amendment also brings movement to the highly controversial topic of customer installations: in its decision of September 26, 2025, the Bundesrat pointed out in the context of the draft law described above “that the possibility of implementing supply concepts without creating distribution networks subject to regulation is of crucial importance for the decentralized energy transition.” The federal government is therefore called upon to “make use of the scope provided by European law as quickly as possible and to clarify through legislation that on-site energy distribution systems are not distribution networks” in order to create legal certainty in a timely manner (further information can be found in the following article).²⁰​

 

Market integration of storage facilities and charging points – determination procedure

With the Electricity Peak Load Act, the German government has stipulated that stationary electricity storage systems and charging stations (or electric cars) should be operated in a manner that is more conducive to the grid, particularly in connection with renewable energy generation plants. In addition to EEG subsidies, the determination procedure that has now been initiated also addresses the levy exemptions for storage facilities that are essential for economic efficiency (currently only for EnFG levies). Specifically, in addition to the existing exclusivity option, a demarcation option (quarterly demarcation – for tendentially large storage facilities) and a flat-rate option (for combinations with PV systems < 30 kWp – demarcation based on assumptions) are now being specified.²¹

 

BESS-BKZ

In its long-awaited ruling of July 15, 2025, the Federal Court of Justice answered in the affirmative the question of whether grid operators are allowed to levy construction cost subsidies (BKZ) for battery storage facilities. The Federal Court of Justice justified its decision by stating that the BKZ also fulfills a steering and control function for grid-connected battery storage systems and contributes to the financing of the distribution grid. This also applies to battery storage systems that are operated in a manner that benefits the grid. Therefore, the levying of a BKZ according to the so-called power price model and thus the equal treatment of battery storage systems and end consumers is objectively justified.²²

In summary, the BGH's decision has created more uncertainty regarding the expected costs and investment decisions due to the leeway it grants to grid operators rather than providing legal clarity. The following article​ provides further background information on the BGH decision.

In its statement on the amendment to the KraftNAV, the Bundesrat argued that large storage facilities > 100 MW should not be exempt from the corresponding BKZ.²³

 

Market-based procurement of instantaneous reserve

With its decision of April 22, 2025, the BNetzA introduced the market-based procurement of instantaneous reserve.²⁴ Instantaneous reserve is essentially provided by the inertia of rotating masses of generators and turbines and contributes to the short-term stabilization of the grid frequency. Market-based procurement of instantaneous reserve will initially be based on a fixed-price system with four product variants (positive/negative × base/premium), whereby the provision of instantaneous reserve is remunerated.²⁵ Transmission system operators (TSOs) will have a nine-month implementation period to establish the market design. Technical and regulatory principles, such as cost recognition and certification of grid-forming properties, have also been defined so that systems such as battery storage and suitably equipped renewable energy inverters can act as providers of instantaneous reserve on the market in the future.²⁶

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