The Ministry of Economic Affairs has received a draft amendment to the Energy Industry Act that aims to more closely link the expansion of wind and solar power to grid expansion. Regions would be considered capacity-limited if they regularly generate more renewable electricity than the distribution network can handle. Reiche’s goal is not a blanket halt, but rather to identify more suitable locations and improve predictable system costs. At the same time, the draft changes the distribution of risk, as compensation for curtailment could be eliminated and connection costs would increase. This effectively weakens the feed-in guarantee, while operators are expected to assume greater responsibility. (t-online: 10.02.26)
Feed-in Guarantee – Grid Access Only “Capacity-Limited”
Grid areas with regular surplus electricity are to be designated as “capacity-limited.” In such regions, new wind and solar power plants would only be allowed to connect to the grid if operators waive compensation via the feed-in tariff in the event of curtailment. This forces projects to adopt more realistic revenue expectations, as not every kilowatt-hour produced will be automatically compensated. Furthermore, grid operators could require construction cost subsidies so that operators contribute to financing grid expansion.
These subsidies are intended to vary regionally, as this is meant to send a signal in favor of grid-compatible locations. This can direct investments specifically to regions where capacity is available. For operators, however, this means that their calculations depend more heavily on the grid connection regime. Banks assess this risk and then demand more equity capital if the framework conditions remain unclear.
Reducing Redispatch – Cutting Costs, Eliminating Perverse Incentives
The draft legislation focuses on a clear cost driver: redispatch. Operators are currently compensated when plants are curtailed due to grid overload, even though they could generate electricity. At the same time, expensive power plants operate in bottleneck locations because renewable electricity cannot reach the load centers due to grid congestion. Experts expect redispatch costs of around €2.7 billion for 2025.
Reiche has a point here, because it doesn’t make sense to subsidize generation that cannot be regularly fed into the grid. “Cheap electricity” only exists systemically if it actually reaches where it is needed. The current logic, however, socializes the risk of bottlenecks because money flows when power is curtailed. This makes the hedging function like a permanent feed-in guarantee, even though grid bottlenecks are a real market and system risk.
Threshold and duration: How large will the new zone be?
The definition of “capacity-limited” grids is controversial. According to the draft, a deviation of more than three percent between technically possible and actual feed-in would be sufficient. Sven Kirrmann of Naturstrom considers this far-reaching and says it could encompass large parts of Germany. He warns: “If exceeding this normal threshold immediately triggers an exceptional regime with significant restrictions, it will drastically reduce the areas in Germany where expansion is reliably planned.”
In addition, the classification is to remain in effect for up to ten years. While this creates stability within the system, it could also lead to prolonged reluctance to connect to grids in certain regions. Operators could then relocate projects instead of pushing them through in bottleneck areas. This corresponds exactly to the logic of the proposal, because it is intended to push the expansion into regions more compatible with the grid.
Market Conditions Instead of Reflexes – Saying “Cheap” and Demanding Safeguards Don’t Go Together
Two narratives clash in this debate. Representatives from the renewable energy sector frequently point to the low generation costs of wind and solar. At the same time, there is fierce resistance as soon as compensation payments decrease or feed-in tariff guarantees are reduced. Critics see this as an imbalance because operators defend protective mechanisms while system costs end up being borne by grids and consumers.
If plants are to be viable in the long term, they must adapt to market conditions. This includes flexible feed-in, storage, direct marketing, and a site-specific focus that takes grid capacity into account. A feed-in guarantee without its own take-off risk, on the other hand, creates incentives that manage bottlenecks rather than solve them. Reiche is trying to restructure this mechanism so that costs arise where the decisions are made in advance.
Agreement with a Warning – Synchronization Yes, Slowing Down No
Energy expert Tim Meyer writes on LinkedIn that the draft contains “much that is correct.” He sees a need to better synchronize grid expansion and the connection of new plants. He also advocates making bottlenecks more digitally transparent, as this helps investors assess locations more realistically. At the same time, he warns against giving grid operators too much power, because otherwise weaker players could dictate the pace.
Meyer writes: “The speed of Germany’s energy transition must not consist of waiting for stragglers before moving forward. We must finally accelerate the stragglers.” Sharp criticism also comes from politicians, with Green Party MP Alaa Alhamwi speaking of a “fossil fuel agenda.” Katrin Uhlig also warns that the project will increase “costs and uncertainty for all projects.”
Ultimately, the following applies: Only if the expansion of wind and solar power finally happens where the grid can actually accommodate it will “cheap electricity” become reliably usable electricity – and Reiche’s project establishes precisely this true cost transparency.