Germany is facing a critical energy policy situation. Despite constant political promises, the dream of lower electricity prices through the expansion of renewable energy is not materializing. Instead of relief, costs are rising because weather-dependent feed-in is impacting a grid that is expanding too slowly. The immediate cause lies in the strong fluctuations in wind and solar power, which create alternating surpluses and shortages. At the same time, prices for households and industry are rising. The key risk factor is volatility, because it forces price spikes and triggers interventions in the system. The consequences are concrete: at the beginning of 2026, households will pay an average of around 37 cents per kilowatt-hour, while businesses will struggle with prices between 14 and 19 cents. Furthermore, the pressure on competitiveness and security of supply is increasing.
The Dream of Free Electricity – Volatility Turns Generation into a Risk
The phrase “Wind and sun don’t send bills” shaped the political narrative, but it no longer reflects reality. Electricity doesn’t automatically become cheaper just because its generation doesn’t require burning fuel. The crucial factor is the entire system, because grids, regulation, and reserves all cost money.
Average prices act as a reassurance, while the fluctuations represent the real danger. When the weather is good, feed-in spikes, while during periods of low wind and solar output, it drops noticeably. The market reacts harshly, resulting in extreme swings that companies can hardly plan for.
The region suffers doubly because high prices and price spikes occur simultaneously. Companies not only pay more, but they also hedge against higher costs. This reduces their willingness to invest, while other regions offer more stable price profiles.
Grids remain the bottleneck, while solar power explodes
Germany expanded its photovoltaic capacity from around 40 to over 120 gigawatts in a decade, while grid expansion lags behind. Permits take time, and procedures and conflicts block many projects. As a result, generation is growing faster than transmission, and this is precisely where the system tips.
Surplus electricity sounds like a success, but it becomes a problem when the grids cannot absorb it. Then, operators curtail power plants or push electricity into export channels. Both come at a cost, while the bill ultimately comes back through grid fees, levies, and system measures.
In such situations, prices even slip into negative territory, which is why producers effectively have to “give away” their electricity. This is not a market triumph, but a warning sign, because it indicates overload and perverse incentives. At the same time, the costs for redispatch and balancing increase, which is why the system becomes more expensive, even though more plants are operating.
Energy as a location factor – otherwise, the dream will migrate abroad
In a decarbonized world, affordable, reliable renewable energy will determine industrial production, which is why value chains are shifting. A 2024 study by the Potsdam Institute for Climate Impact Research highlights global differences: North Africa produces particularly inexpensive solar power, while windy regions like the North Sea, Patagonia, and Scotland achieve high utilization rates. Scandinavia and Canada also have large hydropower potential, but Germany largely lacks this natural advantage.
This is precisely what creates a structural cost disadvantage, because German renewables are, on average, less productive. When energy becomes the dominant input, companies relocate production to where electricity remains permanently cheaper. This threatens the loss of energy-intensive sectors, while supply chains follow suit, leading to regional depopulation.
Policymakers are already responding with steering mechanisms, rewarding consumption during peak production times and demanding restraint during periods of scarcity. This stabilizes grids in specific areas, but simultaneously forces businesses and daily life to operate within specific electricity demand windows. The dream of freedom through cheap energy then ends in a system that controls behavior because technology and infrastructure cannot keep pace.
Why the Bill Rises Despite the Growth of Wind and Solar Power
The price reduction isn’t failing because of a single detail, but rather due to the inherent logic of the system. Wind and solar power reduce fuel costs, but they also increase the demands placed on grids, storage facilities, reserve power plants, and balancing power. These costs are growing, while the benefits of cheaper generation evaporate in everyday life.
As long as grids remain bottlenecks and volatility disrupts planning, electricity will remain expensive and unreliable. Therefore, expansion alone acts as an amplifier: more peak loads, more interventions, more costs. The dream of cheap electricity is thus not shattered by ideology, but by physics, infrastructure, and the sheer scale of the equation. (KOB)