Economy Minister advocates for reducing solar power output
In a move aimed at making the energy transition more efficient and less costly, Economics Minister Katherina Reiche has proposed the elimination of subsidies for new small photovoltaic (PV) systems installed on private roofs.
The Minister's reasoning is that continued promotion of new private solar installations through subsidies may no longer be the best use of public funds to achieve Germany’s renewable energy goals. The focus is on reducing government expenditure related to green electricity from private PV systems, while maintaining feed-in tariffs for existing installations.
The proposal to phase out feed-in subsidies for new small-scale rooftop PV systems has met opposition from sectors such as the Greens and solar industry representatives who warn that ending subsidies jeopardizes further expansion of solar energy.
Minister Reiche justifies the initiative by stating that prices for PV systems and home storage systems have fallen significantly. However, the plan raises concerns about the financial attractiveness of new photovoltaic installations without subsidies for homeowners. An installation without subsidy would take much longer to pay off, with a break-even point of 23 years instead of the previous 11.6 years (assuming a favorable purchase price of 19,000 euros and annual energy consumption of 8,000 kWh).
The government believes that the current subsidy model for small private systems may be less cost-effective as technology prices have decreased, and the need for budgetary efficiency grows. The plans do not affect existing PV systems, nor do they apply to balcony power plants, which do not receive any feed-in tariff and are not affected by the subsidy changes.
Grid operators have expressed concerns about keeping grids stable, especially during summer midday when solar systems produce a lot of electricity. Despite these challenges, the share of solar power in the overall electricity consumption was 14% in 2024, with around 700,000 of these systems estimated to be private PV systems.
The Association of Municipal Enterprises (VKU) warns of potential regional power outages in the worst case. However, the article does not provide the subsidy rates for solar systems, nor does it mention any electricity tax reduction in the private sector.
The government coalition shows little enthusiasm for the plans, indicating a possible hurdle in the proposal's implementation. The debate on the future of subsidies for small solar systems on private roofs is set to continue, with implications for Germany's renewable energy expansion and the financial incentives for homeowners to invest in solar power.
[1] Source: Bundesministerium für Wirtschaft und Klimaschutz [2] Source: Renewable Energy Association NRW [3] Source: Green Party [4] Source: Finanztip [5] Source: Solar Industry Association
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