The encyclopedia · Engineering & Operations · Strategic decision · 2014-2017
Germany switched renewables from feed-in tariffs to auctions in 2017.
The 2017 EEG reform moved large wind and solar from set feed-in tariffs to competitive auctions, letting competition decide the price and the build-out.
German Federal Government (BMWi) · German Wind Energy Association · RWE
the move
Feed-in tariffs made Germany a renewables pioneer, but they paid an above-market price to everyone, so costs ballooned and the pace of build was set by investors rather than planners.
The EEG reform approved in 2016 and in force from 2017 replaced set feed-in tariffs for large new installations with competitive auctions: developers bid for a share of planned capacity and the lowest bids per kWh win, guaranteed that price for 20 years.
Small rooftop installations up to 100 kW kept a fixed feed-in tariff, so the citizen-solar market was preserved while competition set the price for utility-scale wind and solar.
why it works
- A single price to all suppliers overpays the efficient and shields the inefficient
- Auctions force bidders to reveal their true cost in order to win contracts
- A deployment corridor capped volume, so cost control replaced unlimited growth
- The design became a template copied by other countries
what transfers
If a subsidy becomes so generous it drives runaway demand, switch from paying a guaranteed price to auctioning the subsidy — the market sets the price and caps the volume you promised.
what came after
From 2017 large new wind and solar in Germany were paid by auction rather than by fixed feed-in tariff, with a deployment corridor setting how much capacity each round could add. The system lowered build-out costs and became a reference design for competitive renewable tenders, but also drew criticism for slowing expansion and reducing citizen participation.
references
- German parliament approves controversial renewables reform
- Renewables reform / Merkel: Energiewende must not destroy utilities
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