Germany’s capacity market plans, the EEG amendment and the grid connection package will raise electricity costs for industry and consumers rather than lower them, according to an analysis by the International Economic Forum for Renewable Energies (IWR) in Münster.
Federal Economics Minister Katherina Reiche has framed the package around security of supply, predictability and cost efficiency, under the banner of “more market and less permanent subsidy”. IWR argues the combined effect runs the other way: control of the German power system shifts away from the competitive wholesale market towards regulated network monopolies and state-organised capacity mechanisms.
Network operators are not exposed to conventional competition. IWR cites a recent BNE analysis showing that the 18 largest distribution network operators achieved a market-share-weighted average return on equity of 30.1 per cent in 2024 under commercial accounting rules. Under the new framework they would gain more influence over which plants connect, when and on what terms. Operators of firm capacity would receive payments through the capacity market on top of any wholesale revenues, while renewables face greater market exposure and tighter alignment of build-out with available grid capacity.
“This is not a forward-looking energy policy, but a shift in the steering of the energy transition towards actors and revenue models that are considerably less exposed to the cost pressure of a competitive electricity market — with far-reaching consequences,” said Dr Norbert Allnoch, Managing Director of IWR.
For new wind projects the grid connection package moves congestion risk onto operators: a proposed redispatch reservation would allow connection in exchange for waiving financial compensation for later curtailment. Changes to the wind reference yield model and tighter limits on PV feed-in capacity are also planned. New small rooftop PV systems would lose the EEG minimum tariff and have to market their own output, which IWR expects to favour established market players. Battery storage would continue to face construction cost contributions at grid connection.
IWR also pushes back on a common assumption that more gas-fired capacity lowers prices. Under the merit order principle the last plant cleared sets the price for all others. More renewables displace more expensive plants and lower the clearing price; slowing renewables build-out leaves gas as the marginal price-setter more often. The European TTF gas price stood at around €62.50 per MWh in mid-August 2026, which at 50 per cent plant efficiency means fuel costs alone of 12.5 cents per kWh. The parallel coal phase-out sharpens the effect if coal generation is replaced by gas rather than by renewables and storage.
Financing the capacity market is expected to run through a new levy from 2031, with the economics ministry estimating costs of €1bn to €3bn for capacity support in that year, borne by electricity consumers. Reiche herself has said noticeable relief will only arrive in the 2030s. IWR argues policy should instead optimise the whole system portfolio — renewables, storage, grids, flexible demand and firm capacity — and points to pairing renewables with storage as standard in large auctions. It notes that Ultranet, A-Nord, SuedLink and SuedOstLink are due for completion by 2028, which should ease congestion and redispatch needs.
