The 2014 reform of the German Renewable Energy Law

When the German Renewable Energy Act was established in 2000, the energy market was markedly different. Since then, renewable energy use has increased dramatically in Germany, from 6.3% to over 25% of total energy used. The price of the technology has also dropped substantially: solar panel prices are less than half what they were in 2006. Nuclear energy has been scaled back, while natural gas and other fossil fuel prices have increased in Germany and throughout Europe, contributing to a rise in overall energy prices. Now that the program has seen more than a decade of use, German lawmakers have initiated reforms to better reflect these market conditions and otherwise improve its functioning. In some cases the reform reduces renewable energy incentives, but this does not represent a walk backwards on the underlying commitment to Germany’s renewable energy transformation. The transformation, or “Energiewende,” enjoys widespread public support with approval from 82% of the population, and remains on track to meet aggressive targets of more than 40% renewable energy use by 2025.   Germany’s rapid transformation has captured the world’s interest, seen by some as a model, and by others as a cautionary tale, in the United States and worldwide. The Energiewende has been wildly successful in accomplishing its primary goal of increasing renewable use, but the faster than expected adoption of renewables has created its own set of issues. These include higher than expected payouts through the Feed-in Tariff system, and intermittent surges of power to the grid. The reforms’ design provides valuable context for anyone interested in drawing lessons from Germany’s situation For detailed information on the reform, click below to download our background paper.