Policy and investment in German renewable energy

The report finds that Germany has sufficient capital to meet its renewable energy targets, with an annual investment potential of €25-€35 billion, which is 60-170% more than required. However, achieving these goals at the lowest cost requires a diverse mix of investors, including small-scale end users and institutional investors. The analysis highlights that current energy market designs could lead to over 1,000 hours of negative electricity prices per year by 2030, and that aggressive economic curtailment policies could increase onshore wind bid prices by 17% by 2020. To mitigate these risks, the report recommends 'take-or-pay' arrangements or proportional curtailment. Additionally, it warns that complex incentive auction designs may exclude smaller investors, who provided over 25% of equity investment in 2015, potentially increasing long-term energy costs by limiting competition and site diversity.

• Germany possesses more than enough capital to reach its renewable energy goals, with an annual investment potential of €25-€35 billion, which exceeds the required funding for the targeted 7.4GW of new solar PV, onshore wind, and offshore wind capacity by 60-170%.
• The current energy market design is inadequate for a system dominated by renewables and could result in zero or negative electricity prices for more than 1,000 hours per year by 2030.
• Economic curtailment of production during negative price hours could increase onshore wind bid prices by 17% in 2020 if no other flexibility measures are implemented.
• The design of incentive auctions may discourage smaller investors due to high transaction costs and complexity; these investors are critical as they provided over 25% of equity investment in 2015 and could provide half of the potential equity investment in 2020.
• Specific policy adjustments to revenue support can significantly impact energy costs: shortening support from 20 to 15 years could increase costs by 15-18%, while indexing support to inflation could decrease real-term costs by 18-20%.
• Reducing offshore wind targets by half could hinder learning and potentially increase the cost of energy by 6% by 2020.
• To manage negative prices and maintain investor confidence, 'take-or-pay' arrangements are identified as the lowest-cost and lowest-risk option, followed by caps on curtailment hours and proportional curtailment.

APA

Nelson, D., Huxham, M., Muench, S., & O’Connell, B. (2016). Policy and investment in German renewable energy. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2016/04/Policy-and-investment-in-German-renewable-energy-Summary.pdf

Chicago

Nelson, David, Matthew Huxham, Stefan Muench, and Brian O’Connell. Policy and investment in German renewable energy. Climate Policy Initiative, 2016. https://www.climatepolicyinitiative.org/wp-content/uploads/2016/04/Policy-and-investment-in-German-renewable-energy-Summary.pdf.

Wikipedia

{{cite report |last1=Nelson |first1=David |last2=Huxham |first2=Matthew |last3=Muench |first3=Stefan |last4=O’Connell |first4=Brian |title=Policy and investment in German renewable energy |publisher=Climate Policy Initiative |date=April 2016 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2016/04/Policy-and-investment-in-German-renewable-energy-Summary.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nelson2016policy, author = {Nelson, David and Huxham, Matthew and Muench, Stefan and O’Connell, Brian}, title = {{Policy and investment in German renewable energy}}, institution = {Climate Policy Initiative}, year = {2016}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2016/04/Policy-and-investment-in-German-renewable-energy-Summary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }