Government row threatens long-awaited energy reforms in Germany

A new dispute within Germany’s government puts a coalition agreement on long-delayed key energy policy bills at risk. Only weeks before numerous reforms were finally due to be approved by cabinet, the Social Democrats (SPD) threatened to block the electricity grid reform proposed by economy minister Katherina Reiche, a member of Chancellor Friedrich Merz’s conservatives (CDU). The SPD also called for changes to the planned new strategy to clean up heating.

Germany’s government aims to make the country’s energy transition more cost-efficient to improve industry competitiveness. But the Social Democrats, who helped to shape existing policies as part of the previous coalition government, have repeatedly accused Reiche of slowing the switch to a more climate-friendly economy. 

Last week, Reiche submitted three reform proposals to other ministries for internal government consultation: an overhaul of the country’s renewables support system, a package to secure electricity supply with new gas power plants, and a grid reform to align the expansion of wind and solar with lagging grid development. 

The Social Democrats took issue with the grid reform in particular. SPD parliamentary group leader Matthias Miersch in newspaper Neue Osnabrücker Zeitung accused Reiche of “wanting to erect new hurdles for wind farms by driving up risks for investors.” He added that the planned end of compensation payments for renewables that need to be switched off because of grid overload could “become a killer of the expansion of renewables and must be removed.”

The so-called redispatch provision is designed to apply in grid bottleneck “hotspots” where more than three percent of the previous year’s electricity generation could not be feed into the grid. Under the proposed scheme, investors would only be granted immediate grid connection if they waive compensation for future curtailments for up to ten years.

The energy transition must be optimised and some aspects could be made more efficient, Miersch said. “But slowing down the pace would be irresponsible. That is why the SPD parliamentary group will not go along with this.”

The SPD also called for changes to the heating reform, which is scheduled for cabinet approval in mid-May, according to energy and climate newsletter Tagesspiegel Background. SPD buildings minister Verena Hubertz said landlords must shoulder some of the extra costs of energy price rises if they opt for a new fossil fuel boiler, which the reform would allow them to do.