Policies in Germany

Germany's goal is to generate at least 80% of its electricity from renewable sources by 2030. The country supports renewable energy through a variety of policies and programs, including:  Renewable Energy Sources Act (EEG): The primary law that supports renewable energy. It sets out eligibility criteria and tariff levels. The EEG also includes a tenant electricity surcharge to support electricity produced and consumed in the same building. Tendering scheme: Most installations are supported through a tendering scheme that determines the market premium and its level. Financial incentives are provided for by different KfW Programmes. Grants and subsidies are provided by national programmes. Tax incentives include a zero VAT rate for solar PV and storage. These are complemented by non-financial support mechanisms such as training and certification and BAFA-supported energy audits.

Financial Support Mechanisms:

Loans:

The Kreditanstalt für Wiederaufbau (KfW) offers low-interest loans for investments in renewable energies such as:

• "Renewable Energies – Standard" program which supports the construction, expansion, and acquisition of renewable energy systems, including the associated costs for planning, project management, and installation
• Klimaschutzoffensive für Unternehmen

Subsidies and grants: 

National level:

1. Federal Office for Economic Affairs and Export Control (BAFA) Programs: BAFA offers various grants to promote energy efficiency and the expansion of renewable energy. These programs contribute significantly to Germany's climate protection efforts by supporting projects that enhance energy efficiency and integrate renewable energy sources (example: INVEST – Zuschuss für Wagniskapital)
2. NKI-Förderungen/Kommunalrichtlinie

At local level subsidies include: 

• SolarPLUS
• Land Mecklenburg-Vorpommern
• Bürgerenergiefonds

Tax Incentives:

• Zero tax rate: no VAT is charged on the supply and installation of PV systems and associated electricity storage systems
• Income tax exemption: from 1 January 2025, income from the operation of photovoltaic systems up to a gross nominal output of 30 kilowatts (peak) per residential or commercial unit are tax-free
• Trade tax exemption 

Non-Financial Support Mechanisms include 

• Administrative & Capacity-Building Support
• Professional Training and Certification
• Industry-Specific Training
• Energie-Audits

• BMWK
• Bundesnetzagentur or BNetzA
• BAFA
• KfW Development Bank
• Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit)
• Landesregulierungsbehörden

The German Bundestag recently passed a law for heating and cooling planning and the decarbonisation of heat networks to achieve the 2045 climate neutrality target. The revised Building Energy Act (GEG) and the new Local Heat Planning Act (WPG) aim to completely decarbonise the heating sector by 2045 and to transpose the new Energy Efficiency Directive, in particular its art 25.6 on local heat planning. Through the KfW and BAFA, several subsidies and low interest loans are granted for installing renewable energy heating and cooling systems. These instalments are further subsidized with a tax support scheme. District heating grids are not regulated on federal level but can benefit from a subsidy.

Legislation:

• Building Energy Act (GEG)
• Local Heat Planning Act (WPG)

• The Bundesförderung für effiziente Gebäude (BEG) — or Federal Funding for Efficient Buildings — is a key funding program in Germany that supports energy-efficient construction and renovation of buildings. It’s part of the German government's efforts to reduce CO₂ emissions and achieve climate targets in the building sector. It's main goals are: improve energy efficiency in buildings, promote the use of renewable energies for heating and cooling, support the energy transition (Energiewende) in the building sector
• Loan and Subsidy(KfW Renewable Energies Premium)
• Loan (KfW Renewable Energies Standard)
• Subsidy (Federal subsidy for energy efficient buildings – single measures)
• Tax regulation mechanism (Support for the energy-efficient renovation of private buildings)

• BAFA
• BMF
• BMWK
• KfW Development Bank

The country's first national climate law – passed in 2019, amended in 2021 and 2024 – contains annual emission budgets for transport until 2030. The federal government set a target to have 15 million electric cars on the road by 2030. Germany’s National Hydrogen Strategy (Nationale Wasserstoffstrategie), first adopted in 2020 and updated in 2023, identifies clean hydrogen as key for decarbonising transport segments that are hard to electrify. This includes heavy-duty road freight, aviation, and maritime transport.

• Consistent infrastructure spending with high investment in railways
• Improvement of public transport – Germany-Ticket

The environmental bonus (subsidies for the purchase of EVs) was stopped at the end of 2023. 

• BAFA
• BMVD
• BMWK
• BNetzA
• UBA
• KBA