Following sharp criticism for stating that electricity prices in Germany will not decrease significantly until the 2030s, Federal Economics Minister Katherina Reiche (CDU) has defended her position. Reiche announced on Thursday that previous governments made a fundamental error: they pursued the expansion of renewables without planning the network, storage capacity, consumption, and secure power generation as a coherent system.
The CDU politician, who previously served as Parliamentary State Secretary in the Federal Environment Ministry from 2009 to 2013, was involved in a reform of the Renewable Energy Sources Act during that time, which lowered compensation rates for photovoltaic power to curb rapid growth.
Reiche recalled that electricity often is generated where the grid cannot absorb it. In such cases, the power must be curtailed and replaced at other locations by power plants. “The result is high costs for redispatch, grid expansion, and long-term subsidies,” she explained. She added, “In 2025 alone, tens of billions of euros in public funds flowed into the electricity system-and yet our electricity costs remain higher than those of our main competitors.”
According to Reiche, the answer is neither fewer renewables nor more subsidies. Instead, it lies in “a system where all parts work efficiently together.” She elaborated that Germany is focusing on this precise area: synchronizing the expansion of renewables with grid development, introducing more competition into funding mechanisms, and utilizing storage and flexible consumers more strategically.
Crucially, this new approach also involves securing the baseline power generation that kicks in when wind and solar power are insufficient. Reiche stressed that “long-term and diversified gas supply contracts better protect us from price spikes and severe fluctuations.” She acknowledged that this paradigm shift requires time. While past investment and depreciation cycles spanned years and decades, she stated that it is high time to lay the foundation for an efficient, market-driven, and competitive power system.
In the coalition agreement, the CDU/CSU and SPD aimed for permanently low and predictable, internationally competitive energy costs. According to the agreement, adjustments would be made as needed. As an immediate measure, they pledged to relieve businesses and consumers in Germany by at least five cents per kWh by reducing the electricity tax to the European minimum and lowering surcharges and grid fees. Furthermore, revenues generated from CO2 pricing would be returned to consumers and businesses via a “noticeable relief in electricity prices.”
Separately, a study commissioned by the Federal Agency for Nature and Biodiversity (BUND) from Montel Analytics indicated that a high share of wind and solar power in the grid stabilizes electricity prices during energy crises and dampens extreme peaks. The analysis compared three scenarios against the price conditions of the 2022 energy crisis: a highly fossil-based system typical of 2011, the 2022 reference scenario, and a future scenario incorporating the government’s 2030 goal of 80% renewable energy. The study concluded that the average price in the 2030 scenario would drop by 64 percent compared to 2011.
