Germany and the Netherlands to Overhaul Subsidies for Renewable Energy

 

The governments of both Germany and the Netherlands are examining how they structure renewable energy subsidies, looking to spur the industry while managing costs for the end users. Both countries faced disappointments earlier this year when planned auctions for offshore wind failed to generate interest, and they have been working on new plans for their industries.

“In various parts of the world and in Europe, the sector is struggling with rising costs, rising interest rates, and uncertainty about sufficient demand,” said the Netherlands’ Deputy Prime Minister and Minister of Climate Policy and Green Growth, Sophie Hermans. “Without intervention, the rollout of wind farms is at risk of grinding to a halt. The Offshore Wind Energy Action Plan offers additional support for the sector in the coming period and details several additional measures. This will enable the next cabinet to make swift decisions on these matters.”?

Hermans highlighted the danger that, going forward, the pace of offshore wind farm rollout is slower than in recent years. In May, the Netherlands delayed an offshore wind license auction when it became clear that the developers required subsidies to go forward. The Netherlands has 4.7 GW of installed capacity. Its goal for 21 GW was delayed from 2030 to 2032.

The Netherlands continues to see offshore wind energy as a driving force in the Dutch energy transition. It will also help the Dutch to locally source more of their power.

To prevent a slowdown from jeopardizing the country’s long-term plans, Hermans said the new action plan calls for allocating €1 billion to support the construction of 2 GW of new offshore wind farms next year. The plan also anticipates longer-term support efforts for the sector.

In the short term, in addition to the subsidy for the construction projects, the Netherlands government is also extending its Indirect Compensation Cost program by one year with an additional €150 million. This will also improve the future business case for offshore wind farms, according to Hermans. They also plan to work on the demand side of the power market. 

In the longer term, the Dutch cabinet is preparing a bill to enable the Contracts for Difference approach for wind farms, which is already in use in the United Kingdom. Operators receive a subsidy if their revenues fall below a certain level and pay the state when electricity prices are high. The cabinet is also exploring a guarantee fund to support long-term energy contracts.

Another step will consider the timeline for the required construction for wind farms for the developers. The cabinet is also exploring reorganizing the plans for the Ten Noorden van de Waddeneilanden site to possibly incorporate it with the Doordewind energy zone, which would Herman said lead to higher revenue per turbine.

Germany faced similar challenges after it failed to receive bids in its most recent round. The new government’s Economy Minister, Katherina Reiche, on Monday, September 15, said they needed to address bringing down the cost of energy to make the shift to renewable energy successful.

Germany can still achieve its goal of climate neutrality by 2045, but the energy supply must be made more efficient so as not to overburden industry and consumers with the costs of the transition, the minister said.  Expansion must be better managed, and a new subsidy plan will be announced. 

Germany’s goal is to systematically lower its subsidies. For example, the minister called for abolishing a fixed rate for solar power from new installations. For wind power, Germany is also considering CfDs as well as a system of revenue recovery.

Reiche notes that German industry is slowly moving away from oil, gas, and coal. However, they highlight that 54 percent of Germany’s electricity was generated from renewables in the first half of 2025. As part of the new plan, the ministry said it believes the prior government overestimated demand. Working on a revised plan, they asserted that Germany remains on track to source 80 percent of its electricity from renewables by 2030.