Key Findings

Regulation and open markets provide investment certainty and allow small business to compete with large corporations.

Germany’s energy policy is a mix of market-based instruments and regulation. Under the Renewable Energy Act (EEG), renewable electricity has guaranteed grid access to provide investment certainty and allow family businesses and small firms to compete with large corporations. The policy enabled producers of green electricity to sell their power to the grid at a set rate. The rates are “degressive,” meaning they decline over time to drive down future prices. With the introduction of auctions, the German government has looked for new ways to keep citizens involved in energy projects. Unlike coal and nuclear power, the costs for renewables are not hidden and passed on to future generations, but transparent and immediate. The government sees its role as setting targets and policies; the market decides how much is invested in renewables and how the price of electricity develops. Consumers are free to choose their power provider so they can buy cheaper electricity or switch to a provider with a 100 percent renewable portfolio.