Germany set for major power-sector overhaul with EEG-2027 and capacity market, says GlobalData

Germany's electricity demand is also entering a period of rapid growth. Annual consumption, estimated at approximately 466TWh in 2025, is forecast to swell to over 576TWh by 2035, highlighting a critical need for transmission investment. Offshore wind farms in the North Sea and Baltic Sea will require reinforced high-voltage corridors to move power to southern industrial zones. Delays in building and permitting these transmission routes risk renewable output being wasted through curtailment or constrained supply.

Saibasan adds: "Alongside these macro shifts, market dynamics are growing more complex. Negative wholesale prices are already a concern in periods of high wind or solar output when demand is low and they create revenue volatility. As fixed support mechanisms fade, every project must factor in such risks, including exposure to price swings, grid access limitations, and project execution delays. Investors increasingly scrutinize auction rules, the transparency of capacity payments, regulatory certainty, and the timeline for permitting approvals."

Investment activity is responding accordingly. Solar PV and offshore wind are capturing the largest share of capital flows, while hydrogen infrastructure, flexible thermal generation, storage technologies, and long-distance transmission are important components of the broader investment mix. Total power-sector investment is forecast to climb significantly through the late 2020s, supported by Germany's legislative targets: achieving at least 80% renewable electricity by 2030, a coal exit by 2038, and climate neutrality by 2045.

Saibasan concludes: "Ultimately, the success of EEG-2027 and the capacity market reform will be judged by Germany's ability to deliver across four interlinked dimensions: reliability, affordability, market-driven flexibility, and system integration. Regulatory clarity, investment certainty, and infrastructure delivery are critical. If executed in synchrony, these changes promise not only to accelerate the Energiewende but also to position Germany as a benchmark for energy transitions in large industrial economies, proving that moving beyond fixed subsidies toward performance-based, resilient systems is both possible and necessary."