Energy giant RWE CEO in Germany demands: End to the free grid for solar systems? – Image: Xpert.Digital
Solar power dispute: Who ultimately pays for the green energy transition?
Background to the current debate: RWE CEO calls on owners of solar systems to finance grid connections
The German energy transition is reaching a crucial phase in which fundamental questions about the financing and design of renewable energies are being renegotiated. Federal Minister of Economics Katherina Reiche has sparked a heated debate with her proposal to abolish the feed-in tariff for new private solar systems. RWE CEO Markus Krebber is going even further, demanding that owners of solar systems contribute to the costs of grid connections in the future.
Fairness debate on green electricity: Do only the rich benefit from solar energy?
A proposal by Markus Krebber, the head of Germany's largest energy company, RWE, is reigniting the debate about the future of solar energy and touching on a fundamental question of the global energy transition: Who will bear the costs of restructuring our power grids? Krebber calls for a radical rethink and wants owners of private solar systems to pay for the connection to and use of the grids in the future – a burden that has so far been shared by all electricity customers.
At the core of his argument is the accusation that the current system is socially unjust and endangers the stability of the power supply. While wealthier homeowners primarily benefit from subsidized solar power, the billions of dollars in costs for grid expansion are passed on to the general public, especially renters and low-income earners. Furthermore, solar systems flood the grid precisely when electricity is hardly needed, requiring expensive interventions to stabilize it.
The demand has sparked fierce opposition. The solar industry and environmental organizations warn that such a move would stifle the expansion of renewable energies and push climate goals far into the distance. They argue that private investment in solar systems is a crucial contribution to the energy transition that should not be penalized by additional costs. The debate thus reveals the central conflict facing many countries: How can the energy transition be implemented not only quickly, but also fairly and economically for everyone?
The position of RWE CEO Markus Krebber
Markus Krebber, CEO of Germany's largest energy company, RWE, has significantly intensified his criticism of current solar subsidies. At an event organized by the Düsseldorf Business Journalists Association, he argued that current subsidies are merely windfall gains. His reasoning is complex and touches on both technical and social aspects of the energy transition.
Krebber sees private solar plant operators as problematic actors in the electricity system. According to him, these are users who always push electricity into the grid when there is too much sun and their power isn't actually needed. At the same time, they receive compensation that is significantly higher than the wholesale electricity price. In Krebber's view, this situation leads to unnecessary additional costs in the system.
However, the RWE CEO goes one step further than Minister Reiche. While she merely proposes abolishing the feed-in tariff for new plants, Krebber calls for a fundamental reform of cost distribution. His vision envisages solar plant operators contributing to the costs of grid connections and grid expansion. This would represent a fundamental change to the current system, in which these costs are financed through general grid fees.
Arguments for a reform of the financing structure
Economic efficiency without subsidies
Proponents of a subsidy cut argue that solar systems are now profitable even without government support. The costs of photovoltaic modules and storage systems have fallen dramatically in recent years. A modern solar system now costs between €1,200 and €1,600 per kilowatt peak, which is significantly lower than in recent years.
With current electricity prices averaging 35 to 38 cents per kilowatt hour, households can save considerably by using their own solar power. The production costs for solar power range between 4.1 and 14.4 cents per kilowatt hour, depending on the location. This difference makes photovoltaic systems economically attractive even without feed-in tariffs, especially for high levels of self-consumption.
Social justice
A central criticism of the current subsidy structure relates to social justice. Krebber and other critics argue that solar subsidies result in a redistribution from the bottom to the top. The costs of the subsidy are financed through all consumers' electricity bills, while primarily wealthier homeowners benefit from the subsidies.
This criticism is not new. For years, there has been debate about whether the Renewable Energy Sources Act leads to an unfair distribution of costs. Renters and low-income people who cannot afford solar systems must co-finance the subsidies for those who can make such an investment through higher electricity prices.
The regressive effect of the EEG surcharge exacerbates this problem. Poorer households must spend a larger share of their disposable income on electricity than wealthier households. At the same time, they are less able to benefit from the advantages of the energy transition, as they often lack the opportunity to install their own solar systems.
Grid stability and system integration
Another important argument concerns grid stability. The massive expansion of solar energy is increasingly leading to challenges for the power grid. Especially on sunny days, oversupply can occur, destabilizing the grid frequency. Most private solar systems currently feed in uncontrolled power, without regard for current demand or the state of the grid.
This problem is exacerbated on holidays, when good weather brings high levels of solar power production but consumption is low. Transmission system operators then have to implement expensive balancing measures to ensure grid stability. These costs are ultimately passed on to all electricity consumers via grid charges.
Rising network costs as a problem area
Current development of network charges
Grid fees have risen steadily in recent years and now account for about a third of the electricity price. In 2024, households paid an average of 11.6 cents per kilowatt-hour, compared to 7.5 cents in 2021. This increase is primarily due to the necessary expansion of the electricity grids required to integrate renewable energy.
The billion-dollar grid expansion is generating high costs, which so far have been borne primarily by electricity consumers who draw power from the grid. However, solar plant operators with storage systems can significantly reduce their grid consumption and pay correspondingly lower grid fees, even though they use the grid infrastructure for feed-in and need it as a backup.
The problem of the declining financing base
The Federal Network Agency sees a structural problem in the current financing of grid costs. The number of users paying the full amount of grid fees is decreasing, while costs are rising simultaneously. A particularly problematic issue is that households with solar systems and storage systems pay lower grid fees, but use the grid just as intensively when their systems are not producing.
Klaus Müller, head of the Federal Network Agency, has already initiated a reform process to achieve a fairer distribution of grid costs. Various models are being discussed for how prosumers (simultaneous producers and consumers of electricity) can contribute more to grid costs.
Solutions for network financing
Various models are currently being discussed to make grid infrastructure financing sustainable. One option would be feed-in-dependent tariffs, where electricity producers also contribute to grid costs. Alternatively, basic grid charges could be introduced, which are levied regardless of actual consumption or feed-in.
Another approach is pricing grid connection capacity. This would calculate costs not only based on the amount of electricity actually used, but also on the available connected capacity. This would place a greater burden on operators of solar systems with high installed capacity.
Counterarguments and criticism of the reform plans
Position of the Greens and the solar industry
The Green Party has reacted sharply to the reform plans, demanding a right to solar. Green parliamentary group leader Katharina Dröge criticized Minister Reiche's statements for causing massive uncertainty among citizens, tradespeople, and the solar industry. Declines in orders for photovoltaic systems are already being reported.
The German Solar Industry Association (BSI) disputes the assessment that solar power systems are economically viable without subsidies. Managing Director Carsten Körnig argues that only solar systems with high levels of self-consumption and very large ground-mounted systems can currently be operated economically without EEG subsidies. The market values for solar power are, on average, still below the levelized cost of electricity.
Economic considerations
Critics of the reform plans argue that solar subsidies actually make economic sense. Renewable energy generation is associated with positive effects such as avoiding greenhouse gas emissions and reducing dependence on imports. These climate protection effects benefit society as a whole and justify government support.
It is also argued that private solar plant operators are already making an important contribution to the energy transition. Eliminating subsidies could slow the expansion of renewable energies and jeopardize climate goals. Decentralized energy generation by citizens is seen as a key building block for a successful energy transition.
Impact on the energy transition
Drastic cuts in solar subsidies could have negative repercussions for the entire energy transition. Germany has set ambitious goals for the expansion of renewable energies, which can only be achieved with continuous expansion. A slump in new installations would jeopardize these goals.
The solar industry warns of the negative consequences for jobs and regional value creation. Ending subsidies would not only lead to fewer installations, but could also drive companies into insolvency and destroy jobs. This would be a setback for an industry that has made significant progress in recent years.
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Technical solutions for better system integration
Intelligent control and digitalization
Technical solutions are needed to meet the challenges posed by growing solar energy. The Solar Peak Power Act, which came into force in February 2025, requires grid operators and plant operators to improve their control options, even for small-scale plants.
Smart meters and control systems can help ensure that solar systems no longer feed in uncontrolled power, but instead respond to the needs of the grid. This would improve grid stability while simultaneously reducing the costs of balancing measures. System operators who fail to install this technology will be subject to penalties.
Storage technology and flexibility
The increasing prevalence of battery storage offers further opportunities for better system integration. Modern storage systems can not only increase self-consumption but also serve as a buffer against grid fluctuations. However, there are currently few incentives to deploy these storage systems in a grid- or market-oriented manner.
In the future, variable tariffs and time-dependent pricing could help ensure more flexible use of storage systems. This would allow them to charge during low-price periods and release power during periods of high demand. This would both improve grid stability and increase the economic benefits for operators.
Sector coupling and new consumption patterns
Solar energy integration can be improved through new consumption patterns. Heat pumps, electric vehicles, and power-to-heat systems can help directly consume solar power during peak generation times. This reduces grid feed-in and improves system integration.
Sector coupling also offers opportunities to make sensible use of surplus solar power. The production of hydrogen or other energy sources could help balance the fluctuating production of renewable energy.
Economic assessment of the current situation
Amortization and profitability
Despite the reforms under discussion, photovoltaics remains an attractive investment for many households. A modern photovoltaic system typically pays for itself in eight to twelve years under 2025 conditions. The exact payback period depends on various factors, particularly the proportion of self-consumption and local electricity prices.
Self-consumption has become the decisive factor for profitability. While the feed-in tariff is now only 7.86 cents per kilowatt-hour, households can save 28 to 35 cents for each kilowatt-hour of self-consumption. A high proportion of self-consumption is therefore more important than a high feed-in.
Influence of storage systems
Battery storage can significantly improve the economic efficiency of solar systems. They allow the self-consumption rate to increase from approximately 30 percent without storage to up to 70 percent with storage. This leads to significantly higher savings and shortens the payback period of the entire system.
The costs of battery storage have fallen significantly in recent years and are expected to continue to fall. This makes them attractive to more and more households, regardless of potential subsidy cuts. The combination of solar power and storage also offers greater security of supply and independence from the electricity supplier.
Regional differences
The economic viability of solar systems varies considerably by region. In southern Germany, with higher solar irradiation, production costs are lower than in northern Germany. Even inexpensive systems in northern Germany have production costs of at least 8.7 cents per kilowatt hour, which could limit their economic viability without subsidies.
These regional differences must be taken into account in any reform of the subsidy structure. A complete elimination of subsidies could lead to hardly any solar systems being installed in less sunny regions, which would slow the expansion of renewable energies across Germany.
Future prospects and reform options
Gradual reform instead of radical cuts
Many experts advocate for a gradual reform of solar subsidies rather than a radical cut. An overly abrupt change in the framework could lead to a slump in new installations, as was already observed after previous subsidy cuts. A planned transition phase would give the industry time to adjust to the new conditions.
Possible reform steps could include a further reduction in the feed-in tariff, the introduction of minimum requirements for intelligent control, or a gradual contribution to grid costs. It would be important that the changes be announced well in advance to ensure planning certainty.
New business models
The changing framework conditions are also opening up new business models for the solar industry. Direct marketing, power purchase agreements, and tenant electricity could gain importance if the traditional feed-in tariff is eliminated. However, these models often require larger systems and professional marketing.
Services related to energy management and flexibility could also become more important. Companies that offer intelligent control systems or market storage could benefit from these changing requirements.
European perspective
The discussion about solar subsidies is taking place not only in Germany, but also in other European countries. It is clear that different approaches are being pursued. Some countries rely more heavily on market mechanisms, while others continue to rely on government subsidies.
A coordinated European approach could help avoid distortions in the internal market and make the energy transition more efficient. This particularly concerns the issue of grid costs and their distribution among the various actors in the energy system.
Conclusion and evaluation
The debate initiated by RWE CEO Markus Krebber on the financing of solar energy and grid infrastructure touches on fundamental issues of the German energy transition. His call for solar plant operators to contribute to grid costs is part of a necessary discussion about the fair distribution of the burdens and benefits of the energy transition.
The arguments for reform are certainly justified. The falling costs of solar systems, rising grid fees, and questions of social justice require an adjustment of existing structures. At the same time, the risks of too radical a change must not be overlooked. A slump in solar expansion would jeopardize climate goals and destroy important industrial structures.
The key lies in a balanced reform that takes diverse interests into account. Technical solutions for better system integration, fair cost distribution, and predictable transition phases are crucial. The energy transition is too important for the climate and Germany's future to be jeopardized by hasty or unilateral decisions.
Ultimately, the debate also demonstrates that the energy transition is entering a new phase. While previously the focus was purely on expansion, the focus now is on the intelligent integration and fair financing of an increasingly complex system. Mastering this challenge will be crucial to the long-term success of the German energy transition.
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