Germany’s electricity sector is on the cusp of ‘transformative change’, as renewable capacity expands, coal and nuclear power are phased out, and policy reforms kick into gear, according to a new report by GlobalData.
According to GlobalData‘s report, Germany Power Market Trends and Analysis by Capacity, Generation, Transmission, Distribution, Regulations, Key Players and Forecast to 2035, renewables are set to account for around 88% of Germany’s installed power capacity by 2035, up from approximately 73% in 2025.
Renewable power generation
Renewable generation is projected to approach 80% over the same timeframe, as offshore wind, solar PV, and onshore wind emerge as the ‘primary growth engines’. Gas-fired generation is expected to remain important however, as a ‘flexible backstop’, GlobalData noted.
Germany’s EEG-2027 reform mechanism, which paves the way for a renewables-first power grid, is expected to be fully functional by the end of 2027, paving the way for the phasing out of coal by 2038, and on the back of the decommissioning of Germany’s nuclear power network.
“New projects will typically enter the market via competitive auctions or direct marketing arrangements, with smaller-scale installations receiving transitional support or bonuses during the switch,” commented Attaurrahman Ojindaram Saibasan, power analyst at GlobalData.
“Larger projects must now optimise their generation, location, and operational profile, rather than merely depend on guaranteed compensation, thereby pushing the sector toward market-oriented performance.”
Transmission investment
Annual electricity consumption in Germany is expected to grow from around 466TWh in 2025 to 576TWh by 2035, highlighting a ‘critical’ need for transmission investment, GlobalData noted. As offshore wind farms come onstrream, failure to invest in transmission routes risks renewable output being wasted.
“Alongside these macro shifts, market dynamics are growing more complex,” Saibasan added. “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.” Read more here.
