Energy in the 2025 coalition agreement: what the future government is planning

In the coalition agreement, the CDU/CSU and SPD commit to the German and European climate targets and Germany’s climate neutrality by 2045. To this end, the coalition partners want to continue to drive forward the expansion of renewable energies in particular and remain committed to EU emissions trading. At the same time, the costs for companies and citizens are to be reduced.

In detail, the coalition has committed to a series of targets, the implementation and design of which remains to be seen. Many measures already initiated under the previous government will be continued and adjusted by the coalition:

Increasing the energy supply

The coalition partners want to increase the energy supply and thereby stabilize or even reduce electricity costs. To this end, all the potential of renewable energies is to be utilized: Solar and wind energy, bioenergy, hydropower, geothermal energy, climate-neutral molecules and storage capacities. Climate-neutral molecules are solid, liquid and gaseous energy sources that are used in particular in sectors that are difficult or impossible to electrify, such as aviation and shipping. The future German government also intends to strengthen innovative technologies such as wastewater heat, heat recovery and airborne wind power or high-altitude wind energy. With regard to solar energy, operators of existing plants are to be given incentives for grid- and system-friendly feed-in and the dual use of sun and space, for example through parking lot, agricultural and floating PV, is to be facilitated. All of these projects, as well as the full implementation of the third Renewable Energy Directive (RED III), will require further (extensive) amendments to the EEG.

Revision of the power plant strategy

In this context, the power plant strategy in the future Power Plant Safety Act is also to be revised: Up to 20 GW of gas-fired power plant capacity is to be built by 2030. The coalition agreement no longer requires a proportion of H2-ready power plants. New gas-fired power plants are to be built primarily at existing power plant sites. In addition, the potential of domestic gas production is to be utilized. The synchronization of wind power and grid expansion is also to be improved, for example through the designation of temporary bottleneck areas. In principle, however, this is already provided for in the grid expansion plan in Section 14d (4) No. 1 EnWG.

Storage expansion

The coalition partners also want to make the electricity market more flexible by expanding storage. The expansion of storage is to be designed to serve the system and data centers, storage facilities and large renewable energy generators are to be located to serve the grid. Energy storage facilities are to be recognized as being in the overriding public interest and also privileged in connection with privileged renewable energy generation plants (so-called co-location projects). However, this is already stipulated in Section 11c EnWG for energy storage systems and in Section 2 EEG for renewable energy systems.

Financing is to be provided by the special fund and the investment fund

The coalition agreement raises considerable questions about financing. According to a BDEW study, 721 billion euros will need to be invested by 2030 in order to achieve the energy transition. Public authorities cannot meet this alone. It remains to be seen how the special fund will be implemented and allocated to the various sectors. One possible implementation could be the creation, increase and expansion of funding programs. What is certain is that a large part of the amount for the energy industry from the special fund would already be absorbed by the announced cost reductions. This is because the reduction in electricity tax, the costs for the industrial electricity price as well as the reduction in grid fees and the abolition of the gas storage levy will result in enormous costs. It is more than questionable whether further investment in the energy infrastructure from the special fund and the investment fund, in addition to the cost reductions, will be sufficient for this.

Grid expansion and modernization

The future government also wants to push ahead with grid expansion and modernization and adapt it to renewable energies. It wants to achieve this by

• the free design and the superstructure at the grid connection point,
• the digitalization of the networks,
• accelerating and simplifying the rollout of smart meters and
• the strengthening of dynamic electricity tariffs.

At the end of the coalition negotiations, the CDU/CSU prevailed in the design of HVDC transmission grids in favor of overhead lines. A corresponding legislative clarification should be implemented in the near future.

Acceleration of planning and approval procedures

In order to drive forward the energy transition, the coalition partners have decided to reduce bureaucracy, in particular by speeding up planning and approval procedures. The following measures should make this possible:

• Continuation and further development of the federal-state process to implement the acceleration pact,
• swift implementation of RED III (Renewable Energies Directive),
• Examination of the introduction of a pool of experts, the extension of the presumption of consent and the extended protection of replacement facilities,
• Facilitation of heavy-duty transportation of energy systems.

Long planning and approval procedures are currently still a major obstacle to the expansion of renewable energies. In addition, there are long waiting times for grid connection. The coalition agreement does not explicitly address these problems. The acceleration package could be implemented quickly, as around 90 percent of the projects have already been implemented or are in progress (as of February 28, 2025). The Ampel had already introduced a bill “to implement the EU Renewable Energy Directive in the areas of offshore wind energy and electricity grids and to amend the Federal Requirements Act”. The same applies to the draft bill for the implementation of Directive (EU) 2023/2413 in the areas of onshore wind energy and solar energy as well as for energy storage facilities at the same location.

Combined heat and power generation

The future governing coalition is in favor of combined heat and power generation. The Combined Heat and Power Act (KWKG) is to be adapted to the “challenges of a climate-neutral heat supply, flexibility and a capacity mechanism” by 2025. The law was last amended on April 1, 2025 in order to extend the funding for combined heat and power plants.

Heat

The CDU/CSU and SPD have agreed on the following measures for heating:

• The EU Internal Gas Market Directive is to be implemented swiftly. The implementation period ends in August 2026.
• Federal funding for efficient heating networks (BEW) is to be regulated by law and increased.
• The AVB District Heating Ordinance and the Heat Supply Ordinance are to be revised swiftly and create investment security. A bill to amend the AVB District Heating Ordinance was already introduced in the last legislative period.
• Furthermore, price supervision for transparent prices is to be strengthened.
• The Building Energy Act is to be amended and made technology-neutral.
• Introduction of an unbureaucratic arbitration board

Expansion of the hydrogen economy

In order to enable the hydrogen ramp-up, the coalition partners are aiming for the swift legal implementation of the European hydrogen strategy. In addition, hydrogen imports are to be improved through the expansion of cross-border and domestic infrastructure, funding instruments such as H2-Global and IPCEI projects are to be used and trustworthy certification systems for climate-friendly energy sources are to be introduced.

Nuclear energy

On the subject of nuclear energy, the CDU/CSU considered halting the dismantling of the reactors for the time being during the coalition negotiations and having a review carried out to determine whether it is still possible to resume operations at a reasonable technical and financial cost. However, this proposal was not accepted in the coalition agreement.

Promotion of CO2 capture and storage technologies (CCS) and utilization technologies (CCU)

By using CCS and CCU, CO2 can be captured from industrial waste gases or directly from the atmosphere and stored underground. A legislative package on carbon capture and storage (CCS) and carbon capture and utilization (CCU) technologies is to be presented immediately after the start of the legislative period. An overriding public interest in the construction of CCS/CCU plants and pipelines is to be established. In addition, the London Protocol is to be ratified and bilateral agreements with neighboring countries are to be sought.

These technologies can make a significant contribution to reducing CO2 emissions into the atmosphere. A regulation to create a CO2 pipeline network would be desirable, as the industry has so far been dependent on transportation by train, truck or ship. At the end of September 2024, the Bundestag had already discussed a corresponding draft bill to amend the Carbon Dioxide Storage Act (KSpG). However, this was not passed.

Reduction in energy prices

The coalition partners want to permanently reduce energy prices by at least 5 Ct/kWh. The following package of measures is planned:

• Reduction of the electricity tax to the minimum required by EU law (0.1 cents/kWh),
• Reduction in levies and grid charges,
• Grid fees are to be “permanently capped”,
• permanent extension of electricity price compensation and expansion to other sectors and
• special relief for energy-intensive companies that cannot be relieved in any other way through an industrial electricity price.

The reduction in energy prices is particularly important for energy-intensive companies. However, the planned reduction in electricity tax would now primarily affect private households, as many energy-intensive companies had already benefited from lower electricity tax rates due to the existing opportunities for development.

What the coalition agreement means for the energy industry

Although important aspects of the energy industry are being addressed, it is still unclear in many cases what the specific form will take. The new coalition wants to continue to pursue some of the last government’s draft laws, although it remains to be seen to what extent it will amend the drafts.

Companies can expect falling energy prices if the planned measures are implemented.
Finally, a more concrete positioning with regard to investment activities would also be desirable from the perspective of the cities and municipalities. After all, they also bear great responsibility with regard to energy-related restructuring projects, which, in view of the weak municipal budget situation, will hardly be possible without extensive support from the federal government. Examples of this include upcoming investment measures in municipal heating planning.