GERMANY Trends and Developments Contributed by: Udo Olgemoeller, Nicolaus Ascherfeld, Johann von Pachelbel and Janina Müller, A&O Shearman
grid-related matters. Janina works closely with the firm’s M&A team in Hamburg, ensuring seamless integration of regulatory and deal execution workstreams. She is recognised for her pragmatic, solution-oriented approach in navigating evolving energy market frameworks.
A&O Shearman Große Gallusstraße 14 60315 Frankfurt am Main Germany Tel: +49 69 2648 5000 Email: liliane.baab@aoshearman.com Web: aoshearman.com
Germany’s power sector is undergoing acceler- ated structural transformation. Ambitious renewable energy targets, the completed nuclear phase-out, an impending coal exit, the introduction of a central capacity market, and a fundamental reconfiguration of network ownership are reshaping the investment landscape. For renewable energy investors, project finance banks and institutional lenders, the regulatory and commercial environment in 2026 presents both significant opportunity and heightened complexity. Renewable Energy Expansion Legislative framework and deployment The Renewable Energy Sources Act ( Erneuerbare - Energien - Geset z – EEG) remains the central legisla- tive instrument driving renewable expansion. Recent amendments have raised deployment targets, recali- brated auction design to improve realisation rates, and introduced stronger regional steering mecha- nisms. The Solarpaket I has simplified permitting and expanded support for rooftop photovoltaics, whilst accelerated permitting measures building on the 2023 Wind - an - Land - Gesetz have produced a notable increase in onshore wind permit issuance, materially improving bankability for lenders. The offshore wind sector continues to be governed by the Offshore Wind Energy Act ( Windenergie - auf - See - Gesetz – Wind- SeeG), with its centralised planning, pre-survey and
auction regime providing regulatory certainty that is attractive to institutional investors and export credit agencies. Revenue mechanisms and financing implications A critical development for financiers is that new assets no longer receive remuneration during periods of neg- ative wholesale electricity prices, and the sliding pre- mium has been aligned to technology-specific annual market values. This introduces a merchant revenue element into previously subsidy-protected cash flows, with implications for debt sizing, reserve accounts and coverage ratios. The trend towards hybrid financing structures – combining project finance debt with mer- chant tail risk and corporate power purchase agree- ment (PPA) revenue – is well established and likely to intensify. Network Ownership and Capital Mobilisation Transmission: the remaking of TSO ownership Perhaps the most consequential structural develop- ment in Germany’s grid sector is the reconfiguration of transmission system operator (TSO) ownership. Germany’s four TSOs (50Hertz, Amprion, TenneT and TransnetBW) face an investment challenge of historic proportions, requiring capital on a scale that exceeds what incumbent shareholders alone can provide.
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