Germany's Court Upholds Renewable Energy Revenue Policy

Germany's constitutional court deemed a policy requiring renewable energy producers to surrender excess revenues lawful, aiming to curb electricity costs during the energy crisis. The decision supports the Electricity Price Cap Act, amid protests from renewable energy operators who argued the approach unfairly targeted them.

Germany's constitutional court has ruled in favor of a government policy requiring renewable energy producers to forfeit excess revenues to curb escalating electricity costs during the 2022/2023 energy crisis. The ruling was prompted by a case brought by 22 renewable energy plant operators against Germany's Electricity Price Cap Act, which mandated the surrender of surplus earnings from electricity sold between December 2022 and June 2023.

The appropriated funds were channelled to cap electricity prices for both households and companies, amid an energy price surge following the Russia-Ukraine conflict and disruptions in Russian energy exports to Germany. The rise in energy costs has posed a challenge to German businesses, which are grappling with economic contraction for the second consecutive year.

Critics, including the complainants, contended that the measures disproportionately targeted renewable energy producers, while gas-fired power plants—deemed responsible for price hikes—were excluded. They argued relief should come from broader societal resources such as taxes. The verdict prevents a refund of around 750-850 million euros to operators, thus avoiding additional strain on Germany's public finances.

Stephan Harbarth, President of the constitutional court, defended the profit skimming, calling it a justified reaction to a unique crisis in the electricity market post-February 2022 Russian-Ukrainian war.

(With inputs from agencies.)