EU approves €7.9 billion for bioenergy development in Germany

As the world gallops towards just energy transition, Germany has received the European Union’s green light to channel €7.9 billion into its biomass and biogas sector under state aid rules. The funding, part of Berlin’s new biomass package, will back climate-friendly heating systems and expand renewable electricity generation.

Biogas is seen as a crucial stabiliser in Germany’s energy transition, as it can be stored and dispatched when solar and wind power fall short. To encourage flexibility, subsidies will cover only a limited number of operating hours, ensuring plants generate power during peak demand. The government also raised the “flexibility surcharge,” rewarding plants that adapt output to grid needs.

Katherina Reiche, Economy Minister, stated, “Bioenergy has a future and an important role to play in our electricity system. Investment security is now being created for bioenergy and for around 2,500 plants in Germany.”

The first wave of subsidies will be available in the upcoming tender round on 1 October. Germany’s Federal Network Agency (BNetzA) has raised the annual tender volume for 2025 to 1.3 gigawatts, with 813 megawatts open for bidding in the next round.

The industry believes that the investment will help future plants in not only safeguarding electricity supply but also supporting rural heating infrastructure, helping advance Germany’s heat transition.

However, experts caution that bioenergy expansion has limits. Large-scale cultivation of energy crops raises concerns about land use, monocultures and biodiversity loss. Balancing sustainability with supply security remains a challenge.

The European Commission, that is required to vet state aid to prevent market distortions, concluded the aid package was both necessary and proportionate to sustain bioenergy’s role in Germany’s energy mix. Without intervention, many older plants faced closure as existing subsidies expired, threatening the sector’s stability.