Fossil fuel energy policy is undermining the energy transition: Saxony’s renewable energy sector is sounding the alarm

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The counterproductive energy policy at federal and state level is having an impact. It is now – once again – putting jobs and businesses at risk. A survey of Saxony’s renewable energy companies shows that the economic situation in the sector is deteriorating significantly. According to the two industry associations, the reasons for this include current reforms at federal level and the associated regulatory and economic uncertainty. As a result, climate targets, jobs and tax revenue for local authorities are at stake.

VEE Sachsen e.V. and KlimaUnion Sachsen are therefore jointly calling for continuity and reliability in climate and energy policy. This is because the energy transition has fundamentally served to decentralise supply and strengthen local value creation. The new EEG, however, reinforces the structures of the fossil fuel energy sector.

This assessment is based on a survey conducted by VEE among its member companies. Even though project utilisation is high at individual companies and new generation plants are being built, particularly outside Saxony, a clear trend is emerging: Without exception, all survey participants confirm that economic prospects since 2026 have worsened or even deteriorated significantly.

“The plants currently under construction were approved and awarded contracts three years ago,” explains VEE President Falk Zeuner. “If newly approved projects do not win tenders, the enormous time and financial investment in planning goes to waste. If tender prices are too low, even a slight deterioration in conditions means these projects can no longer be financed and, two years later, will not be built either.”

This would have significant economic consequences for project developers and workers in the energy sector, as well as for suppliers and industrial electricity customers, who must continue to expect highly volatile fossil fuel prices from imports in the medium term.

A host of obstacles for renewables

The reasons for the looming standstill are manifold. The conditions for future investment decisions have become noticeably more stringent. These include, in particular, the legislative changes brought about by the Grid Package and the amendment to the Renewable Energy Sources Act (EEG). The prospect of a possible redispatch reservation or the designation of grid congestion areas makes planning more difficult and undermines economic viability. The same applies to the increased burden posed by the local authority levy and the lease cap, which curtails the opportunities for the local economy to the benefit of grid operators. And last but not least, the sector is struggling with ever-longer waiting times for grid connections.

Added to this are problems already evident in current tendering processes, such as the persistently high level of oversubscription for onshore wind energy tenders, given the limited tender volume. A tender volume of around 2,500 megawatts was met with a bid volume of around 6,400 megawatts.

Added to this are significantly lower award prices, which in some cases mean that projects already approved can no longer be implemented profitably. The volume-weighted award price fell to 5.06 cents per kilowatt-hour – down from around 6.8 cents just a year earlier.

Saxony is also causing planning chaos

And on top of that, there is the Saxon dithering over priority wind energy areas, which many municipalities governed by conservative parties are using to drag their feet on designating these areas or, if possible, to prevent them altogether. For planners of new wind turbines, the situation is becoming completely unmanageable. Delaying and dithering seem to be the order of the day across almost the whole of Saxony. So far, priority areas have been designated only very sparingly in Saxony’s regional plans, meaning that many projects cannot benefit from simplified approval procedures.

The consequence, according to the VEE, is that some projects already approved today can no longer be implemented due to a lack of economic viability. The energy transition – a key driver of job creation which, according to a Bertelsmann study, was not due to reach its peak until 2025 – is already faltering significantly. According to a VEE survey, some companies are cutting jobs as a precautionary measure. Local authorities are also bearing the brunt, as they are missing out on tax revenue and dividends from local value creation; in the long term, Saxony’s industry will also suffer, as it already requires significantly more green electricity than is currently available.

“Every wind energy project that fails to materialise means lost investment, lost tax revenue and reduced regional value creation,” explains Matthias Schöneich, regional group coordinator for KlimaUnion Saxony. “For Saxony in particular, wind energy is a key economic factor that creates jobs, secures contracts for businesses and strengthens the region as an industrial hub by providing affordable energy. This requires reliability rather than constant uncertainty regarding the political framework.”

“The numerous planned legislative measures are clearly not coordinated with one another. The changes to grid access charges, for example, would once again put a strain on the EEG surcharge, which is actually supposed to be falling. A guiding hand is needed, because we require planning certainty,” says VEE President Falk Zeuner, appealing to federal policymakers. “Saxony’s local authorities are also bearing the brunt of this, as they could really do with the revenue from renewable energy plants.”