Germany's power sector is undergoing major change as higher demand, renewable growth and the coal phase-out reshape its energy system.

Installed renewable capacity is set to rise from about 73% of the power mix in 2025 to nearly 88% by 2035, while renewable generation could reach close to 80% over the same period, according to GlobalData.

Solar PV, offshore wind and onshore wind are expected to lead much of this expansion. Gas-fired generation is likely to serve as flexible back-up as thermal capacity falls.

Germany's new capacity market, due to be fully operational by the end of 2027, aims to bolster supply security as coal is phased out by 2038 and nuclear power stays offline.

Meanwhile, the EEG-2027 reform will alter how renewable electricity is supported, with fixed feed-in tariffs being phased out.

Electricity demand is projected to climb from roughly 466 TWh in 2025 to over 576 TWh by 2035, adding pressure to invest in transmission infrastructure.

New high-voltage links will be required to carry electricity from offshore wind projects in the North Sea and Baltic Sea to industrial centres in southern Germany.

Delays to transmission projects could raise curtailment (deliberate reduction in electricity generation) and lead to supply constraints.

Investment is expected to focus on renewables, along with hydrogen, storage, flexible generation and long-distance transmission, as Germany pursues 80% renewable electricity by 2030 and climate neutrality by 2045.