Feed-in Premium (FIP) Mechanism
In Germany, most new large-scale renewable energy installations, including onshore wind, receive support through a sliding Feed-in Premium (FIP), known as the Market Premium (Marktprämienmodell).
The FIP is the difference between the "Reference Value" (the price awarded in the auction) and the "Market Value" (the average market price achieved by the power, adjusted for the specific technology and time of generation).
FIP Payment = Reference Value - Market Value
The producer sells the electricity directly on the market and receives the FIP as a top-up payment.
The "Ceiling" Price
The "ceiling" or maximum price is set by the Bundesnetzagentur (Federal Network Agency) for the auctions.
This is the highest price (in cents per kilowatt-hour, or ct/kWh) that bidders are allowed to submit in the tender.
Ceiling Price (Maximum Bid): For example, the ceiling for onshore wind auctions in 2024 and 2025 was set at 7.35 ct/kWh.
The "Actual" Price (Reference Value):
The "actual" price is the Reference Value/Award Price that a successful project secures in the auction. This is the price that is used to calculate the FIP.
Actual Price (Reference Value): This is the winning bid price, which is generally below the ceiling price.
The Bundesnetzagentur has kept the ceiling stable because the "upward trend in bid volumes has not yet led to a significant decrease in the award prices" (meaning the actual winning bids are still relatively high).
In summary
Ceiling Price: The maximum allowed bid in the onshore wind auctions (e.g., 7.35 ct/kWh for 2024/2025). This price is a cap on the Reference Value.
Actual vs. Ceiling: The actual awarded price (Reference Value) in the auction is typically lower than the ceiling price. The FIP payment is then calculated based on this Actual Award Price minus the actual market revenue.
Results Show Increasing Competition and Decreasing FiP
Maximum Bid Price (Ceiling): The ceiling was adjusted upward significantly in 2023 (from ct/kWh to 7.35 ct/kWh) due to rising costs for construction, financing, and operation. This higher ceiling has been maintained through 2025.
Near-Ceiling Bids (2023-2024): After the ceiling was raised, the Average Award Price (Actual) came very close to the Maximum Bid Price (Ceiling) for all of 2023 and most of 2024. This indicates that developers needed the full support price to cover their increased costs, leaving very little competitive margin.
Falling Prices (2025): Starting in late 2024 and continuing into 2025, the Average Award Price began to show a noticeable decline, moving further below the ceiling. This suggests that competitive pressure has increased, likely due to a better project pipeline (more permits) and potentially stabilized or reduced costs, leading to lower subsidy requirements. The auction in September 2025, for example, saw the average bid fall to 6.57 ct/kWh, a significant drop.
