Support schemes for renewable energy

Renewable energy projects have become increasingly competitive. Decreasing investment costs and evolving energy market conditions, coupled with continuous EU and national promotional efforts have consolidated this trend over the past years. As a result, even without public financial support, energy markets alone can deliver most of the additional renewable energy capacity required in the EU. 

At the same time, given the increased ambition under the European Green Deal and REPowerEU, national support schemes remain an important tool to stimulate further investment in the sector. These public interventions need to be designed carefully, so as to avoid distorting the functioning of the energy market and increasing energy costs for European households and businesses.

Support schemes for electricity from renewable sources

In line with Article 4 of the Renewable Energy Directive, EU countries are obliged to allocate support for electricity from renewable sources in an open, transparent, competitive, non-discriminatory and cost-effective manner. Exemptions apply to small-scale installations and demonstration projects as well as to peripheral regions and small islands.

According to the directive, support schemes shall incentivise the integration of electricity from renewable sources into the electricity market in a market-based and market-responsive way. EU countries may also consider establishing mechanisms to ensure regional diversification in the deployment of renewable electricity, particularly to achieve cost-efficient system integration.

In addition, the directive requires EU countries to publish a long-term schedule outlining the expected allocation of support, including indicative timing, frequency, expected capacity, budget, and eligible technologies, where applicable.

Tenders for renewables

Across the EU, operational support for utility-scale projects, such as contracts for difference, certificate schemes, tariffs or premiums, is most often allocated on a market basis through competitive tenders (auctions).

Announced as part of the European Wind Power Action Plan in October 2023, the Recommendation and Guidance document are informed by feedback received through a month-long Call for Evidence. 

Prior to this, a study published in November 2022 analysed how tendering procedures, as one of the forms of public support, are fostering the deployment of renewables as part of the broader energy system transition. This study provided the basis for the Commission Report on the performance of support for electricity from renewable sources granted through tendering procedures in the EU, also published in November 2022.

Net-Zero Industry Act

Under the Net-Zero Industry Act (NZIA), the Commission has adopted rules requiring the inclusion of specific non-price criteria in EU country auctions for the deployment of renewable energy, including responsible business conduct, cybersecurity, and contributions to sustainability and resilience. 

From 30 December 2025, the new rules must be applied to 30 % of auction volumes, or 6 GW per year per EU country. 

Guidance on two-way Contracts for Difference (CfDs) 

In December 2025, the Commission published guidance on the design of two-way contracts for difference. 

Contracts for difference (CfDs) are contracts between a power-generating installation operator and a counterparty, usually a public entity, designed to provide minimum revenue protection while limiting excess remuneration. 

Smarter-designed CfDs can help lower the overall costs of the electricity system in several ways. They can 

• reduce investment costs by providing greater revenue certainty
• maximise the value of investments by ensuring the electricity system operates efficiently
• minimise renewable curtailment through appropriate investment incentives
• lower energy costs by attracting additional low-cost clean generation to the market and displacing high-cost fossil-fuel generation