The European Commission said on Dec. 21 it had approved the German government's 28 billion euro ($29.69 billion) support scheme for renewable energy, which is aimed at rapidly expanding use of wind and solar power.

The policy, which replaces an existing renewables support scheme, runs until 2026 and is designed to deliver Germany's target to produce 80% of its electricity from renewable sources by 2030.

The European Commission said the scheme was "necessary and appropriate" to promote renewable energy and cut planet-heating emissions and that its positive environmental impact outweighed possible distortions of competition.

"The German Renewable Energy Act 2023 scheme will contribute to further decarbonize electricity production," EU competition policy chief Margrethe Vestager said in a statement.

The scheme pays a premium to renewable energy producers, on top of the market price they receive for selling their power. Small generators can receive a feed-in-tariff providing a guaranteed price for their electricity.

Expanding clean energy production will be key to meeting Germany's goal to eliminate its net greenhouse gas emissions by 2045, as well as partially filling the energy supply gap caused by Russia cutting off most of the gas it sends to Europe this year.

Berlin's response to Europe's energy crunch has attracted criticism from some EU countries. Concerns focused on Germany's broader plan to spend up to 200 billion euros in subsidies to shield consumers and businesses from soaring energy costs - a sum that many other states cannot afford, and which some said would distort competition in the European Union's single market.

The Commission said Berlin's renewable state support was limited to the "minimum necessary" and included safeguards to minimize competition distortions. Companies must bid for the aid in government tenders.

To avoid compensating companies twice, Germany will also phase out existing support for renewable producers in times of negative power prices by 2027.