The German Institute for Economic Research (DIW Berlin) analysed developments in key energy transition technologies in the first half of 2026 in its latest Energy Transition Monitor. The study concludes that while Germany's energy transition is making progress, it lacks the necessary momentum in crucial areas. Photovoltaics, in particular, which saw significant growth in previous years, is no longer keeping pace with the increasing expansion targets.
Although the installed photovoltaic capacity currently still exceeds the targeted expansion path, this lead could soon be lost. The expansion rate recently amounted to just under 80 percent of the future required level, down from almost 90 percent in the preceding half-year. The expansion of onshore wind power also continues to develop too slowly. While offshore wind power was accelerated by new large-scale wind farms coming online, long lead times and hesitant investments jeopardise target attainment.
Deficiencies in Heat and Transport, and System Flexibility
Progress in heat pumps and electric vehicles must be assessed as insufficient. Wolf-Peter Schill, Head of the Transformation of Energy Industry Research Department at DIW Berlin, emphasises that a real breakthrough in these areas, which would be crucial for reducing dependence on oil and gas imports, is not materialising. In the first quarter of 2026, almost every second new heating system sold was a heat pump, yet fossil heating systems continued to be sold in significant numbers. The same applies to electric mobility: almost one in four newly registered vehicles in the first half of 2026 was battery-electric, although internal combustion engines still dominate.
Schill notes that the electrification of heat and transport is central to achieving climate neutrality. He expresses concerns that the new building modernisation law is unlikely to significantly accelerate the uptake of heat pumps, and the debate about a possible end to the internal combustion engine phase-out could hinder electric mobility.
Challenges in the Electricity System and Storage Market
The integration of renewable energies into the electricity system requires increased efforts. In the first half of 2026, negative electricity prices occurred for 291 hours. The calculated losses from electricity generation during these periods reached a new high of around EUR 430 million. This development indicates a lack of flexibility in the electricity system, as electricity prices fall at midday due to high solar power generation and rise in the evening. Storage capacities and other flexibility options are not growing at the same pace as generation from wind and solar energy.
Nevertheless, there is a positive development in the market for large-scale batteries. Their expansion has almost doubled compared to the previous half-year, and the grid-connected storage capacity increased by 50 percent within six months. A faster provision of grid connections could further accelerate this expansion.
- —Photovoltaic expansion rate is just under 80 percent of the target path.
- —Progress in heat pumps and electric vehicles assessed as insufficient.
- —Negative electricity prices lead to significant losses in the energy system.
- —Market for large-scale batteries shows positive, but expandable, growth.
Schill emphasises that the conditions for a significant acceleration of the energy transition are now more favourable than before, due to improved framework conditions and technological progress. He states it is crucial to adhere to the expansion targets and to push the electrification of heat and transport more decisively to achieve climate protection goals and reduce dependence on fossil energy imports.
