German Court Upholds Legality of Profit Cap for Energy Crisis Relief

The Federal Constitutional Court ruled that the temporary profit cap on renewable energy producers during the 2022 energy crisis was justified and constitutional.

The Federal Constitutional Court rejected complaints from 22 renewable energy producers challenging the legality of profit caps imposed under the 2022 Strompreisbremse (electricity price cap) law.
The court ruled that the measure, which redirected excessive profits to stabilize energy prices for consumers, was a justified and proportionate response to the exceptional energy crisis caused by the Ukraine war.
From December 2022 to June 2023, 90% of profits exceeding typical investment expectations were collected, amounting to €750 million, far below the initially anticipated €13.5 billion.
The court clarified that the profit cap was not a tax or a special levy but a redistribution mechanism benefiting heavily burdened consumers without generating state revenue.
While the ruling acknowledged an impact on the business freedom of energy producers, it deemed the temporary measure necessary to address the crisis-induced market distortions.