ABSTRACT China's rapid renewable energy (RE) expansion has intensified interactions between subsidy mechanisms, electricity market design and power system operation. Existing studies on international experience, particularly Germany's energy transition, largely emphasise descriptive policy comparisons, while offering limited quantitative insight into how subsidy reform affects market participation, price volatility, and generator revenues. This paper addresses this gap by analysing Germany's transition from fixed feed‐in tariffs to mandatory market participation supported by market premium and contract‐for‐difference‐type mechanisms. Using historical market data, subsidy payment records and plant‐level revenue simulations, the study evaluates the impacts of different support regimes on subsidy costs and renewable profitability. The results show that mandatory market participation reduces long‐term subsidy expenditures and allows renewable generators to achieve higher revenues than fixed tariffs in a majority of periods, albeit with greater exposure to price volatility. These findings indicate that market‐oriented support mechanisms can enhance efficiency while maintaining investment incentives, offering relevant insights for China's ongoing electricity market reform.
Jiang et al. (2026) studied this question.