Economy and Energy Minister Katherina Reiche unveiled a long-awaited report commissioned by her ministry, and set out measures she said would reduce the burden of the transition on Europe's sluggish top economy.
"The energy transition can only succeed through more pragmatism and realism," said the minister, from Chancellor Friedrich Merz's centre-right CDU party.
"Energy policy decisions must not lead to misguided investments or overregulation, but must focus on the market."
One key area she focused on was renewable energy subsidies, which she said must be "reviewed regularly to assess their economic benefits and reduced to the absolutely necessary level".
The report, drawn up by consultancy BET and the EWI institute, noted that renewable sources sometimes provide more electricity than is needed, but too little during periods of low sunlight and wind.
The gap then needs to be filled with fossil fuels.
In particular, it called for the abolition of a subsidy for solar farms that guarantees a set level of payment.
It is a marked shift from Germany's previous coalition, in which the Green party headed the economy ministry and renewable subsidies were a key tool to speed up the energy transition.
Reiche, whose party has been in power since May in coalition with the centre-left SPD, however insisted Monday that the government was committed to the current goal of increasing the share of renewable electricity consumed in the country to 80 percent by 2030.
Germany aims to achieve greenhouse gas neutrality by 2045.
Reiche's other recommendations included reducing excessive regulation and always taking cost into account when planning further expansions of renewables.
Leading industry federation the BDI praised the report as providing the "foundation for significant efficiency improvements in the energy system".
"This will make it possible to combine financial viability, industrial competitiveness, and climate neutrality," it said in a statement.
But the NGO Environmental Action Germany accused Reiche -- who has also proposed building more gas-fired power plants -- of relying on "the short-sighted proposals of the gas lobby".
Proposals to reduce subsidies "amount to the dismantling of important support programs," said the group in a statement.
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