Linklaters successfully advises LEAG on €1.75 billion compensation for early lignite phase-out and transformation

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Andreas Fritz
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andreas.fritz@linklaters.com

Linklaters has advised Lausitz Energie Kraftwerke AG and Lausitz Energie Bergbau AG (LEAG) comprehensively in negotiations with the German federal government on compensation payments of up to €1.75 billion for the early phase-out of lignite-fired power generation and on its transformational realignment. LEAG, currently Germany's second-largest electricity producer, is repositioning itself against the backdrop of the coal phase-out in order to be able to operate competitively in its core and growth markets through independent subsidiaries.

By signing the public law agreement between the Federal Government and LEAG on 11 December 2025, the parties finalised the terms and established the conditions for the disbursement of the first instalment of the compensation payment at the end of this year. The European Commission had approved the compensation on November 18, 2025, as compliant with state aid law. LEAG was thus able to bring the EU state aid proceedings on the admissibility of compensation payments for the early phase-out of coal, which had been ongoing since March 2021, to a successful conclusion following intensive negotiations.

The compensation constitutes a key component in securing LEAG’s recultivation and site rehabilitation obligations in the federal states Brandenburg and Saxony. LEAG's parallel transformation process towards climate-neutral energy generation enables investments in future technologies that create new jobs in the region and sustainably improve Germany's overall CO₂ balance. The advice provided by Linklaters encompassed corporate law, state aid law, public law, tax law, environmental and energy law, as well as economic matters relating to the derivation and structuring of the compensation components, designed to ensure appropriate compensation for LEAG and secure an orderly transition to a climate-neutral energy system.

The Linklaters team was led by Staffan Illert (Partner, Corporate/M&A), Dr. Jan Endler (Partner, State Aid Law/Public Commercial Law) and Oliver Rosenberg (Partner, Tax).

Other team members included Mirko König (Counsel, Corporate/M&A), Rico Kaßmann (Counsel), Dr. Ferry Bühring (Managing Associate), Annika Sokolka (Associate) and Alexandra Wrede (Associate) (all Public Commercial Law), Christopher Bremme, (Of Counsel), Julia Sack (Counsel), Andreas Hofheinz-Bartole (Associate), Dr. Ruth-Jeannette Losch (Senior Associate) (all Energy Law), Dr. Anna-Katharina Lohbeck (Counsel, TMT), Kirsten Placke (Counsel, Tax), Nadine Kaiser (Associate, Corporate/M&A), Sebastian Meyn (Managing Associate, Environmental and Planning Law) and Dr. Max Fuss (Managing Associate, Tax).