The measures were approved by parliament yesterday (18 June), ending months of arguments over imposition of a setback rule of 1,000 metres from the nearest dwelling.
The agreement was reached as part of a wider discussion between state governments and Merkel about working towards the"rapid expansion of renewable energies and the necessary networks" that was "urgently required," according to Germany's Handelsblatt.
This also included increasing the target for offshore wind to 20GW by 2030 and capping the renewable surcharge paid by consumers.
The state and federal governments agreed to work on a mechanism that could keep track of the country's progress towards reaching its goal of sourcing 65% of electricity from renewable sources by 2030, according to Handelsblatt.
Wolfram Axthelm, executive director of the German wind energy association (BWE), welcomed the move for states to be allowed to set distancing rules. However, he warned that other challenges facing the German wind industry - especially repowering - had not yet been addressed,
He added: "Here you need flexible rules that secure the areas for energy generation.
"The legislator should clarify and facilitate the repowering of such plants in order not to jeopardize the goals set by politicians for a share of 65 percent of renewables in the electricity mix by 2030. Effective repowering is an important component in the success of the energy transition."
Another measure agreed by the states that won parliamentary approval yesterday was to drop the 52GW limit on solar PV capacity.