Overview
High and further increasing volatility of power prices due to the expansion of renewables on the one hand and significantly decreasing prices for battery cells in recent years on the other hand have led to a highly attractive market environment for battery storage (BESS) projects in Germany. The German legal framework for BESS projects is currently also in a process of changes: The German parliament adopted a comprehensive energy reform package on 31 January 2025, which includes relevant changes for BESS projects with the aim to further support the growth of storage capacities in Germany. Further current developments arise from the recent positioning of the German Federal Network Agency (Bundesnetzagentur – “BNetzA”) on specific legal matters such as grid connections or construction cost subsidies (Baukostenzuschüssen).
In the following, we provide an overview of the recent developments of the legal framework of BESS projects and outline which obstacles to BESS projects still require further efforts by the new German government.
1. LEGISLATIVE CHANGES BY THE ENERGY REFORM PACKAGE 2025
On January 31 2025, the German Parliament adopted a comprehensive energy reform package which includes, inter alia, the following changes for BESS projects which are expected to enter into force in March 2025:
Flexible grid connection agreements
The reform package introduces the possibility of grid operators to offer flexible grid connection agreements – FCAs – (flexible Netzanschlussvereinbarungen) to their customers, which in particular allow the use of so-called “overbuilding” (Überbauung) and “cable pooling”. The new regulations are aimed at enabling a controlled, grid-supportive use of energy, especially at times of peak loads or oversupply, and reflect what has already partly been implemented in practice by grid operators at certain voltage levels. Plant operators can now choose a grid connection point that is already used by other plants of different types, including BESS (cable pooling). This may result in the installed capacity of a renewable energy plant and BESS project together exceeding the available grid connection capacity (overbuilding). In such cases, a flexible grid connection agreement between the grid operator on the one hand and the connected users on the other hand is required to control the feed-in in a controlled manner.
Marketing options under the EEG for co-located BESS
BESS can provide for an economically viable business model if co-located with onshore wind and solar PV plants whose generated electricity is in turn subsidized under the EEG. For this operational model, the energy reform package includes relevant changes to Section 19 EEG with the aim to further optimize the flexible usage options of BESS project. In the future, BESS operators will be able to choose between the following three options:
- Exclusivity option (Ausschließlichkeitsoption – Section 19 (3a) EEG-new): Storage and feed-in exclusively of renewable electricity (green electricity).
- Differentiation option (Abgrenzungsoption – Section 19 (3b) EEG-new): This option allows for a mixed use of the BESS, i.e. for storage of both grey and green electricity, and the different electricity quantities are treated differently in order to calculate the exact quantity of renewable electricity eligible for renewables remuneration.
- Lump-sum option (Pauschaloption – Section 19 (3c) EEG-new): This option allows for a lump-sum renewables remuneration without exact measurement of the respective electricity quantities and is designed for smaller plants to allow the use of BESS without a too high administrative burden. This option is only available to operators of smaller solar plants with a maximum installed capacity of 30 kW.
The actual implementation of the two latter options still depends on further specifications by the Federal Network Agency (“BNetzA”), which is obliged to define the specific requirements for the quantities of electricity eligible for EEG remuneration at the latest by 30 June 2026.
2. FURTHER DEVELOPMENTS DUE TO THE POSITIONING OF THE BNETZA
(Failed) attempt to establish a new grid connection procedure
The attractive market environment for BESS projects has recently led to a sharp increase in grid connection requests which currently sum up to more than 200 GW only for BESS above 1 MW. Given the increasing shortage of grid connection capacities, BNetzA has published a consultation paper end of last year in which the agency presented its favored so-called “repartitioning model” (Repartierungsmodell) for discussion. According to this model, available grid connection capacities shall be allocated equally on specific dates, with a pro rata (proportional to the amount of requested capacity) or per capita (equal shares) distribution among all applicants. However, after evaluating the statements of market participants in February 2025, the BNetzA recently withdrew from further developing a position paper, as the repartitioning model it proposed could not gain consensus in the market.
As a result, it remains the responsibility of the individual, more than 850 German grid operators, to develop and apply a procedure for allocating grid connection capacities. There is thus no uniform approach of grid operators for the allocation of grid capacities, even though the “first come, first served model” is still the most frequently used procedure by grid operators.
Position paper on construction cost subsidies
Construction cost subsidies are economically relevant for the development of BESS projects, as they can make up to 15% of the investment costs. The handling and permissibility of construction cost subsidies has been controversial in practice to date and is the subject of ongoing legal proceedings at the Federal Court of Justice (BGH) in Germany.
Notwithstanding, BNetzA has published a new position paper on construction cost subsidies for BESS end of last year, in which it upholds its existing position that grid operators are basically entitled to charge construction cost subsidies for grid connections of BESS projects above the low voltage. BNetzA has made further adjustments in relation to the calculation based on the existing capacity price model (Leistungspreismodell) and has introduced the concept of a differentiated discount scheme: while TSOs have the option of granting discounts of up to 80% on construction cost subsidies, particularly in northern Germany (control areas of TenneT and 50 Hertz), this does not apply to DSOs or to TSOs in southern Germany. This means that significant local cost differences may arise.
3. REMAINING CHALLENGES FOR BESS PROJECTS AND NEED FOR FURTHER LEGAL ADJUSTMENTS
Despite the previous legislative changes, further amendments to the legal framework are necessary to make the development and expansion of BESS as efficient as possible. These include the following areas for improvement.
Planning: BESS as privileged projects
BESS projects are typically built in so-called outer areas (Außenbereich) and are therefore only permissible without a prior zoning plan procedure if they qualify as a so-called “privileged project” pursuant to Section 35 (1) nos. 1 to 9 BauGB. As BESS projects are not expressly listed in Section 35 (1) BauGB, and as most federal states have not yet defined uniform administrative practices in assessing whether BESS can still be regarded as privileged projects, BESS developers currently need to assess and discuss with the local authorities on a case-by-case basis whether a project is permissible in the outer areas, or whether they may need to undergone a significantly more burdensome and time-intensive zoning plan procedure first.
This lack of clarity with regard to planning procedures for BESS, while still understandable in times where the number of BESS projects was much smaller, is considered as increasingly unsatisfactory by BESS developers in times where a large upscaling of BESS is actually needed. The German legislator should therefore consider to adjust existing planning laws to appropriately reflect the importance of BESS projects as flexibility options.
Permitting: Further simplifications
Based on the applicable state building ordinance of the respective German federal state in which the BESS project is located, BESS projects currently require a building permit which is generally granted in a simplified building permit procedure. The first federal states (e.g. Bavaria) have recently introduced further simplifications to permitting law, according to which BESS projects may no longer require a building permit at all under certain circumstances (e.g. if the BESS project is to be classified as a privileged project according to Section 35 (1) no. 3 BauGB). It will be necessary to continue monitoring whether all federal states will now introduce more extensive and uniform simplifications for the permitting of BESS projects and whether and to which extent such developments will actually contribute to a further acceleration of the project development process.
Grid connection: capacity allocation and construction cost subsidies
A continued point of focus will be the future handling of construction cost subsidies and grid allocation procedures. While construction cost subsidies, correctly applied, may be a sensible tool to allocate BESS projects to the right regions and to limit the number of grid connection requests to projects that are actually pursued and to avoid duplicate connection requests for the same projects, the question remains how the existing procedures for grid connections of BESS projects can be shaped in a more efficient and speedy way. Whereas streamlining of grid connection procedures may partly be addressed by new regulations and administrative action by the BNetzA (e.g. in relation to digitalization and harmonization of plant certification procedures), the grid operators and the plant operators together may need to find a way to effectively apply flexible capacity allocation and it may be the better solution to avoid further regulation and administrative burdens.
DO YOU NEED FURTHER INFORMATION OR LEGAL ASSISTANCE?
We will be happy to assist you with legal advice on all aspects of the current developments for BESS projects in Germany or on any questions in relation to the German legal framework for BESS projects.
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