Update on the Regulatory Framework for Battery Storage Projects: Network Charges and Levies

The battery storage (BESS) market is currently booming – both nationally in Germany and internationally. BESS projects can offer highly profitable investment opportunities with the potential for strong returns. However, profitability and project design depend heavily on the regulatory framework. In Germany, beside the question of grid connection and beyond construction-related grid connection costs, network charges have a significant impact on the business case of BESS projects. So far, projects have benefited from exemptions and privileges regarding network charges, levies and fees – a decisive factor behind the current boom. A reform process by the Federal Network Agency (BNetzA) is now underway that could have a substantial impact on the viability of projects. In this insight, we provide an overview of the current German regulatory framework for BESS with regard to network charges, levies, and fees as well as existing exemptions and privileges.

Network charges and levies – general principles

Network charges and levies are generally charged in return for the use of the grid, i.e., grid usage. Currently, however, this only applies to the off-take of electricity from the grid (electricity obtained from the grid). Electricity fed into the grid (e.g., from a power generation plant) is not subject to network charges.

Therefore, when electricity is generated by a wind or PV plant and stored locally in a BESS without using the public grid (e.g., behind a common metering point), no network charges or levies apply. Consequently, business models that combine renewable energy plants and BESS which exclusively store generated electricity on-site and subsequently feed the electricity into the grid, are exempt from network charges and levies.

Exemptions from network charges

In principle, network charges would apply if electricity is obtained from the grid for storage in a BESS. Under certain conditions, BESS may qualify for an exemption (§ 118 (6) of the German Energy Industry Act (EnWG)). This exemption is applicable to BESS put into operation after 31 December 2008 and prior to 3 August 2029, with a duration of 20 years from the commissioning date. A key requirement is that electricity must be fed back into the same grid. This exemption is of particular relevance to system services such as balancing energy, though its applicability to multi-use models remains a subject of legal debate.

Furthermore, under certain circumstances, BESS may also have the option to claim individual reductions of network charges or other special reduced network charges (e.g., § 19 (2), (3), and (4) of the German Regulation on Electricity Grid Access Charges (StromNEV)).

Privileges on levies

In principle, levies would apply if electricity is obtained from the grid for storage in a BESS. Under certain conditions, BESS can benefit from storage-specific privileges on levies (§ 21 of the Germany Energy Finance Act (EnFG); see also the regulation BK8-24-001-A of the BNetzA). Generally, levies are reduced to zero to the extent that electricity is re-fed into the grid within the same calendar year.

Additional reductions and caps are available for energy-intensive companies (§§ 30 et seq. EnFG). Reductions may also apply to end consumers with particularly high electricity consumption (mechanism of § 15 (2) in conj. with BK8-24-001-A).

Concession fees and electricity tax

The off-take of electricity from the public grid or via a direct line crossing public land may be subject to concession fees. Currently, there are no storage-specific exemptions—only general reductions, such as for special contract customers or off-peak use, apply.

In principle, the electricity tax is triggered when electricity supplied by a utility company is consumed by end users. Stationary BESS are considered part of the grid infrastructure and are therefore not treated as end consumers – meaning no electricity tax applies. Multi-use models, however, may involve certain uncertainties.

BNetzA reform: AgNes

On 12 May, the BNetzA launched its reform process on network charges (AgNes) which also addresses the BESS exemptions. The reform aims to revise the principles of grid cost allocation, including the current exemption under § 118 (6) EnWG.

The BNetzA questions the full exemption currently available to some BESS, arguing it conflicts with the principle of cost-reflectivity, as these operators do not contribute to the grid costs they cause. Since grid usage occurs both when electricity is taken from and when it is fed into the grid, complete exemptions may be seen as discriminatory compared to other grid users.

Any changes to these exemptions could have significant implications for the profitability of BESS projects. The exact scope of the reform remains open. It cannot be ruled out that the BNetzA may soften its position in response to industry criticism.

Our Advisory Services

BESS projects face a wide array of regulatory requirements, particularly regarding network charges and levies, all of which can materially impact project economics. Therefore, the ongoing reform discussions by the BNetzA, which will take effect for the period starting after 31 December 2028, could have a detrimental effect on BESS project business models. In order to avoid such uncertainties, BESS projects should be planned, implemented and commissioned as soon as possible. We provide comprehensive support in assessing regulatory issues and in implementing your projects, e.g., by drafting and negotiating the relevant BESS project agreements. Please do not hesitate to reach out to our team for further information or advice.