The Federal Network Agency recently published the scenario framework for the network development plan 2037/2045. Looking at the expansion paths for energy storage systems used for grid development, it is assumed that 67.4 GW of PV battery storage systems and a further 23.7 GW of large battery storage systems will be installed in the German power grid by 2037 - in 15 years. A multiple of today's volumes! The approval of the scenario framework states that large battery storage systems “contribute to the integration of wind and PV” and it is assumed that those storage systems will be located close to PV and wind across the country.
However, this fundamentally very reasonable idea is currently being counteracted, because an inaccuracy in legislation that has received little public attention but is decisive for the geographical placement of large battery storage systems is not being addressed by the same Federal Network Agency in the sense of a meaningful expansion of storage. We're talking about the so-called “construction subsidy”, which the network operator collects from network users when they connect to the grid. According to current practice, the construction subsidy is linked to the amount of annual network charges that consumers pay for power consumption from the network. In a sense, new subscribers are therefore required to pay an additional annual network fee fee, which is used by the network operator for general network expansion measures (not for the actual network connection — which must be paid separately). The amount of construction subsidies varies greatly from region to region and is typically significantly higher in southern Germany than in northern Germany. It represents a significant order of magnitude for large battery storage systems. For example, the construction subsidy for a storage system with 100 MW connected capacity in northern Germany generally amounts to no more than EUR 5 million, but in large parts of southern Germany it exceeds EUR 14 million. The 9 million EUR additional costs mentioned in the example represent a significant part of the investment costs, which have a prohibitive effect on construction projects in southern Germany. The only sensible way out at the moment is to place the storage facilities in areas with a low construction subsidy, with otherwise completely equal conditions: i.e. predominantly in northern Germany. Unfortunately, because storage is of course needed everywhere in Germany!
But let's take a step back. Why do battery storage systems pay a construction subsidy in the first place? After all, by legal definition in the recently revised Section 3 No. 15d of the Energy Industry Act (EnWG), an energy storage device is an “installation in an electricity network which postpone the final use of electrical energy to a later date than that of its generation (...)” and not a final consumer of electrical energy. Large-scale battery storage systems are only built at powerful network nodes in consultation with grid operators. They reduce the load on the networks and do not put an additional load on them.
One could now object that this regulation has only existed since June 2022 and that the consequences have not yet been reflected in all regulations and implementation practice. But far from it: Many years ago, legislators created a transitional provision in Section 118 of the Energy Industry Act, which made storage expansion, as we are currently experiencing in Germany, possible in the first place. It states under No. 6: “New systems for storing electrical energy built after 31 December 2008, which are put into operation within 15 years from 4 August 2011, are exempted from charges for network access for a period of 20 years from commissioning with regard to the purchase of the electrical energy to be stored.” This exemption therefore applies currently and as it stands for new plants until 2026.
Is the network operators' business practice of collecting the construction subsidy therefore illegal? Unfortunately, in the end, this is a question for lawyers, which Kyon Energy is currently having clarified in ongoing abuse proceedings with the Federal Network Agency. In the meantime, numerous grid operators are continuing to collect the construction subsidy for battery storage systems — with all negative consequences for the distribution of storage systems in the German power grid.
On the other hand, the legislator's intention in Section 118 EnWG seems clear, namely to reduce the hurdles to the expansion of storage facilities and to establish non-discriminatory network access for storage systems compared to generation plants. In principle, the latter do not pay any fees for network access, i.e. in particular neither construction subsidies nor network charges. Against this background, it is quite possible that, when formulating decisive paragraph 6 of Section 118, the legislator simply did not expect that there could still be room for interpretation with regard to the exemption from the construction subsidy.
But there is a glimmer of hope: As part of several legislative proposals to secure energy supply in winter, the Bundestag formally called on the Federal Government on September 30, 2022, “to submit proposals to remove existing obstacles to the construction and use of storage systems, including large battery storage systems. Within the framework of the requirements of the European Court of Justice, this includes issues of network charging systems and construction subsidies. “The only obvious consequence for the Federal Government to comply with this request is now to present a draft law clarifying that energy storage systems do not have to pay a construction subsidy.
We cannot afford any further delays in the current energy and climate crisis. Huge investment volumes are being mobilized these days to build storage facilities with a volume of several gigawatts in Germany. The extremely ambitious goals from the scenario framework are thus within reach. But we must not allow the southern half of the country to go empty and to have no storage facilities available there for better integration of renewables, with all the negative consequences for grid expansion requirements and ultimately for security of supply. The sector is ready to create the necessary storage capacities for Germany's energy security and is now expecting the necessary decisions from politics. We therefore hereby make an urgent appeal to the Federal Government:
The simplest solution to this would be to simply add the two words “including construction subsidies” to the existing exemption in Section 118 EnWG. This would save time until a comprehensive reform of energy law, in which the new storage definition could then be consistently taken into account as a separate plant class alongside producers and consumers. With a pragmatic and quickly implemented clarification of the transitional provision in Section 118 EnWG, it would be immediately clear to all parties involved that energy storage systems are exempted from payment of construction subsidies, even without the Federal Network Agency, the network operators and the project developers having to ask their lawyers to resolve this issue in lengthy proceedings. The industry and all consumers in southern Germany will thank you for it!
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