With a new Government at the helm, Germany’s energy regulator has floated a series of changes to the country’s electric grid over the past few months.

Despite having one of the world’s largest economies, growth has stalled in recent years, with certain events having highlighted frailties in the county’s electricity network, such as its dependence on imported gas and issues with stability.

As encountered by other countries experiencing similar issues, such as the UK and Italy, grid reform doesn’t come cheap, nor is it straightforward.

This is especially true for countries such as Germany, where grid dynamics have changed massively over the past couple of decades with a huge influx of new renewable energy power plants.

A report published by the independent Macroeconomic Policy Institute (IMK) at the end of 2024 estimated that annual investments in the electricity network need to more than double from EUR 15bn to EUR 34bn if Germany is to meet its net-zero ambitions.

Overhaul of grid connection fees

With such huge investment needed, coupled with an outdated system, Germany’s energy regulator, the Federal Network Agency (BNetzA), recently published a report discussing potential changes to the country’s electricity grid.

The cornerstone of this discussion piece centred on grid connection fees, and who will ultimately be footing the bill for the infrastructure required to facilitate the country’s net-zero transition.

Unlike in the majority of other European countries, developers in Germany aren’t charged for the feed-in of electricity and instead these costs are exclusively paid for by end-consumers.

However, as part of its recent publication, BNetzA has suggested a new cost mechanism whereby feed-in providers will be required to pay some or all of these connection fees.

As acknowledged by BNetzA, not only does this have the potential to reduce customer bills, but this “could create financial incentives for grid operators to quickly connect renewable energy systems.”

As part of its discussion, the regulator suggested a series of potential cost sharing mechanisms, including:

• Splitting the costs of all grid upgrades fifty-fifty between feeders and consumers (estimated to be EUR 33bn in 2025).
• Splitting the costs of grid upgrades associated with the connection of new renewable energy projects between renewable feeders (estimated to be EUR 2.4bn this year).
• Feeders to contribute for the costs associated with specific grid services.

The regulator also suggested how costs could be split between individual feeders, which included fees for:

• Energy fed in (EUR/MWh).
• Installed capacity or maximum load (EUR/MW).
• Contractually agreed grid connection capacity (EUR/MW).

BNetzA also suggested that feeders could pay an annual flat rate, which would differ depending on whether the project was transmission or distribution connection.

In discussing the feasibility element of introducing feed-in fees, BNetzA acknowledged the added complexity of such a scheme, “especially if regionally or technology-dependent components were introduced.”

Although not discussed in detail within the publication, when considering the added costs associated with the interconnection of some technologies, such as offshore wind, it would make sense for the regulator to add technology-dependent elements to these fees.

Concerns and complexities for BNetZA

As with any changes in policy, there will always be winners and losers. “Grid users have adapted to the current grid fee system over the years and are therefore typically sceptical of changes,” explained BNetzA in its recent publication.

The situation is particularly complex when it comes to projects that have already connected to the grid. With the grid operator having already upgraded infrastructure to facilitate interconnection, on the one hand, it makes sense to charge them feed-in fees.

However, with developers having had no way of anticipating feed-in fees, these would likely prove very unpopular and in the words of BNetzA, could “cause significant acceptance problems.”

As explained by the regulator, “an appropriate balance must be struck between the refinancing of grid costs, the interests of paying grid users, and a system that is feasible for all parties involved,” which is incredibly difficult to achieve.

As one would expect, organisations representing developers have heavily criticised the introduction of new fees and proponents likely to benefit from paying lower fees have expressed their support.

The association representing the interests of Germany municipal utilities, the Association of Municipal Utilities (VKU), welcomed BNetZA’s grid reform, but warned of excessively dynamic grid charges that “would be technically complex, expensive, and difficult to understand.”

“The energy transition needs stable grids – and stable rules. A grid fee system that doesn’t work in practice helps no one,” said VKU’s general manager Ingbert Liebing as part of a statement.

As part of its own statement, offshore wind advocacy group, Bundesverband Windenergie Offshore (BWO), heavily criticised the potential of feed-in fees, describing them as “systematically wrong” and a “step backward in energy and industrial policy.”

According to BWO, the proposal will jeopardise the economic viability of new projects and send a disastrous signal to investors. “Anyone who drives away investors is jeopardising Germany’s future viability as an energy location,” said the organisation’s managing director Stefan Thimm.

Added to this, BWO highlighted ongoing issues with the offshore wind industry such as rising construction costs and increased regulatory risk, that would only be compounded by additional fees.

“Project developers and investors are losing confidence. The results of the recent auctions speak volumes: participation is declining. Bids may not be received in the future,” explained BWO, in reference to publication of the results of BNetzA’s most recent renewable energy tender.

Stakeholders had until June 30 to submit comments on the 57 page proposal, which will now be analysed by the regulator ahead of additional discussion groups taking place later in the year.

*This story was originally published exclusively for NPM Europe subscribers.