Large battery storage facilities are considered a key component of achieving a virtually greenhouse-gas-neutral electricity supply in Germany. The regulatory landscape for battery energy storage systems ("BESS") has shifted significantly in recent months, creating both opportunities and challenges for project developers.
Background
The planning and construction of large-scale BESS in Germany has increased significantly in recent years, placing considerable demands on the electricity network and exceeding current network planning assumptions.1 This imbalance between supply and demand has prompted two separate responses: proposals from the German transmission system operators ("TSOs") and a legislative initiative to address bottlenecks in network capacity. BESS operators and investors must also consider ongoing reforms to the network tariff system that, if implemented, will directly affect investment decisions, in particularly as existing exemptions are under review. These developments have further prompted the legislature to amend the Federal Building Code (Baugesetzbuch, "BauGB") to establish a planning-law basis for large-scale BESS.
1. Revision of Network Connection Procedures
Under Section 17 para. 1 of the German Energy Industry Act (Energiewirtschaftsgesetz, "EnWG"), network operators must provide connections on reasonable, non-discriminatory and transparent terms. The existing "first come, first served" allocation procedure is widely regarded as inadequate to meet current demand. In response, the German TSOs published a joint proposal in February 2026 for a revised allocation procedure. A leaked draft bill from January 2026 by the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie, "BMWE") signals parallel legislative reform through the so-called "Network Package" (Netzpaket).2 Whether these measures will ultimately relieve pressure on BESS operators and investors remains to be seen.
1.1 TSO Initiative: "First-Ready, First-Served" Approach
The TSOs have proposed a new "first-ready, first-served" allocation procedure (Reifegradverfahren) designed to prioritise projects with a high probability of realisation and sufficient quality for secure, affordable network connections. This TSO-led initiative has no binding legal effect on any market participant. TSOs and in particular distribution network operators remain generally free to design their respective network allocation procedure provided they comply with Section 17 para. 1 EnWG. However, the procedure is designed to apply to all transmission-level connection requests, including BESS. Launch is planned no earlier than April 2026.3 Binding commitments already granted remain valid; pending applications may be transferred to the new procedure or withdrawn, with fees refunded in the latter case.
The proposal is structured around three core principles: (i) cyclical processing of applications rather than continuous case-by-case review; (ii) compliance with minimum formal admissibility requirements; and (iii) prioritisation by maturity level in the event of oversubscription.
Applications must be submitted by a fixed deadline together with a non-refundable application fee (Antragspauschale) of EUR 50,000. The TSOs then conduct a cluster study covering admissibility review, maturity assessment and ranking, capacity allocation, and a network compatibility calculation. Successful applicants receive a connection reservation offer and have one month to accept by paying a realisation deposit (Realisierungskaution) of EUR 1,500/MW, which is credited against subsequent construction cost subsidies (Baukostenzuschuss). The procedure aligns with the Federal Court of Justice’s (Bundesgerichtshof, "BGH") ruling that no differentiation may be made between connection applicants.4 BESS operators are insofar generally required to pay construction cost subsidies.
The heart of the TSO proposal is the maturity assessment. Projects are ranked by points distributed evenly across four categories: (i) site security and approval status; (ii) technical plant and connection concept; (iii) financial and operational performance of the applicant; and (iv) grid and system value. In the event of oversubscription, projects with a high probability of implementation and sufficient quality will be given preference over other projects with fewer points. BESS can score particularly well under the grid and system value criterion, as projects combining multiple technology categories (e.g. generation, load, and storage) at a single connection point may receive additional points. However, this benefit is available only to projects implemented by a single contractual partner of the TSO; mere co-location is therefore unlikely to qualify.
1.2 Legislative Initiative: Network Package
The leaked Network Package represents the legislature’s response to the challenges facing network connection procedures, including speculative connection requests, and facilitates the installation of grid-neutral battery storage systems co-located with existing facilities. The Network Package formalises and reforms the legal framework for network connections, though the timing of an official draft and completion of the legislative process remains uncertain at this point in time.
Under the Network Package, the BMWE also intends to abolish the existing "first-come, first-served" approach. While the design of the procedure remains reserved to the TSOs, the Network Package introduces an approval requirement by the BNetzA. The departure from the existing "first-come, first-served" approach is further supported by expressly granting the TSOs the ability to prioritise connection requests according to legally defined criteria to distinguish serious projects from speculative inquiries. Under the existing legal framework, this was possible only subject to the limitations of Section 17 para. 1 EnWG. Under the Network Package, TSOs will have the right to prioritise connection requests on the grounds of security of supply, expansion targets for generation and storage facilities, and area designations in spatial planning and land-use plans.5
For BESS specifically, the Network Package amends Section 17 EnWG by introducing a new paragraph 2b to facilitate so-called "grid-neutral storage" in co-location. Battery storage systems can contribute significantly to network stability by smoothing generation or absorbing load peaks without placing additional strain on the network. The provision applies to co-location with both renewable energy installations and consumption facilities (e.g. charging stations or data centres). Where a BESS is installed at the same network connection point without increasing the existing network-effective maximum capacity, the network operator may not refuse connection by reference to existing or anticipated capacity constraints. This is intended to significantly reduce bureaucratic barriers for network-serving storage projects.
2. Revision of Network Tariffs
The Federal Network Agency (Bundesnetzagentur, "BNetzA") has launched a comprehensive reform process to fundamentally redesign Germany’s network tariff rules (the so-called AgNes process).6 In regard to BESS, BNetzA has also published a so-called Orientation Paper which indicates how BESS operators will pay for network usage in the future.7
Under current law, BESS commissioned by 4 August 2029 generally qualify for a full 20-year network tariff exemption from first operation. However, in its Orientation Paper, the BNetzA indicated its intention to subject BESS to the general network tariff framework. Under the envisaged system, a modified tariff comprising two components would apply: a financing-function tariff and an incentive-function tariff. The incentive component may by design take a negative value, and it remains under active discussion whether the combined balance could reach zero or fall below it.
A further open question is whether feed-in tariffs will be introduced. BNetzA advocates for their introduction and has stated that, given the dual function of BESS as both generator and consumer, BESS would in principle be affected. According to BNetzA double-charging is to be avoided.
Of particular importance for projects currently in planning: pursuant to Section 118 para. 6 sentence 12 EnWG, the BNetzA is authorised to deviate from the temporal scope of the existing exemption. Early deviation, i.e. the early introduction of network tariffs for BESS, must be considered likely. The BNetzA takes the view that arguments based on the protection of legitimate expectations are unlikely to succeed, as the introduction of the deviation authorisation in 2023 has already significantly undermined any such expectation.8
3. New Privileged Status for BESS Under BauGB
The BauGB since December 2025 grants BESS «privileged» status in external areas. Prior to the reform, BESS projects in external areas lacked explicit statutory recognition, resulting in inconsistent permitting outcomes across municipalities. The location-bound (ortsgebunden) requirement under Section 35 para. 1 no. 3 BauGB was frequently used to reject BESS applications.
3.1 The Two-Tier Privilege (December 2025)
Section 35 para. 1 no. 11 BauGB covers co-located storage, granting privileged status to BESS that are in a spatial and functional relationship with an existing renewable energy installation, with capacity appropriate to the plant they support. Section 35 para. 1 no. 12 BauGB covers standalone storage on a subsidiary basis, applying where no. 11 is not met. It requires the facility to be located within 200 m of a qualifying substation or a power plant with a nominal output of at least 50 MW, to have a minimum rated output of 4 MW, and to fall within a municipal area cap of 0.5% of the municipal area or 50,000 m², whichever is reached first. Not all BESS projects will qualify; project-by-project assessment is essential.
3.2 Overriding Public Interest
Section 11c EnWG (as amended already in November 2023) confirms that BESS facilities are in the overriding public interest and serve public health and safety, giving them priority weighting (Abwägungsvorrang) in any interest-balancing exercise. This designation facilitates species protection exemptions and aligns BESS with the established framework applicable to renewable energies and major grid infrastructure.
3.3 Investment Implications
The reform eliminates the need for a special development plan for BESS in external areas, shortening project timelines and establishing a uniform approval standard across municipalities. This represents a meaningful improvement in legal certainty for investors. Residual ambiguity remains, particularly regarding the 200 m proximity rule and the spatial-functional relationship under no. 11, and the Bundesrat has called for further clarification on both points. Developers and investors should assess existing and pipeline projects against the December 2025 criteria and monitor regulatory guidance as it develops.
What’s next?
None of the regulatory initiatives described under 1. and 2. have been formally enacted, and material changes remain possible as legislative and regulatory processes progress. It can, however, be stated with a high degree of certainty that the TSOs will implement the "first-ready, first-served" procedure for network connection capacity allocation. Depending on how the maturity criteria operate in practice, BESS projects with strong planning foundations and advanced readiness stand to benefit. At the same time, the anticipated introduction of construction cost subsidies and network tariffs for BESS will directly affect the economic viability and investment landscape for battery storage in Germany. Stakeholders are advised to monitor these developments closely and to assess their implications for both existing and planned BESS investments.
1 Cumulative BESS connection requests at the transmission level alone amount to approximately 211 GW (as at Q3 2025), with applications across all network levels reportedly exceeding 400 GW, see BMWE, Draft Network Package, p. 1; TSO, Maturity assessment procedure for grid connections to the transmission grid, 5. February 2026, p. 3-4.
2 The draft bill has the working title "Draft law to amend energy industry law to synchronize plant expansion with grid expansion and to improve the grid connection procedure." (Entwurf eines Gesetzes zur Änderung des Energiewirtschaftsrechts zur Synchronisierung des Anlagenzubaus mit dem Netzausbau sowie zur Verbesserung des Netzanschlussverfahrens); published: https://table.media/assets/climate/referentenentwurf-netzanschlusspaket.pdf, last accessed 27 February 2026.
3 TSO, Maturity assessment procedure for grid connections to the transmission grid, 5 February 2026, p. 39.
4 BGH Judgment of 15. July 2025 (Az. EnVR 1/24). See also Burmeister, van Eik, Sievert, Client Alert: German Federal Court of Justice upholds building cost subsidies for battery storage operators, 18 August 2025; https://www.whitecase.com/insight-alert/german-federal-court-justice-upholds-building-cost-subsidies-battery-storage, last accessed 27 February 2026.
5 See section 17b para. 1 of draft proposal for the German Energy Industry Act ("EnWG-E").
6 BNetzA, Procedure for determining the general electricity network tariff system (AgNes), https://www.bundesnetzagentur.de/DE/Beschlusskammern/GBK/Ebene1_Rahmen/AgNes/start.html, last accessed 27 February 2026.
7 BNetzA, Speichernetzentgelte: Orientierungspunkte der BNetzA, 16 January 2026, https://www.bundesnetzagentur.de/DE/Beschlusskammern/GBK/GBK_Termine/Downloads/2026/01_2026/30.01./Orientierungspunkte_Speichernetzentgelte.pdf?__blob=publicationFile&v=3, last accessed 27 February 2026.
8 Gesetz zur Anpassung des Energiewirtschaftsrechts an unionsrechtliche Vorgaben und zur Änderung weiterer energierechtlicher Vorschriften, 28 December 2023, BGBl. 2023 I Nr. 405.
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