Amendment to the Energy Industry Act: changes for energy supply companies and grid and system operators

On 27 August 2024, the Federal Ministry for Economic Affairs and Climate Protection (BMWK) presented a draft law which aims to transpose the European Directive on Electricity Market Design ((EU) 2024/1711) into German law.

The draft bill provides for comprehensive amendments to both the Energy Industry Act (EnWG) and the Renewable Energy Sources Act (EEG) and covers the areas of grid connection procedures, energy communities, energy supply and grid regulation.

1. New structured procedure for grid connection in accordance with Section 17 EnWG

a) Binding deadlines for processing the grid connection application

While a coordinated grid connection procedure has existed for some time for renewable energy plants (Section 8 EEG) and for power plants of 100 MW or more (KraftNAV), no specific requirements have yet been set for other plants. There are currently long waiting times for battery storage projects despite the privileged status introduced with Solar Package I.

According to the new draft law, grid operators will in future have to inform the connection recipient of the result of the examination of the grid connection request, including the result of the grid compatibility test, within 8 weeks. The notification must include a schedule for the establishment, modification or extension of the grid connection.

In addition, information about the process and the documents to be submitted should be provided on the network operator’s website before the application is submitted.

Until 31 December 2025, transitional provisions are currently provided for in accordance with Section 17 (5) RefEntw EnWG, according to which the request must generally be answered within 3 months.

b) Non-binding grid connection information

Furthermore, non-binding grid connection information is to be introduced in accordance with Section 17a RefEntw EnWG. This means that grid operators must provide information on their website about their available and reserved grid connection capacities for the transformer level from extra-high voltage to high voltage and for the transformer level from high voltage to medium voltage, with a monthly update. However, this information does not constitute a legal claim to the actual availability.

In addition, within two years of the law coming into force, grid operators are to provide a monthly updated and standardised online tool that can be used to provide grid connection seekers with non-binding information on grid connections. In terms of content, the tool should primarily provide information on the nearest available grid connection points and on nearby, but reserved, grid connections for generation systems, systems for storing electrical energy and consumer devices with a nominal output of 135kW or more, as well as forecasting the expected costs for the grid connection request.

Overall, the aim is to process grid connection procedures more quickly and achieve greater transparency between the parties.

c) Further amendments regarding network access

From 1 July 2025, grid operators will be obliged to set up and operate a joint internet platform (Section 20b RefEntw EnWG) to provide digital information on the necessary steps for processing grid access. This includes data on the possibility of ordering, changing or cancelling metering point orders.

In addition to improving the provision of information for consumers, the regulation is intended to make it easier for grid operators to access the market, which is still being hampered by the requirements for existing market communication. “The aim is to open up a stable, standardised and direct means of communication in the area of network access to all network operators operating in Germany.”

2. “Energy sharing” and “energy community” as an integrative model in the new electricity market design

Another centrepiece of the draft legislation is the introduction of Section 42c RefEntw EnWG, which is intended to transpose the European requirements on energy sharing into German law. This will give end consumers the opportunity to join up within a grid area (in future across grid areas) to form so-called energy communities and, unlike at present, outsource key obligations as an energy supplier to the existing energy supplier for grid electricity or service providers. However, larger companies pursuant to Section 42c (1) sentence 2 RefEntw EnWG are exempt from this regulation, as the legislator expects them to be able to fulfil the requirements of the energy industry.

According to Section 42c EnWG, separate contracts are required for the implementation of an energy community, which must fulfil a certain minimum content. In addition, Section 42b and Section 20 (1a) RefEntw EnWG stipulate certain requirements, such as the balancing of the amount of energy fed into and withdrawn from the grid, which could still cause obstacles in practice. According to its own statements, the BMWK does not anticipate any new mass business in the near future.

3. New obligations for energy suppliers

Even though the energy crisis in 2022 seems to have been overcome, it has shown how volatile the German energy market can be. The changing supply of electricity and gas coupled with growing demand leads to extreme price fluctuations.

Suppliers will therefore be subject to a new hedging obligation in future in accordance with Section 5 (4a) EnWG. This includes the development of their own appropriate hedging strategies to cope with varying availability at any time and fulfil obligations from customer contracts more reliably.

The BNetzA is authorised to receive these hedging strategies and to review the risk of default. In addition, the authority may at any time demand suitable measures to limit the risk of a failure to supply its own customers.

How exactly a corresponding hedging strategy should look and what impact this has on the company’s own procurement strategy remains unanswered in the draft law.

Furthermore, the following new regulations are particularly relevant for energy suppliers:

• Individual changes to the requirements for billing and the supply contract in accordance with Sections 40 et seq. RefEntw EnWG and inclusion of a separate provision for supply interruptions in Section 41f RefEntw EnWG, which is likely to lead to a frequent need to adapt the general terms and conditions.
• New regulations for dynamic tariffs and fixed-price contracts in Section 41a (4) to (7) RefEntw EnWG and Section 41a (4) RefEntw EnWG provide for the possibility of passing on taxes, levies and surcharges to the customer without the right of cancellation for fixed-price electricity contracts, among other things. In addition, Section 41a (6) EnWG contains for the first time an obligation to itemise the individual price components before the contract is concluded.
• Implementation of new obligations to cooperate in relation to energy communities, which is likely to entail additional administrative work (Section 42c (6) RefEntw EnWG).
• Obligation to offer fixed-price tariffs with a term of at least 12 months for supplies to more than 200,000 end consumers. However, the draft regulates various exceptions.
• Furthermore, providers of dynamic electricity tariff contracts and contracts with fixed price tariffs are obliged to inform the end consumer about the costs, advantages and disadvantages of the respective type of contract prior to conclusion.

4. Reducing bureaucracy in the EEG - simplified use of solar energy?

To accelerate the expansion of EEG systems, there are also plans to facilitate the construction of garden PV systems and mobile agricultural PV systems.

The former previously fell under the definition of ground-mounted PV systems, which is why the corresponding provisions in the EEG also applied to garden PV systems. As a result of the amendment to the EnWG, garden PV systems are no longer included in the definition, meaning that they are also excluded from the regulations on the construction of ground-mounted systems.

With regard to mobile agricultural PV systems, so-called tracker systems, the amendment makes it clear that these are also covered by the regulations on high-mounted agricultural PV systems. This makes it easier for tracker systems to participate in tenders for agrivoltaic systems.

5. How has the BMWK’s project been evaluated so far?

Overall, the new amendments to the law appear to be viewed favourably. As intended, the information obligations can ensure greater transparency when connecting to the grid, thereby eliminating any uncertainties in the implementation of a project and driving forward the expansion of renewable energies. The planned reservation mechanism for grid connections is particularly welcomed but comes too late for many projects.

From the perspective of the grid operators, however, it is pointed out that the timely implementation of the regulations is hardly feasible in view of existing grid connection requests. Especially as the energy market is still partly occupied with the implementation of previous legislative changes. Furthermore, the requirements relating to grid access are no longer just framework conditions, but regulations that go into too much detail. According to the comments submitted, the requirements for energy sharing are not yet detailed enough to be applied in large parts and make a significant contribution to the energy market.

In our opinion, it therefore remains to be seen to what extent the current draft bill will be revised in the further legislative process and how quickly a political agreement between the governing parties will be reached.