Federal Court of Justice decision dated 15 July 2025 confirms that construction subsidies for battery storage systems based on the performance price model are permissible

Briefing

On 15 July 2025, the Federal Court of Justice (BGH) ruled (case no. EnVR 1/24) that network operators in network connection procedures under the Energy Industry Act (EnWG) may demand a construction cost subsidy (BKZ) for battery storage systems (BESS) based on the performance price model (BGH press release; full text of the decision). In doing so, the BGH clarified the admissibility of this practice and removed any doubts as to the legality of a BKZ for battery storage systems. On 22 July 2025, the BGH also published the reasons for its decision.

Background to the decision

The question of whether to grant a construction cost subsidy is a key (cost) factor in the implementation of BESS projects. Depending on the connection capacity, the costs often run into the tens of millions, which is why the BGH’s decision was eagerly awaited in the industry.

In the first instance, the Higher Regional Court of Düsseldorf ruled that the granting of a BKZ was excluded on the grounds of discrimination against other connection customers by means of the performance price model. In this case, the Higher Regional Court were of the view that the special features of battery storage systems – in particular their different grid utilisation compared to a “normal” end consumer – had to be considered in the BKZ calculation. Accordingly, a blanket application of the Federal Network Agency’s (BNetzA) performance-based pricing model was not permissible.

Opinion of the Federal Court of Justice

The Federal Court of Justice overturned the decision of the Higher Regional Court of Düsseldorf and deemed the granting of a BKZ in grid connection proceedings under the EnWG to be permissible. It found that the granting of a BKZ calculated according to the performance price model for battery storage systems did not violate the prohibition of discrimination under Section 17(1) EnWG.

The Federal Court of Justice acknowledges that, from a technical point of view, battery storage systems have a different effect on the grid than end consumers: they merely store the electricity they consume and release it later and can even support the grid in the event of impending grid bottlenecks. However, this positive impact on the grid is not necessarily attributable to the respective connection network operator. Ultimately, it is up to the network operators to assess the specific effects on the grid and possible ways of avoiding expansion costs. However, no general discrimination against “normal” end consumers could be established.

However, it should be noted that the question of whether and to what extent the individual service price of the respective network operator was determined in a permissible manner remains open. In this regard, particular consideration will have to be given in future to the position paper of the Federal Network Agency, which provides for average pricing based on the last three years, as well as reduction options for flexible grid connection contracts.

What impact does the ruling have in practice?

The ruling removes the previous legal uncertainty as to whether the BKZ can be granted for battery storage systems, at least for the grid connection procedure under the EnWG. This means that previous payment and reimbursement reservations are now generally irrelevant and the provisions made by grid operators can be reversed. In addition, the storage industry can now prepare for the payment of a BKZ and take this into account in its profitability calculations and project financing.

Does the Federal Court of Justice ruling also apply to storage facilities above 100 MW?

However, the BGH ruling cannot be regarded as legally conclusive. Among other things, the granting of a BKZ on storage facilities with a capacity of 100 MW or more is likely to remain inadmissible. This is because, in deviation from the EnWG, these storage facilities are subject to the so-called KraftNAV, which expressly prohibits the levying of a BKZ in Section 8 (3).

It is also unclear to what extent the collection of a (significant) advance payment of the BKZ is permissible in the ongoing grid connection procedure under the EnWG, as this may in principle only be granted as consideration.

Outlook

Although the Federal Court of Justice’s decision provides some clarification, it must be viewed as a setback for the storage industry overall, alongside the announced network charge reform. It remains to be seen whether the legislature will amend the legal situation for storage facilities in a positive manner to continue to promote the necessary flexibility. In addition, legal uncertainties remain regarding the collection of the BKZ, particularly for storage facilities with a capacity of 100 MW or more. In view of the range of questions currently arising in the grid connection and approval process for battery storage systems, it is to be hoped that the legislator and the Federal Network Agency will take stronger and faster action to end the “legal vacuum” and ensure the necessary planning and investment security for the players involved.