With the latest amendment to the Energy Industry Act, Germany is implementing an important component of European internal energy market policy known as energy sharing. The idea is that citizens and small businesses will no longer just generate renewable electricity themselves but will also be able to share it with each other within an energy community. From 2026, this will create a completely new market segment between self-supply and traditional electricity supply. This will give rise to opportunities for cities, municipalities and small businesses, but also new organisational and regulatory requirements.
Background
In November 2025, the Bundestag passed the amendment to the Energy Industry Act encompassing the new regulation on energy sharing in Section 42c EnWG. The basis for this is Article 15a of the Internal Electricity Market Directive, which has now been transposed into German law. From June 2026, end consumers – in particular, private individuals and small businesses – will be able to form energy communities and jointly exploit the potential of renewable energy systems. It is important to note that the jointly shared amount of electricity will continue to supplement the existing residual electricity supply, meaning that the original energy supplier will remain in place.
Implementation of energy sharing
While tenant electricity models and communal building supply have so far been limited to individual buildings or neighbourhoods, energy sharing offers significantly greater spatial and organisational flexibility. For the first time, renewable electricity generated in renewable energy systems and/or temporarily stored in “front-of-the-meter” storage facilities can be shared with other end consumers in the same balancing area via the public grid – and from 2028 onwards, even beyond. This creates added value for so-called prosumers and provides a noticeable lever for energy transition in urban areas.
The model is also deliberately designed to remain citizen friendly. Private individuals, SMEs, municipalities and other public institutions as well as citizen energy companies are eligible to participate. For municipal SMEs in particular, the concept creates new opportunities to use renewable energy more flexibly and integrate it economically.
Challenges
However, to ensure that an energy community works, the legislator has defined a set of organisational requirements. The participants must conclude clear agreements on electricity supply, billing, the use of controllable consumption devices, and the operation and maintenance of the systems. To make implementation more practicable, these tasks can also be transferred entirely to external service providers which should give projects the required legal certainty.
However, the question of financial support remains open. So far, Germany has not introduced any specific incentives such as premiums or grid fee reductions, like those in Austria or Italy. Taxes, levies and grid fees continue to be charged via the conventional residual electricity contract. It remains to be seen whether the Federal Network Agency will make things easier in the future by setting rules – the lawmakers have deliberately left this decision up to them.
Overall, energy sharing is a new instrument that makes renewable electricity more widely available, strengthens participation and brings the energy transition into the everyday lives of many consumers. At the same time however, it raises new organisational and regulatory issues that must be addressed at an early stage.
