Alternative Energy & Power 2019

Last Updated August 07, 2019


Law and Practice


Taylor Wessing Partnerschaftsgesellschaft mbB is a full-service international law firm, working with clients in the world’s most dynamic industries. Our 33 offices of the Taylor Wessing network blend the best of local business, industry and cultural knowledge with international experience to provide astutely commercial solutions for clients. One major pillar of Taylor Wessing’s global energy group is the energy practice of Taylor Wessing Germany with its five German offices. Taylor Wessing Germany advises on energy and infrastructure projects in Europe and all over the world. The Energy Group’s advisory portfolio includes M&A and financing, project development, regulatory energy law, energy antitrust law, plant construction, environmental law and litigation. As a full-service law firm for the energy industry, main practice areas include renewable energies and clean tech, energy supply contracts, networks and infrastructure, electro-mobility, energy storage, thermal power plants, oil and gas and the digitalisation of the energy system transformation. Taylor Wessing advises investors, financiers and banks as well as project developers, energy suppliers, plant constructors and operators and energy-intensive companies.

The Energy Economy Act (Energiewirtschaftsgesetz – EnWG) and its Ordinances, such as the Electricity Network Access Ordinance (Stromnetzzugangsverordnung – StromNZV), the Electricity Network Fee Ordinance (Stromnetzentgeltverordnung – StromNEV) and the Incentive Regulation Ordinance (Anreizregulierungsverordnung – ARegV), provide the legal framework for the entire power industry, while the Renewable Energy Act (Erneuerbare-Energien-Gesetz – EEG) is the principal law regarding renewable energy.

Germany’s energy sector is widely stated-owned, consisting of many local utilities with their respective distribution system networks as affiliates. On the regional/municipal level, there are numerous regional utilities active in generation and distribution. Some of these are fully or partially owned by municipalities or cities. Furthermore, the former dominating market players, E.ON, RWE, Vattenfall and EnBW, are partly privatised and partly state-owned. Examples of German power generating firms having public shareholders include EnBW (NECKARPRI – ultimately owned by the state of Baden-Wuerttemberg and OEW – association of local authorities) and RWE (partly owned by the cities of Dortmund and Essen). Similarly, one of the largest German utilities, Stadtwerke München, is fully owned by the city of Munich. The four Transmission System Operators (TSOs) in Germany are, following liberalisation of the market, owned either by private investors, the German state, foreign states or a mix of these (see 1.2 Principle State-owned or Investor-owned Entities).

In compliance with European unbundling rules resulting from European Directive 2003/54 (EU) and the newer Directive 2009/72 (EU), Sec. 6-10, EnWG require the unbundling of vertically integrated entities to warrant a transparent, non-discriminatory energy market. This aim is for this to be achieved by way of informational, operational and legal unbundling, unbundling of accounting and ownership unbundling.


E.ON, RWE, EnBW and Vattenfall, also known as ‘big four’, are Germany’s main energy companies. Due to recent consolidation trends in the German market, Vattenfall has sold its German lignite business to Energetický a průmyslový holding (EPH) in 2016. Vattenfall’s former lignite business now operates under the name of LEAG, the latter now being the second largest energy production company in Germany behind RWE (Monitoring-Bericht der BNetzA 2018).

Additionally, Uniper was formed in 2016 by the separation of E.ON’s fossil fuel assets into a separate company. E.ON acted as a majority shareholder until it sold its shares to Finnish state-owned company Fortum in 2018. Lately, Fortum increased its stake in Uniper to 49.99%.

Lately, RWE and E.ON committed to a major transaction of various assets in March 2018 subject to approval by European Commission’s DG COMP. During this still on-going process, RWE will transfer all of its shares in its subsidiary company Innogy (76.8%) and pay an additional sum of EUR1.5 billion to E.ON. In return, RWE acquires:

  • a share of 16.67% in E.ON;
  • all renewable energy activities from both E.ON and Innogy;
  • the minority shares E.ON held in two RWE-owned power plants;
  • gas-storages previously owned by Innogy; and
  • the 37.9% share E.ON holds in the Austrian energy company Kelag.

Following this transaction, RWE intends to focus on its role as one of the biggest energy generation companies in Europe with a diversified portfolio while E.ON becomes Germany’s largest DSO and electricity supplier. The transaction is still pending before European Commission’s DG COMP.

Today, the principal companies that own and operate generation facilities are RWE, EnBW, E.ON/Uniper, Vattenfall and LEAG.

Apart from aforementioned major producers, there are a few other large-scale generation companies such as STEAG. Further, the electricity generation market consists of numerous independent companies, mostly public utilities and hundreds of renewable energy generation facilities ranging from solar panels installed on private houses to off-shore wind parks.


The German transmission system is split between four TSOs Amprion, TenneT, 50Hertz and Transnet BW that operate independently in geographically separated territories based on former demarcation areas. They became (partly) independent of their former parent companies, RWE, E.ON, Vattenfall and EnBW, following unbundling requirements in the Third Energy Package. E.ON and Vattenfall sold their transmission systems entirely. RWE still has a minority share of 25% in Amprion, while a Consortium of banks and insurance companies jointly holds the other 75%. EnBW is still owner of TransnetBW. 50Hertz is owned by TSO Elia from Belgium (80%) and KfW (20%). TenneT TSO is a subsidiary of TenneT Holding, which is owned entirely by the Dutch Ministry of Finance.


The electricity distribution sector consists of approx. 900 DSOs, most of which belong to state-owned utilities. However, some DSOs are owned by investor-owned companies such as E.ON, which will become Germany’s largest DSO once the aforementioned deal with RWE is completed. Approx. 90% of all DSOs supply less than 100,000 customers each and are therefore not subject to strict unbundling requirements according to Section 7 II and 7a VII EnWG (de minimisexemption) (Monitoring-Bericht der BNetzA 2018).


The former ‘big four’ no longer form an oligopoly regarding electricity supply: in 2017, the four companies combined supplied electricity to 25% of all commercial customers and 37% of all residential customers. In total, there are over 1,000 electricity supply companies in Germany, most of which supply less than 10,000 customers each. On average, a customer can choose between 124 competing supply companies (Monitoring-Bericht der BNetzA 2018).

On 19 December, the German Government tightened its rules on foreign investments in German businesses by non-EU/non-EFTA investors. The reforms entered into force on 29 December 2018.

The competent body for investment review in Germany is the Federal Ministry of Economic Affairs and Energy. The existing German law already provides two pillars: First, non-sector-related prohibition right (catch-all) if the acquisition endangers public order or security (“öffentliche Ordnung oder Sicherheit”) of the Federal Republic of Germany (cross-sector investment review) and second, special rules apply to the acquisition of certain defence and IT security companies (sector-specific investment review). The relevant review thresholds are as follows:

  • if the investor, following the acquisition, holds 25% or more of the voting rights in the German target, either directly or indirectly (by way of attribution); and
  • if the target is operating so called critical infrastructure or related software or the transaction is subject to the sector-specific investment review, the threshold is now a 10% shareholding.

The legal basis that is separate from merger control regulation is embedded in the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG) and in the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV). During a respective proceeding, there is a two-stage review process: In the first phase decision upon whether or not to open in-depth review proceedings is made. In a potential second phase an in-depth review might take place.

The new AWV specifies in which cases “an endangerment for the public order or security of Germany” might exist. The non-exhaustive list in Section 55 paragraph 1 AWV also includes operators of so-called critical infrastructure. The energy industry is included in the latter. The BMWi decides on a case by case basis. Further, the new rule clarify that EU acquisition vehicles cannot be used to circumvent the review procedure. The German Government introduced a notification obligation for target companies operating in areas listed in Section 55 paragraph 1 AWV. Further, the BMWi can retroactively start an examination for up to five years after the transaction (signing).

The amendment of the AWV was triggered by the Chinese state-owned State Grid Corporation of China’s planned acquisition of a 20% minority stake in 50Hertz. At the time of the intended acquisition, the German Government was unable to intervene on the grounds of public order and security because the investment was below the 25% threshold. To prevent the sale, the government bought the 20% stake via the majority owner’s pre-emption right.

If permitted under the AWG and AWV, a foreign investment would in principle be protected under German law in the same manner and would enjoy the same level of protection as any other business owned by domestic shareholders. In some cases, money transfer restrictions, particularly under generally money laundering prohibition laws might have to be observed. Given that foreign investment as a general rule under German law enjoys the same level of protection and regulation, no specific incentive procedures or specific protection schemes are in place or should be required in Germany.

Principal laws governing the sale of generation, transmission, and distribution assets, and the amalgamation or merger of power industry entities are the Civil Code (Bundesgesetzbuch - BGB), the Commercial Law (Handelsgesetzbuch - HGB) and the Limited Liabilities Company Act (GmbHG)/the Stock Corporation Act (AktG). These laws are applicable for any asset or share deal in Germany, ie, not only to the power industry. The laws do not provide minimum requirements that must be satisfied by a purchaser of assets or an acquirer of a business.

A transaction can furthermore be subject to merger control clearance by the Federal Cartel Office (Bundeskartellamt - BKartA). Relevant legislation can be found in the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen - GWB). A transaction is notifiable to the BKartA if the transaction constitutes a concentration, the jurisdictional thresholds are met and the transaction has an appreciable effect within the territory of Germany. A notifiable transaction may not be completed before clearance is granted by the BKartA. The statutory timetable for clearance provides two phases: In the first phase, the BKartA must decide whether to clear the transaction within one month after submission of the complete notification or, if the transaction raises competition concerns, to commence an in-depth investigation in a second phase. A decision in this second phase must be issued within four months of the date of the notification. Extensions of the second phase are possible if, for example, the parties submit commitments. Such commitments are made to remedy competition issues. Typical (structural) commitments are divestments and the separation of corporate links between competitors. In appropriate cases, behavioural commitments (eg, granting access to infrastructure) are possible too.

The Federal Network Agency (Bundesnetzagentur – BNetzA) is the main regulation and planning authority of the energy sector. Its core task with respect to the energy sector is to ensure compliance with the EnWG, the EEG and their respective ordinances. It guarantees the liberalisation of the market via non-discriminatory network access and efficient system charges.

In particular, the BNetzA, according to its own description (Bundesnetzagentur (2019): Areas of responsibility), ensures:

  • the most secure, low-priced, consumer-friendly, efficient, and environmentally sustainable supply of electricity and gas possible for the general public;
  • effective and genuine competition in the supply of electricity and gas, and efficient and reliable operation of energy supply systems for the long term;
  • implementation and execution of Community law on energy supply; and
  • efficient approval proceedings to adapt the German extra-high voltage network to the growing use of renewable energy sources.

The BNetzA’s decisions are made by its Ruling Chambers. Companies directly concerned may participate in the Ruling Chamber proceedings and business circles affected by the proceedings may be invited to attend. Decisions can be challenged before civil court. However, the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie - BMWi) as the competent supervisory authority cannot overturn a decision made by the Ruling Chamber since its members act with a judge-like independence.

The Grid Expansion Acceleration Act (Netzausbaubeschleunigungsgesetz – NABEG) and the EnWG also provided the BNetzA with a central role in planning the expansion of the transmission system. Its tasks include inter alia approving the Scenario Framework and examining as well as confirming the Network Development Plan.

As the expansion of the transmission system is indirectly paid for by customers through network charges, the BNetzA’s goal is to ensure expansion measures appropriate for the system’s stability (Bundesnetzagentur (2019): Die Rolle der Bundesnetzagentur).


On 21 December 2018, the Energy Collective Act (Energiesammelgesetz – EnSaG) entered into force, amending parts of the EnWG, EEG and the Combined Heat and Power Act (Kraft-Wärme-Kopplungsgesetz – KWKG). It aims to correct support measures and to accelerate the progress towards climate protection targets by various adjustments to the aforementioned laws (Bundesgesetzblatt (2018): Bundesgesetzblatt Jahrgang 2018 Teil NR. 47).


The Act on the Modernization of the grid fee structure (Netzentgeltmodernisierungsgesetz- NeMoG), adopted in July 2017, aims to align network fees step by step, starting in January 2019. From 2019 to 2023, the grid fees charged for the use of transmission grids will be incrementally harmonised across Germany. Starting in 2023, the total electricity transmission grid usage fees will be calculated uniformly for the first time (§ 14 b StromNEV) (Bundesgesetzblatt (2018): Bundesgesetzblatt Jahrgang 2017 Teil NR. 48. This will lead to increasing network fees in western Germany and lower fees in eastern Germany since heavy investments in eastern network infrastructure will be shared equally nationwide.

NABEG-Novelle (NABEG 2.0)

The Amendment on the Network Expansion Acceleration Act entered into force in May 2019. It aims to accelerate network expansion through more efficient approval procedures and to improve existing network components (Netzausbaubeschleunigungsgesetz Übertragungsnetz, Gesetze im Internet).

Structure Strengthening Act

Due to environmental reasons, the federal government plans to withdraw from coal-based energy generation not later than 2038 (see 3.2 Principle Laws and/or Policies Relating to the Early Retirement of Carbon-based Generation).

As some regions rely on the coal industry as main component of the local economy, the BMWi is working on the so-called Structure Strengthening Act (Strukturstärkungsgesetz – StStG) to support those regions through financial aid, extending existing support programmes or establishing federal facilities. On 21 August 2019, the Federal Ministry of Economics and Energy initiated the participation of the federal states and associations in the draft bill for the German StStG (BMWi (2019): Entwurf eines Strukturstärkungsgesetzes Kohleregionen).

Building Energy Act

Since there were multiple laws governing the requirements for energy efficiency of buildings, together with the Federal Ministry of the Interior (Bundesministerium des Innern – BMI), the BMWi is working on a Building Energy Act (Gebäudeenergiegesetz – GEG) which will combine the Energy Conserving Act (Energieeinsparungsgesetz), the Energy Conservation Directive (Energieeinsparverordnung) and the Renewable Energy-Heat Act (Erneuerbare-Energien-Wärmegesetz) into a single Act to ensure common requirements for the energy efficiency of new buildings. On 29 May 2019, the BMWi initiated state and association hearings. Comments on the draft bill could be submitted until 28 June 2019 (BMWI (2019): Gebäudeenergiegesetz (GEG) – Gesetz zur Vereinheitlichung des Energieeinsparrechts für Gebäude).

New Offshore Site Development Plan

On the basis of in particular the WindSeeG, the Federal Maritime Hydrographic Agency (Bundesamt für Seeschifffahrt und Hydrographie - BSH) and the BNetzA started to set up at the offshore site development plan (Flächenentwicklungsplan – FEP). Most importantly, the FEP determines areas for construction and operation of offshore wind parks. It further determines time sequences in which the areas will be subject to tender processes on the basis of the central model of the WindSeeG. In May 2018, the BSH published the preliminary draft of the FEP. This was followed by a public hearing in June 2018, the publication of a first draft in October 2018 and a second draft in April 2019. At the end of June 2019, the final version was published. The plan regulates the expansion of offshore wind energy in the national exclusive economic zone of the North Sea and Baltic Sea from 2026 onwards.

The transition from a fossil fuel-driven energy market to a renewable energy market is a continuously relevant topic in the Germany in general. Whereas traditionally the German scheme for renewable energy relied on fixed feed-in tariffs provided under the EEG, the current version – the EEG 2017 – has shifted the framework to an auction system for the more significant onshore forms of renewable energy production. Tenders for offshore wind energy are subject to a separate law, the Code on the Development and Support of Wind Energy at Sea. The main drivers, and the focus of both investment and financing, in renewable energy in Germany are onshore wind energy, solar PV and offshore wind energy. Biogas and biomass play a reduced role. There are also some utility-scale geothermal projects to be seen, as well as some hydropower projects.

Because of fundamental errors in the design of the EEG 2017 auction system, newly installed capacity in offshore wind in Germany reached a level of only 2,400MW in 2018 (compared to 5,000MW of newly installed capacity in 2017). Newly installed capacity for solar PV in 2018 in Germany has outperformed onshore wind energy, with 2.81GWp of new capacity (compared to 1.66GWp in 2017).

In 2018, Germany saw fewer renewable energy transactions for newly developed projects, mainly on account of the significant reduction of newly installed capacity in the onshore wind sector. German investors and German financing banks have therefore put more focus on international business and projects outside Germany, mainly within Europe.

In line with the energy turnaround towards renewable energy production, German administration has just decided to reduce and finally cease coal firing after an acceleration of the cessation process for nuclear power had been resolved, following Fukushima. Gas, particularly in a power-to-gas context, but also as the remaining source of fossil fuel firing, is expected to continue to play a role in the German long-term market design, for reasons including  grid stability management and securing base load capacity.

Section 1a I EnWG explicitly states that the price of electricity at the wholesale market is not subject to any regulations and is entirely based on market mechanisms resulting from supply and demand. Trading is done either on the exchange (European Energy Exchange EEX in Leipzig or the European Energy Exchange EPEX Spot in Paris) or over-the-counter (OTC). The exchange is split into two markets, the futures-market and the spot-market (day-ahead and intraday). Trade at the spot market are scheduled for supply on the same day (intraday) or the next (day-ahead). Trade on the future market can be scheduled for up to six years in advance. However, market liquidity is predicted to be lower in the future. These time horizons are also used in OTC-trading, with the notable difference that OTC-intraday-trades can be closed as late as 15 minutes before supply, as opposed to 45 minutes before supply when trading on the spot market (Bundesnetzagentur (2019): Wholesale prices).

The German energy market historically consisted of a single bidding zone which was not embedded in law. However, the European Commission criticised the nationwide bidding zone due to power shortages in Germany’s south and made some allegations that different price zones could be implemented. To prevent the European Commission from doing so, an Amendment to the Electricity Network Access Ordinance was passed in November 2017, preventing TSOs from being able to split the existing bidding zone and effectively adopting the single bidding zone into formal law. There is no nodal pricing.

With regard to the prevention of insider trading on the wholesale market, the Regulation on Wholesale Energy Market Integrity and Transparency “REMIT") was introduced on 28 December 2011 in all European member states. The Federal Network Agency is responsible to enforce REMIT procedures in Germany (European Commission (2011): Regulation (EU) No 1227/2011).

There is no national regulation on cross-border electricity exchanges: the relevant rules are at the European level. The most important regulation for the cross-border use of networks, and thus for the management of interconnectors, is the EU Regulation on Cross-border Exchanges in Electricity (714/2009/EC) which contains mandatory provisions for the settlement of cross-border electricity trading. 

As part of the internal energy market of the European Union, imports and exports of electricity are permitted without any regulatory or technical barriers. Interconnected with nine neighbouring countries, Denmark, Netherlands, Luxembourg, France, Austria, Poland, Czech Republic, Sweden and Switzerland, Germany is, according to the BMWi, the leading exporter of electricity in Europe with a total of 82.7 TWh exported compared to 31.5 TWh imported in 2018 (BMWI (2019): Strommarkt der Zukunft).

The bulk of exports went to the Netherlands (20 TWh). A large share of these (20 TWh) was passed on to Belgium and Great Britain. Austria ranks second (12 TWh). 11.7 TWh were exported to Switzerland, mainly passed on to Italy. Fourth place Poland with 7 TWh imports electricity from the new federal states of Germany, only to partly export back to Southern Germany via the Czech Republic (Fraunhofer ISE (2019): Net Public Electricity Generation in Germany in 2018).

While exports usually occur because of market based mechanisms of supply and demand, there are short periods in which the German generation of electricity heavily exceeds the national demand, usually when unexpected strong winds occur, leading to more renewable energy being produced than needed. In those times, negative electricity prices are not unusual since it is often more expensive to shut down or reduce the generation capacity of coal-based or nuclear power plants compared to paying foreign entities to consume Germany’s excess electricity. There was a total of 134 hours with negative electricity prices in 2018 giving an incentive to export surplus energy to surrounding countries (Statista (2019): Anzahl der Stunden mit negativen Strompreisen in Deutschland in den Jahren 2008 bis 2018).

Though Germany annually produces more electricity than it uses, imports of electricity occur when the electricity price in neighbouring countries is very low due to a lot of excess renewable energy, when emission-allowances become expensive enough to make generation via coal-based power plants uneconomic compared to the import of electricity or when unexpected circumstances impede the generation of sufficient renewable energy.

The share of renewable energies in the German electricity mix rose by more than 40% for the first-time last year. In 2018, Germany’s supply mix of electricity largely consisted of power from coal (lignite and hard coal) and renewable energy, each accounting for over a third of the total electricity produced. The amount of electricity produced from coal is expected to steadily decrease until the complete stop of coal-based energy production planned for 2038, while renewable energy is supposed to provide most of the electricity needed in the future. Last year’s supply mix, (according to BMWi (2019): Strommarkt der Zukunft), was as follows:

  • coal: 228.7 TWh (35.4%)
    1. lignite: 145.5 TWh (22.5%)
    2. hard coal: 83.2 TWh (12.9%)
  • oil: 5.2 TWh (0.8%)
  • gas: 83.4 TWh (12.9%)
  • nuclear: 76 TWh (11.8%)
  • renewable energies: 226.4 TWh (35%)
    1. wind: 111.5 TWh (17.3%)
    2. solar: 46.2 TWh (7.1%)
    3. hydro: 16.6 TWh (2.6%)
    4. bio mass: 45.7 TWh (7.1%)
    5. domestic refuse: 6.2 TWh (1%)
  • others: 27 TWh (4.1%)

Total: 646.8 TWh

The merger control provisions of the GWB governed market concentration limits and are enforced by the BKartA. The BKartA prohibits any merger that would significantly impede effective competition, in particular if it leads to the creation or strengthening of a dominant market position. The GWB contains rebuttable presumptions as to the existence of dominant market positions. There is a presumption of single dominance where a single undertaking has a share of at least 40% of the market. Collective dominance is presumed if three or fewer undertakings have a combined market share of at least 50%, or if five or fewer undertakings have a combined market share of at least two thirds.

The BKartA defines the relevant markets for electricity supply along the affected market levels:

  • The market for the generation and first-time sale of electricity (which does not include electricity generated and marketed on the basis of the EEG). This market comprises, in principle, Austria, Germany and Luxembourg. The BKartA, however, has stated that the competitive effects of the separation of the former common price zone Austria and Germany in October 2018 have to be taken into account. In its sector inquiry report in 2011, the BKartA assumed that E.ON, RWE, Vattenfall and, in part, EnBW had a dominant market position. However, this finding requires updating in future cases given the changes that have arisen in the meantime (in particular divestment of generating capacity and transmission grids, decommissioning of nuclear power plants and expansion of EEG capacities).
  • The German-wide market for wholesale/distribution. To date, BKartA and courts could leave open whether and which energy company has a dominant position on the wholesale/distribution level.
  • Separate retail markets for the supply of household and small commercial customers (standard load profile customers), which is further segmented into the local/regional markets for basic supply and the German-wide market for the supply of special contract customers, and the German-wide market for the supply of industrial/large customers (load-metered customers). On the (local/regional) markets for the basic supply, the respective basic supplier has a dominant position. On the nation-wide markets for the supply of special contract customers and the supply of industrial/large customers, no supplier has a dominant position, according to the BKartA.

According to Section 1 GWB, agreements and concerted practices restricting competition are prohibited. An individual exemption from the ban on cartels is possible under Section 2 (1) GWB. In addition, the EU block exemption regulations apply, mutatis mutandis, to restrictive agreements according to Section 2 (2) GWB. Section 3 GWB also contains an exemption for certain restrictive agreements involving small and medium-sized enterprises. Section 19 GWB prohibits the abuse of a market dominant position. In addition, pursuant to Section 20 GWB, the prohibition of unfair impediment and discriminatory conduct also applies to market strong undertakings. Section 21 GWB prohibits boycotts and other forms of retaliation against undertakings.

The BKartA bears primary responsibility for the enforcement of the GWB. The provisions are enforced either in administrative proceedings or proceedings for administrative fines. Along with this public enforcement, the GWB is also enforced in civil court proceedings (private enforcement).

The BKartA may initiate proceedings on its own initiative or upon request. The BKartA may conduct investigations, carry out unannounced searches on business and residential premises, and seize objects (eg, documents, electronic devices) of potentially probative value for the investigation and image computer hard drives.

The BKartA may also conduct interviews and request the disclosure of specific documents or information. However, due to the fundamental rights of defence that apply in proceedings for administrative fines, there is no obligation to respond to questions or to produce documents.

The BKartA can, by means of administrative proceedings, impose an order to discontinue the conduct objected to. Furthermore, in proceedings for administrative fines, the BKartA can impose a fine on companies of up to 10% of the worldwide group turnover achieved in the business year preceding the fine decision and on individuals of up to EUR1 million.

The main legislative focus for climate change policies is the EEG. Besides this, a large variety of regulations and laws exists aiming at the reduction of emissions, such as emission reduction schemes for industrial plants, requirements for energy efficient construction of buildings etc.

In addition, the agreements of the UN Framework Convention on Climate Change and its Additional Protocols, the Kyoto Protocol and the Paris Convention are the guiding principles and yardsticks for the Federal Government's climate protection policy. German climate protection policy uses a broad mix of instruments to achieve specified climate protection goals. In addition to EU emissions trading (EU ETS), these include, for example, the Renewable Energies Act, the Combined Heat and Power Act, the Energy Saving Act, the Energy Saving Ordinance and the Energy Industry Act, as well as the Renewable Energies Heat Act and the Energy and Climate Fund Act. The Federal Ministry of Economics and Energy is also actively involved in intensifying co-operation to disseminate climate-friendly technologies and to adapt to climate change within the framework of the technology mechanism of the Framework Convention on Climate Change.

EU ETS works according to the principle of "Cap & Trade". An upper limit (cap) determines how many greenhouse gas emissions may be emitted by installations subject to emissions trading. Member states issue a corresponding amount of emission allowances to the plants - partly free of charge, partly through auctions (one allowance allows the emission of one tonne of carbon dioxide equivalent - CO2 equivalent). Emission allowances can be traded freely on the market. The Greenhouse Gas Emissions Trading Act (Gesetz über den Handel mit Berechtigungen zur Emission von Treibhausgasen - TEHG) of 28 July 2011 forms the legal basis for trading in allowances for greenhouse gas emissions in an EU-wide emissions trading system in Germany and implements Directive 2003/87/EC (Emissions Trading Directive). It has so far proven to be inefficient in light of too many certificates having been issued and prices having dropped to a level where significant trading no longer occurred. A sudden increase of certificate prices occurred in late 2018.

Sec. 13g EnWG requires five lignite-fired power plants to be partially or completely decommissioned between 2016 and 2019. This section was introduced in 2016 as a contribution to national and international efforts against climate change. The mechanism provided for works as follows. The affected power plants have to remain in a stand-by mode to ensure the stability of the network as a whole in case of emergency for four years from the respective point of decommissioning onwards. During this stand-by period, the operators of these power plants receive compensation subject to a specific calculation mechanism provided for within the law.

The so-called ‘coal-commission’ (Kommission für Wachstum, Strukturwandel und Beschäftigung – KWSB), established in June 2018, finished their work in February 2019 regarding the withdrawal of coal-based generation and has delivered its suggestions, which the BMWi plans to implement with a coal decommissioning act, hopefully by the end of 2019. This involves a reduction of coal-based electricity production from 40GW at present to 30GW in 2022 (15GW lignite and hard coal each), 17GW in 2030 (9GW lignite, 8GW hard coal) until the cessation of coal-based generation by 2038. In 2032, the government plans to evaluate if a complete stop is possible by 2035. To achieve these goals, there will be different approaches for lignite- and hard coal-fired power plants.

There will be a decommissioning premium for hard coal-fired power plants which will be given out by a public invitation for tender. The operator that asks for the lowest price per reduced carbon-dioxide emission is awarded the premium. The premiums will be gradually reduced until 2030 to encourage power plant operators to act fast.

With regard to the lignite industry, the BMWi plans to start negotiations regarding a compensation amount. Should the negotiations fail, regulatory actions including compensations will be the alternative of choice (BMWi (2019): Rahmen und nächste Schritte für die Kohleausstiegsgesetzgebung).

In Germany, electricity from renewable sources is mainly supported through a market premium scheme. For most installations, the award and the level of the market premium is determined through a tendering scheme. Plants with a capacity of up to 100 kW and other plants in exceptional cases can benefit from a feed-in tariff. The criteria for eligibility and the tariff levels are set out in EEG 2017.

The Federal Government has set itself the target of reducing greenhouse gas emissions in Germany by 40% by 2020, 55% by 2030, 70% by 2040 and 80-95% by 2050. According to the climate protection report 2018, Germany is falling short of its climate targets for 2020. Instead of the target of 40% fewer greenhouse gases than in 1990, the reduction in emissions in Germany is only about 32%.

There is a tender procedure for renewable electricity capacities in Germany for wind energy and solar PV. It serves to establish a sliding feed-in premium to be awarded to auction winners. Eligible technologies are new wind onshore, wind offshore, solar, and biomass (new and existing plants, § 22 paragraph 4 EEG). In general, there are separate tenders for each technology (§ 36 - § 39 EEG). There is, however, a special tender for wind and solar and it can be expected that tenders will increasingly be designed in a renewable technology open manner (§ 36 - § 39 EEG). EEG 2017 also provides for the possibility of joint solar tenders with other European (neighbouring) countries, and these tenders have already been conducted successfully. Respective provisions are set by the Cross-border Renewable Energies Ordinance (“GEEV”) (Verordnung zur grenzüberschreitenden Ausschreibung für Strom aus erneuerbaren Energien (Grenzüberschreitende-Erneuerbare-Energien-Verordnung - GEEV)). The auction proceedings are organised by the BNetzA. The BNetzA sets the format requirements (currently a sealed bid format) for the bidding processes as the format is not specified by law (§ 30a EEG). 

EEG remuneration under the tender system is granted for a period of 20 years, starting from entry of operation of the plant. At the end of this period, no further EEG remuneration is available (expect for biomass plants).

The costs of the tariffs set by the tenders are borne by the end consumers.

The German promotional bank KfW offers several financing programmes related to renewable energy.

Facilities for generation of alternative energy, in particular by wind, solar and hydro power and by biomass, are not subject to a specific legal framework. The general rules on permit requirements and procedure and to the material legal requirements apply.

According to Germany’s federal structure both federal law and law of each affected federal state have to be considered:

Public Planning of Generating Facilities

Onshore generating facilities

The binding legal framework for geographical allocation of on shore energy generating facilities consists of the local zoning plans (Bebauungsplaene) and the local land development plans (Flachennutzungsplaene) set by the municipalities according to BauGB and the municipal codes of the federal states. Such binding public plans may designate certain areas for specific energy generating facilities or may exclude them from other areas (Section 35 BauGB).

Thezoning plans and land development plans are set up on the basis of the spatial planning (Raumordnung), in particular the regional plans of the federal states.

Off-Shore generating facilities

The allocation of off-shore wind energy farms in the German Exclusive Economic Area, their connection grids and cross border grid connection is defined by the Site Development Plan (FEP), issued 28 June 2019. The scope of the FEP may be extended to the territorial waters of the adjacent German federal states. The FEP also defines the timeline when the qualified areas shall be included in the tendering procedure by the BNetzA and the planned time schedule for the individual start of operation.

The FEP is set up by the BSH. The FEP is based on public spatial planning: The Maritime Spatial Plans for Germany’s Exclusive Economic Zone set up by the BSH that are for the time being subject to revision by the BSH and the Federal Ministry of the Interior.

Permit Requirements for Construction and Operation of Generating Facilities

Onshore generating facilities

Unlike transmission lines the construction and operation of on shore facilities for generating alternative energies are not subject to the specific requirement of a planning approval decision under energy law (Section 43 EnWG, see 5 Transmission). Certain generating facilities defined by 4.BImSchV require - due to their size - a permit according to the BImSch, for example:

  • Biomass electricity generators with a rated thermal input of greater than or equal to 10 MW; and
  • Wind turbines of a total height greater than 50 m.

The permit according to BImSchG is not limited to the very facility generating the energy but covers the whole industrial premises (Betriebsstätte), including the installations required for such operation.

To the extent the generating facilities are not subject to permits according to BImSchG, in particular solar energy and photovoltaic installations, they require in general at least a building permit according construction codes of the federal states. Minor projects may even be exempted.

Generating power from geothermal energy in a depth of more than 110m requires, as a general rule, approvals under the BBergG.

Permits according to BImSchG and construction permits do not necessarily include all required approvals. Additional permits may be necessary in view of the project’s specific impact on specially protected interests, for example under water management law (Wasserrecht), nature protection law (Naturschutzrecht), aviation law (Luftverkehrsrecht), monument protection law (Denkmalschutzrecht) etc.

Off-shore facilities

The construction and operation of off-shore wind farms either located within Germany’s Exclusive Economic Zone or construed by an entity domiciled in Germany require planning approval decision (Planfeststellungsbeschluss) according to Section 45 WindSeeG. Effects and procedure of such planning approval decision are very similar to those of planning approval decisions on transmission grids under Sec. 43 EnWG (effects and procedure see 5.1 Regulation of Construction and Operation of Transmission Lines and Associated Facilities and 5.2 Regulation of Transmission Service, Charges and Terms of Service). Entitled for an application is only the entity that was ascribed such off-shore wind farm project by BNetzA.

Legal requirements for all approval for construction and operation of energy generating facilities

The legal compliance of the construction and operation of energy generating facilities is materially governed by numerous federal and state laws, in particular on planning law (Bauplanungsrecht, Section 29 & 35 BauGB), water management, nature protection law, aviation, monument protection, etc.

To the extent that the project is compliant with this legal framework, the applicant is entitled to the permit under BImSchG or to the building permit.

Apart from the planning approval decision for off-shore wind farms and their connection grids according to Section 45 WindSeeG there is no specific law for obtaining the approvals for energy generating facilities. As the authority to grant such permits is with the federal states their specific administrative procedure codes (Landesverwaltungsverfahrensgesetze) apply. Furthermore, the permitting procedure follows general provisions like those applicable under BImSchG or such on the environmental impact assessment (EIA) according UVPG, that implements legal international obligations in particular on public access to (environmental) information, procedural involvement of the public and access to courts set out by Aarhus-Convention and EU law (for example the EU EIA-Directive 2014/52/EU).

As BImSchG is federal law the included provisions on the procedure is the same for regulators in Germany.

First step in the procedure to obtain a permit under BImSchG is the assessment, if an EIA according to UVPG was obligatory. 4. BImSchV lists projects subject to compulsory EIA, for example wind farms with twenty or more wind energy turbines. Other projects are require a full scope EIA depending on the outcome of a preliminary EIA according on the specific effects of the project. If an EIA is compulsory the procedure for obtaining a permit under BImSchG unfolds, in principle, as follows:

  • screening (with preliminary EIA) or Scoping to define the scope of the EIA;
  • filing of the application documentation;
  • within four to six weeks decision by the regulator on completeness of the documentation;
  • public announcement of the project (oeffentliche Bekanntmachung);
  • involvement of the stakeholders of public interests (Traeger Oeffentlicher Belange TOEB);
  • disclosure of the documentation to the public and to the public and private stakeholders (Oeffentlichkeitsbeteiligung);
  • public hearing limited to those who have submitted comments to the documentation (Eroerterungstermin);
  • review and assessment of the submitted comments and involvement of public stakeholders;
  • adjustments of planning documentation to the extent necessary and – in the case of material amendments - iteration of the involvement and hearing of public and private stakeholders;
  • permit; and
  • public disclosure of the permit.

If an EIA is not compulsory, the involvement of the public (public disclosure of the documentation, public hearing) and the public disclosure of the permit are optional.

As the permitting under BImSchG is in the responsibility of the federal states the authority to grant the permit is allocated to different regulators in each federal state. There may be:

The procedures for obtaining a building permit vary substantially as the building codes are law of the federal states. Obtaining a building permit is less structured than the planning approval procedure or the procedure to obtain a permit according to BImSchG. The applicant will apply for the permit and file the respective documentation. After the completeness has been reviewed, the regulator will involve the affected public stakeholders and to some extent the neighbours. If the project’s legal compliance is confirmed, the permit has to be granted. Regulators in charge are either the district authorities (Landkreise) or the administration of such cities which do not belong to a district (kreisfeie Staedte).

Permits under BImSchG and building permits are usually subject to numerous conditions (Nebenbestimmungen) that the regulator imposes on the applicant and that impose the legal compliance of the construction and operation.

Typical obligations under such permit are all types of measures (prevention, protection, compensation, CEF-measures according to EU FFH-Directive) in respect of the protection of the environment, the neighbours, protected sites (such as military sites, airfields, etc.), air traffic (marking obligations), decommissioning and recovery of the land after termination of the operation, technical and safety requirements and monitoring or reporting obligations.

Permits under BImSchG may always be amended by the regulator with additional obligations to grant the legal compliance of project even with increased requirements.

Changes to project permitted under BImSchG require a formal amendment by modification permits (Änderunggenehmigung) that have to pass the standard permitting procedures. For minor changes with no risk of negative impact of the emissions, a notification may suffice. Building permits are changed by subsequent modification permits.

If there is no mutual agreement with the land owner to secure the use of the land, a compulsory expropriation may be imposed on the land owner to allow the compulsory transfer required right of use or - if there is an imminent public need - the title in land. Expropriation may only be executed for compensation. Statutory basis may be in particular Section 45 EnWG that allows for expropriation in favour of energy supply projects. The expropriation procedure is done by the regulator of the federal state where the real property is located and according the specific expropriation laws of this federal state. As a standard model expropriation law provides for two step procedure: first, pressing public need for expropriation under strict application of the principle of proportionality has to be established, second, the amount of compensation is calculated on the basis of the respective statutory provisions on the basis of market value. The compensation for the mere use of the land may be 20% to 30% of its compensation market value.

There is a procedure for early transfer of possession (vorzeitige Besitzeinweisung).

As most facilities generating alternative energy were located outside the developed areas (Aussenbereich), the operator is under the statutory obligation to decommission the facility (Rückbauverpflichtung). The regulator in charge of the permit shall request a respective binding undertaking by the applicant. The undertaking has to be backed by collateral like a public charge (Baulast) or by a guarantee (Buergschaft) over the potential costs of. These obligations are usually included as condition precedent (aufschiebende Bedingung) into the permit.

For the understanding of the legal framework of transmission lines it is crucial to acknowledge Germany’s federal structure. The planning of high voltage and extra high voltage transmission lines of national, and even international importance, are subject to both federal law and law of the federal states.

The German regulatory framework for authorisation of transmission lines distinguishes between planning by state authorities (Planungsrecht) and the approval requirements. Approval allows for construction and operation, the public planning defines the legal framework for these lines (necessity, priority, geographical corridors, etc).

Planning and approval are a multistep complex procedure on the federal and state level, involving the transmission system operator (TSO), other stakeholders and the public.

Planning and approval of transmission lines is in particular subject to the EnWG. Most recently the planning and approval procedure has been substantially improved by NABEG 2.0. Both EnWG and NABEG 2.0 apply in particular to transmission lines greater than or equal to 110 kV. EnLAG facilitates some aspects of the expansion of transmission lines of extra high voltage of greater than or equal to 380 kV.

Apart from these regulations providing for specific requirements for transmission networks, general rules apply on both the federal and state level. General laws on the procedure apply: the administrative procedure codes or obligations on environmental impact assessments EIA according to UVPG that implements international obligations set in particular on public access to (environmental) information, and procedural involvement of the public and access to courts by Aarhus-Convention and EU law (for example the EU EIA-Directive 2014/52/EU).

Like all other approvals, those for construction and operation of transmission line are materially not only governed by specific law but also by numerous federal and state laws, in particular, for example, those on water management, nature protection law, aviation, monument protection, etc.

The planning of the transmission lines is done mainly by the regulator at the federal level. The German TSOs and the BNetzA are substantially involved. The public and the private stakeholders are involved in the specific aspects of the planning.

  • Joint Scenario Framework:The joint Scenario Framework (Szenariorahmen)isset up (every two years) by the TSOs indicating their view on the feasible development of electricity generation and consumption for the coming ten years. It is subject to approval by the BNetzA. The most recent one of 15 June 2018 covers the years 2019 to 2030.
  • Electricity Development Plan:The annual onshore Electricity Development Planand the Offshore Electricity Development Plan (Netzentwicklungsplaene Strom) are set up by the TSOs every two years subject to approval by the BNetzA. The Electricity Development plans define on the basis of the Scenario Framework the need of optimising, expansion and reinforcement measures. These are backed by Environmental Reports prepared by the BNetzA on the feasibility of the measures within the nature protection framework.
  • Federal Requirements Plan Act: These preparatory joint scenario framework and the Electricity Development Plan are implemented by the Federal Requirements Plan Act (Bundesbedarfsplangesetz BBPlG)that is passed by federal parliament as binding federal statute every four years. BBPlG lays down the compulsory definition of necessity and priority of the included projects including endpoints of the lines, but not the proper lines and corridors.
  • Federal Sectoral Planning/Regional planning by the states:The BBPlG is implemented either on the federal level by the BNetzA or on the level of the federal states. To the extent that extra high voltage included in the BBPlG affect more than one federal state or have cross the external German border’s with other national states, the BNetzA provides - usually on TSO initiative - a binding decision on the Sectoral Planning (Bundesfachplanung) on the corridor (width of 500m to 1000m) of respective lines. The Sectoral Planning Procedure includes a Strategic Environmental Assessment (Strategische Umweltverträglichkeitsprüfung) according to the UVPG. The compatibility with the regional planning of the affected federal states has to be granted and public and private interests have to be balanced. NABEG 2.0 includes additional provisions facilitating the planning procedure. The Sectoral Planning is in respect of the defined corridor binding for the specific subsequent planning approval decision. On the contrary corridors defined by the regional planning allows for deviation by the planning approval decision. The Sectoral Planning Procedure is started by an application conference (Antragskonferenz), the documentation is disclosed to the public and the public and private stakeholders are involved (Oeffentlichkeitsbeteiligung). The procedure includes a public hearing of those who submitted comments to the documentation. The procedure is managed by the BNetzA and the TSO.

If only one federal state is affected, the corridor is defined by the spatial planning instruments of the respective federal state (Landesraumordnung).

Approval to Construction and Operation of the Transmission Lines and Associated Facilities

Onshore transmission lines

Construction and Operation of transmission lines and their associated facilities require in general a planning approval decision (Section 43 EnWG). Minor projects may be subject to a facilitated planning permit (Plangenehmigung). Low profile changes to the lines and facilities may only be notified to the regulator. Transmission lines in the coastal waters do also fall within the scope of Section 43 EnWG.

Facilities required for the operation of transmission lines (like converters, phase shifter, transformer stations etc) may be included into the planning approval decision (Section 43 EnWG).

The planning approval decision includes all necessary permits and determines the project’s compliance with all applicable legal requirements (Konzentrationswirkung). No other approval by public regulators is required.

The major stepping stones of the procedure to obtain a planning approval decision are:

  • application by the TSO providing the major substantial information and an easy understandable description of the project that would allow the regulator to define the specific scope and requirements for the planning. The application may be limited to specific sections of the line. The application shall identify a preferred line within the binding corridor and discuss alternatives;
  • application conference to define the scope of the review by the regulator. The application conference is public and involves the interested stakeholders;
  • decisions on scope of reviews and required documentation, in particular the impact of both construction and operation on public and private interests and possible prevention and compensation measures, scope and requirement of a preliminary EIA (Umweltvertraeglichkeitsvorprüfung) or a full scope EIA according to UVPG and of the so called environmental and landscape management plan (Landschaftspflegerischer Begleitplan LBP). A (full scope) EIA is compulsory;
    1. for overhead power lines greater than 15 km length and greater than or equal to 220 kV;
    2. for all underground power cables; or
    3. if substantial environmental impact was identified by the Preliminary Environmental Impact Assessment);
  • filing of the application documentation, including for example definition of the required land and necessary expropriation, unilateral undertakings (Zusagen) to prevent or mitigate conflicts, etc;
  • within one-month decision by the regulator on completeness of the documentation;
  • involvement of the stakeholders of public interests (TOEB);
  • disclosure of the documentation to the public and the public and private stakeholders (Oeffentlichkeitsbeteiligung);
  • public hearing limited to those who have submitted comments to the documentation;
  • review and assessment of the comments submitted by the stakeholders;
  • adjustments of planning documentation to the extent necessary and – in the case of material amendments - iteration of the involvement of public private stakeholders;
  • public planning approval; and
  • public disclosure of the planning approval decision.

The procedure is managed by the regulator in charge of granting the planning approval decision (Planfeststellungsbehoerde) and the applicant (Vorhabentraegerin).

Regulator in charge for the planning approval decision procedure for transmission lines that cross the international borders of Germany or the internal border of German federal states is the BNetzA.

Is the projected transmission line located in one single federal state, the latter is in charge of the permitting. The specific regulator with authority to grant the approval depends on the organisation of the federal state in charge:


The construction and operation of submarine cables require two approvals under BBergG by different regulators, including the Federal Mining Code. One permit on mining law issues according to BBergG either for the Baltic Sea by the Mining Authority Stralsund and for the North Sea the State Office for Mining, Energy and Geology. In addition, an approval by the BSH is required on the compliant use of the use of the water on the continental shelf and air space above these waters.

  • Planning approval decisions usually include two types of terms and conditions. One is unilateral undertakings by the applicant. By inclusion into the planning approval decision, these undertakings become binding and enforceable. The other type is ancillary conditions that the regulator imposes on the applicant.
  • Typical obligations under the planning zoning decision are measures including prevention, protection and compensation. In respect to the protection of the environment, neighbours, protected sites, etc, marking installations due to risks for air traffic, recovery of the land after termination of the operation, protection corridors, technical requirements and reporting obligations and expropriation needs. The regulator is entitled to impose additional prevention or compensation obligations even after granting the planning approval decision provided that the planning approval decision did no cover and balance all conflicts. Affected stakeholders may be entitled to request these additional measures.
  • The planning approval decision may be amended or changed by a subsequent planning approval decision (Planergaenzungsverfahren). For minor changes not affecting other stakeholders, or if these stakeholders have consented to the amendment, a facilitated procedure may apply (no public hearing - Anhoerungsverfahren - and no public disclosure of the planning approval decision – oeffentliche Bekanntgabe).

Though the planning approval decision includes all permits by regulators for the construction and operation of transmission lines, it does not replace the consent from landowners for the use of land. The land owner’s consent for the use of land may be replaced by compulsory expropriation (Enteignung). Unlike other types of permits for energy facilities according to BImSchG or state building codes (Baugenehmigung), a planning approval decision facilitates the expropriation procedure by anticipating the necessary binding decision of the public need and proportionality of the expropriation (enteignungsrechtliche Vorwirkung). If the planning approval decision has become final, the land owner cannot challenge the assumption of the public need of expropriation in the subsequent expropriation procedure.

If there is no mutual agreement on use of the land, a compulsory expropriation will be imposed on the land owner to acquire the respective land use right or even – if there is a need – the title to the land. Expropriation may only be executed for compensation. The expropriation is carried out by the regulator of the federal state where the real property is located and according the expropriation laws of this federal state. NABEG 2.0 provides for some specific provisions in respect of extra high voltage lines.

The amount of compensation is calculated on the basis of the respective statutory provisions of the federal states and is based on the market value. The compensation for the mere use of the land may be 20% to 30% of the land’s market value.

The use of land has to be secured by land charges (beschraenkte persoenliche Dienstbarkeiten) in favour of the TSO and registration in the public land register (Grundbuch). These land charges restrict the use of land to the extent it interferes with the operation of the transmission lines.

There is a procedure for an early transfer of possession (vorzeitige Besitzeinweisung) and of an early expropriation (vorzeitige Enteignung) prior to the planning approval decision.

Damages caused by construction or operation have to compensated.

The German transmission system is split between four transmission system operators (50Hertz, TenneT, Transnet BW and Amprion). Historically, these companies cover a specified geographical territory resulting from the time of former demarcation areas. Thus, each company is responsible for a specific control area (Regelzone) and all four German TSOs co-operate nationwide to ensure the reliability and stability of the network. The current situation can be considered as a factual monopoly as only one TSO acts in each control area even though there are no formal rights allowing exclusive operation in their respective geographical territories. However, parallel construction of network infrastructure does not take place.

The principle govening laws are:

According to 21 paragraphs 1 and 21a EnWG, network fees must be proportionate, non-discriminatory and transparent. Further details regarding the regulation of transmission fees are stipulated by ordinances based on the aforementioned provisions, namely StromNEV and ARegV. StromNEV governs the determination and calculation of charges for the transmission of electricity. ARegV, establishes the incentive-based regulation of transmission charges. It aims to simulate competition to incite TSOs to work more efficiently and cost-effectively (see 5.2.2 Establishment of Transmission Charges and Terms of Service). StromNEV can be understood as a general framework for the regulation of network charges while ARegV specifies the current methods used for calculation.

StromNZV governs the access to electricity networks and provision of transmission services. The BNetzA is the main regulator for all matters regarding transmission networks and the TSOs.

Establishment of Network fees

Since transmission and distribution networks are natural monopolies, the network charges are heavily regulated by the BNetzA to simulate competition and thereby incite improvements in productivity and cost efficiency. After a prior cost assessment, the BNetzA determines a revenue cap for each specific transmission or distribution system operator for a regulation period of five years. These revenue caps are reviewed and adjusted in accordance with statutory provisions on a yearly basis during a regulation period to provide necessary flexibility and to cover material changes in the cost basis. The revenue caps are the maximum a system operator can earn from network charges and are based on the operator’s base costs and an individual efficiency value.

Base costs

A system operators base costs include maintenance, expansion and operational expenses and the rate of return on equity. The year three years before the start of a new regulation period is used as a reference for the calculation of base costs (so-called foto year). The return on equity is pre-determined by the BNetzA for each five-year regulation period in accordance with legal requirements, while the share of equity is capped to a maximum of 40% by Section 7 paragraph 1 s. 5 StromNEV.

When the BNetzA lowered the rate of return on equity to 6.91% for the third regulation period (2019-2024) compared to 9.05% in the second period (2014-2019), more than 1000 system operators filed a lawsuit against the decision. The claimants were successful at the ‘Higher Regional Court’ Düsseldorf (Oberlandesgericht – OLG Düsseldorf) as the court of first instance, deciding that the BNetzA did not sufficiently consider the market risks and market distortions due to low interest rates. Thus, the court came to the conclusion that the Federal Network Agency unlawfully set the rate of return on equity too low. However, the BNetzA appealed against this decision and the Federal Court of Justice (Bundesgerichtshof – BGH) overturned the prior decision on the 9 July 2019 (EnVR 41/18), ruling that the BNetzA has a wide discretion in choosing how to calculate and how to effectively determine the return on equity for system operators within the legal requirements. Thus, the rate of return on equity is now set to 6.91% for the third regulation period. However, even with the lower rate of return on equity, investments in the energy sector still seem to be an attractive option, especially compared to common other investment options with even lower interest rates.

Efficiency value

The efficiency value for each system operator is calculated by comparing the influencable costs and the network area to cover both against each other and against the same values of other national (for distribution system operators) and international (for transmission system operators) system operators.

If the system operator manages to reduce its costs, it is allowed to keep the difference between the costs and the revenue cap as additional profit. These reduced costs are the starting point for the calculation of the next year’s revenue cap, which again gives an incentive to further reduce costs and boost the efficiency of the system operator. This continuous cost reduction is supposed to effectively benefit the consumer by lowering the network charges and thus the retail price of electricity.

Terms of service

The EnWG enables the Federal Government in form of the BMWi to issue ordinances regarding the energy sector. In turn, these ordinances enable the BNetzA to issue administrative acts in form of administrative acts (so-called Determinations (Festlegungen)) regarding network access and usage, see Section 29 paragraph 1 EnWG. This competence includes inter alia predefining legal agreements regarding network access and usage. In November 2018, the Federal Court of Justice clarified (EnVR 33/17) that the BNetzA’s competence is not restricted to certain parts of those legal agreements but it can instead predefine the whole contract if necessary to ensure common requirements across contracts between different parties.

Network customers have several options to appeal against unfair and/or unreasonable network fees. First, the can claim that (regulated) network fees are still unfair and/or unreasonable according to Section 315 BGB. This case will lead to a “double-checking” of already regulated network fees in front of civil courts.

Additionally, the Federal Court of Justice decided on 9 July 2019 (EnVR 5/18) that the Federal Network Agency’s above-mentioned determination of the rates of return on equity for the third regulation period of the incentive regulation directly and individually affects the considerable economic interests of an electricity utility invited to the administrative procedure. Thus, network customers can request to take part in these administrative procedures and are allowed to challenge the Federal Network Agency’s decision by way of a third-party injunction.

Network connection and access to transmission networks are statutorily granted via Section 17, 20 and 21 paragraph 1 EnWG. Connection, access conditions and charges have to be reasonable, non-discriminatory and transparent. A TSO can only deny a network customer’s access if it can prove that granting access is impossible or would not be reasonable, see Section 20 paragraph 2 EnWG. Proof has to be submitted to the BNetzA who will review this decision as regulator. While the conclusion of several contracts is required for the access and usage of an electricity network, the BNetzA published a standardised network usage standard contract that must be used in practice (see 5.2.2 Establishment of Transmission Charges and Terms of Service).

Planning approval decisions according to Section 43 EnWG for high voltage and extra high voltage transmission lines may include all installations required for operation (see 5.1 Regulation of Construction and Operation of Transmission Lines and Associated Facilities).

In respect of connection grids for off-shore windfarms in the Exclusive Economic Zone the planning approval decision according to Section 45, 44 paragraph 1 WindSeeG – does include all ancillary installations necessary for construction and operation (see 4.1 Principle Laws Governing the Construction and Operation of Generation Facilities).

The permit of energy generating facilities according to BImSchG may also not be limited to the very installation for energy generation but include the ancillary installations related to this operation (see 4.1 Principle Laws Governing the Construction and Operation of Generation Facilities).

Distribution facilities not covered by such planning approval decisions or permits according to BImSchG as part of the generation facility, may require specific, separate permits under BImSchG, like power transformer substations (Elektroumspannanlagen) ≥220 kV, provided they are not contained (4. BImSchV).

To the extent distribution facilities qualify as building (Bauwerk) or installation (Anlage) under the building codes of the federal states (Landesbauordnung), they may require a building permit. Most state building codes exclude the mere lines and cables from the requirement of a building permit, likewise, the poles of overhead power lines (Freileitungen).

If facilities are not subject to planning approval decisions, that include all necessary permits, electricity distribution facilities may require additional separate approvals, for example:

  • according to water management law for activities potentially affecting waterways (eg, bridges, tunnels, etc);
  • under nature protection law;
  • under the forest protection law of federal states, for example if the construction and maintenance of an underground power cable requires the cutting of forest;
  • according to the law of state and federal streets (Bundes- und Landesstraßenrecht), if such streets have to be bridged or if the lines shall be laid into the roadway; exemption may apply;
  • according to aviation law, for example for poles exceeding a certain height in the vicinity of airports and (military) airfields;
  • under the law for protection of certain military areas (Schutzbereichsgesetz); and
  • according to provisions for the protection against electro-magnetic fields (21. BImSchV).

For the process of obtaining a planning approval decision see 5.1.2 Regulatory Process for Obtaining Approvals to Construct and Operate Transmission Facilities. For obtaining a permit according to BImSchG chapter 4.1.2.

As to typical conditions to permits and approvals see 5.1.3 Terms and Conditions Imposed in Approvals to Construct and Operate Transmission Facilities.

As to the options of expropriation in view electricity distribution facilities, see 5.1.5 Transmission Service Monopoly Rights.

Although there are no formal monopoly rights for distribution networks, companies need concessions with municipalities to be able to access and use publicly owned property in order to effectively operate a distribution network and supply electricity to local customers within a city’s geographic area (Section 46 EnWG). These concessions are only granted to one operator for a timeframe of 20 years giving this company the exclusive right to use public streets for network infrastructure. The company that gets to operate a certain distribution grid is determined in a transparent, non-discriminatory tender procedure. The municipal administration publicly states what conditions an operator has to meet in order to win and how significant each requirement is in the final decision process. The new operator can, according to Section 46 paragraph 2 EnWG, demand transfer of ownership or being granted possession of the distribution grid and all installations relevant to operate it from the old operator for a reasonable price. No concessions are needed for distribution networks, or parts of those, if they are located outside of a municipality.

Above-mentioned explanations for TSO level (5.2.1 Principle Laws Governing the Provisions of Transmission Service, Regulation of Transmission Charges and Terms of Service) apply for DSO level accordingly.

Above-mentioned explanations for TSO level (5.2.2 Establishment of Transmission Charges and Terms of Service) apply for DSO level accordingly.

Taylor Wessing Partnerschaftsgesellschaft mbB

Am Sandtorkai 41
20457 Hamburg

+49 40 36803-0

+49 40 36803-280
Author Business Card

Law and Practice


Taylor Wessing Partnerschaftsgesellschaft mbB is a full-service international law firm, working with clients in the world’s most dynamic industries. Our 33 offices of the Taylor Wessing network blend the best of local business, industry and cultural knowledge with international experience to provide astutely commercial solutions for clients. One major pillar of Taylor Wessing’s global energy group is the energy practice of Taylor Wessing Germany with its five German offices. Taylor Wessing Germany advises on energy and infrastructure projects in Europe and all over the world. The Energy Group’s advisory portfolio includes M&A and financing, project development, regulatory energy law, energy antitrust law, plant construction, environmental law and litigation. As a full-service law firm for the energy industry, main practice areas include renewable energies and clean tech, energy supply contracts, networks and infrastructure, electro-mobility, energy storage, thermal power plants, oil and gas and the digitalisation of the energy system transformation. Taylor Wessing advises investors, financiers and banks as well as project developers, energy suppliers, plant constructors and operators and energy-intensive companies.

Compare law and practice by selecting locations and topic(s)


Select Topic(s)

loading ...

Please select at least one chapter and one topic to use the compare functionality.