Power Generation, Transmission & Distribution 2024 Comparisons

In Germany, the power industry operates as a competitive market with separate entities in generation, storage, transmission, distribution and supply. Ownership in each segment is a mix of public and private.

• Generation – companies including utilities, independent producers and renewable developers own and operate various power plants. They utilise fossil fuels (coal, gas) and renewable sources (solar, wind, geothermal, hydro, biomass). Private companies predominantly own generation assets. Nuclear power plants were phased out after Fukushima in 2011 and finally closed down in April 2023.
• Transmission – four independent transmission system operators (TSOs) handle the high-voltage grid. They ensure reliable electricity transmission. The TSOs, such as Tennet, 50Hertz, Amprion, and TransnetBW, are mainly publicly owned.
• Distribution – local distribution system operators (DSOs) manage lower-voltage networks delivering electricity to end consumers. Ownership of distribution networks involves public, private and co-operative entities, including municipal or regional authorities.
• Supply – the supply segment allows consumers to choose providers. Traditional utilities, independent retailers and new market entrants operate in this liberalised market.
• Storage – the market for storing electricity is currently growing strongly due to the increasing proportion of renewable, volatile electricity. Both battery storage and hydrogen storage are common technologies. Storage systems are currently primarily operated by private individuals. Grid operators are only allowed to operate storage systems to ensure grid operation in exceptional cases and with the authorisation of the Federal Network Agency.

Energy law encompasses the Energy Industry Act (EnWG), which regulates grid-bound energy, electricity, gas and other energy sources. It covers the entire value chain, including production, storage, transport, distribution and consumption. Additional important laws include the Renewable Energy Sources Act (EEG), Combined Heat and Power Act (KWKG), Energy Building Act (GEG), Act on the Digitalisation of the Energy Transition (GDEW) and Grid Expansion Acceleration Act (NABEG). Various regulations related to energy law can be found in planning, safety, environmental, tax and public procurement laws.

In Germany, the electricity market allows competition among retailers. Major listed companies like E.ON, RWE, EnBW and Vattenfall, along with municipality-owned utilities (Stadtwerke), dominate the market. Recent reorganisations led to changes between E.ON, RWE and the disappearance of Innogy. Uniper, primarily a gas trader, faced challenges due to the Ukraine war and received support from the German government, which finally resulted in a takeover by the Republic of Germany. EnBW is predominantly owned by the State of Baden-Wuerttemberg.

Stadtwerke, local municipality utilities, play a significant role and some, like Stadtwerke München and EWE, even own international production assets, predominantly renewable assets to support their transformation to net-zero.

Transmission assets are owned by independent grid operators, including the major four TSOs mentioned previously and numerous local DSOs on a municipal level.

The renewable energy sector attracts many startups, including Enpal or 1KOMMA5°, companies offering solar panel installations and long-term rentals to homeowners.

Germany has a foreign investment review and approval process to safeguard national security interests, including in the power sector. This process is governed by the Foreign Trade and Payments Act (AWG) and the Foreign Trade and Payments Ordinance and conducted by the Federal Ministry for Economic Affairs and Climate Actions (BMWK).

The review applies to non-EU/non-EEA investors acquiring at least 10% of shares or voting rights in a German energy company. It focuses on national security concerns related to critical infrastructure.

Foreign investments in the power industry receive equal protections under German law, regardless of the investor’s background. These protections stem from constitutional principles, statutory laws and international agreements.

To ensure energy supply security, Germany introduced the Energy Security Act (EnSiG) in 2022. It allows for the installation of a trustee or permanent seizure of shares in energy-related companies if the energy supply is at risk. Germany utilised this law to seize all shares in Gazprom Germania in November 2022, following plans for its liquidation by Gazprom.

In Germany, the sale, mergers and amalgamations of power industry assets are regulated by laws such as the EnWG and the Act Against Restraints of Competition GWB. The GWB applies to all transactions also outside of the energy sector and requires filing with the Federal Cartel Office if certain thresholds are met.

Furthermore, according to the AWG (see also 1.3 Foreign Investment Review Process) for non-EU/non-EEA investors, a two-step process is triggered if they intend to acquire 10% or more of the shares in an energy company, starting with an application to the BMWK. In 2023, there were 23 reviews specifically related to energy sector transactions notified.

The timeline for regulatory review varies based on the transaction’s complexity. Approvals may come with conditions to address competition concerns or protect consumers and energy market stability. These conditions may include asset divestitures, network access or compliance with specific requirements.

There are no minimum requirements for purchasers stipulated in the laws, but regulatory authorities consider factors like financial stability, industry experience and ability to comply with regulations and serve the public interest.

In Germany, the Federal Network Agency (Bundesnetzagentur) is the central authority overseeing the electricity supply and transmission development. It ensures supply reliability and assesses adequacy, monitors generation planning and development, and manages transmission system planning and development.

The Federal Network Agency assesses electricity supply adequacy and identifies risks to security. It regulates generation facilities, promotes renewable energy and manages incentives. Specifically, the tender proceedings for granting incentives to new renewable energy installations are organised, monitored and decided by the Federal Network Agency. It also plans and develops the transmission system, sets access rules and oversees construction and operation to ensure proper functioning and expansion.

The energy law in Germany has undergone significant changes driven by legislative activity and the need to address environmental and climate policy objectives. The war in Ukraine and concerns about gas supply prompted the energy transition movement and led to a flurry of legislative initiatives.

The core of the legislative development was the delayed adoption of the so-called Solar Package I.

Solar Package I sets the course for accelerating the expansion of photovoltaics and reduces bureaucracy, and facilitates the realisation of the higher expansion targets for PV, which were set with the revision of the EEG in 2023. It covers the entire range of PV, from small systems on balconies to systems on the roofs of houses, apartment blocks and factory buildings through to large ground-mounted PV systems. It also contains important innovations on other renewable energies, electricity storage and grids, as well as important innovations for the energy transition. With the resolution on Solar Package I, key parts of the photovoltaic strategy of the BMWK were implemented.

The currently announced legislative initiatives continue the focus of the last year on renewable energy expansion and also tackle energy efficiency topics.

The Solar Package II is expected to be implemented shortly. This is intended to further simplify authorisation and permitting procedures, particularly for ground-mounted systems. The construction and technical requirements for roof-mounted systems are to be optimised and the interaction with listed buildings adapted.

The “Electricity Storage Strategy” from the Federal Ministry for Economic Affairs and Climate Protection sets out a comprehensive strategy for the promotion of electricity storage in Germany. It emphasises the importance of electricity storage systems for the energy transition and identifies various areas of application such as the integration of renewable energies, grid stability and electromobility. The strategy aims to accelerate the market launch of electricity storage systems and drive innovation. To this end, existing barriers are to be removed, technological developments supported and investment in research and development promoted. One focus is on creating favourable framework conditions for electricity storage systems, including financial incentives and legal regulations. The strategy strives for close co-operation between government, industry and research institutions in order to effectively realise the goals and establish Germany as a leading location for innovative electricity storage technologies.

Germany is actively transitioning its energy system to increase renewable energy sources and reduce fossil fuel-based generation. This has led to growth in renewable installations and more participation from decentralised energy producers. While a 56% share of renewable energies in power consumption in 2023 has been achieved, the energy transition aims for 80% renewable energy in the power sector by 2030 and greenhouse gas (GHG) neutrality by 2035. 215 GW of solar capacity are to be added by 2030. The target for 2023 was exceeded: instead of 9 GW, 14.6 GW of new solar installations were added, almost twice as much as in 2022. 13 GW of solar capacity is now to be added in 2024 and 18 GW in 2025. From 2026, more than three times as much is to be added – ie, 22 GW. Around half of the additional capacity is expected to come from ground-mounted systems and the other half from rooftop systems. Community energy and citizen participation are integral to this transition, allowing local communities and co-operatives to own and benefit from renewable projects. Grid expansion and decentralisation are key challenges to accommodate the rising share of renewable energy, with grid operators facing capacity issues. Thus, local production and decentralisation are crucial aspects of the energy transition. Also, the increase in storage capacity is needed to buffer volatile energy production by renewables.

The German electricity market is highly liberalised, promoting efficient wholesale trading with various players. Wholesale electricity prices are determined through competitive offers from producers, without price regulation.

The wholesale electricity market operates through various market platforms, including over-the-counter (OTC) trading platforms and power exchanges.

Most electricity transactions, both short-term and long-term/OTC futures, occur through OTC trading. Buyers and sellers engage via brokers or directly, either through OTC platforms or by telephone. The OTC market operates anonymously, with unpublished prices known only to participants. Electricity is physically transferred or balanced between balancing groups. OTC-traded products lack significant standardisation. Participants have regulatory obligations like REMIT reporting. OTC trading offers more flexibility compared to exchanges. Contracts are not governed by specific legal norms, although parties often utilise EFET framework contracts developed by the European Federation of Energy Traders.

Electricity can be also traded on stock exchanges like Leipzig EEX (European Energy Exchange) and Paris EPX (European Power Exchange). To be able to trade on EEX, certain requirements must be fulfilled by the participants, such as the admission as a trading participant by the European Commodity Clearing AG and the EEX trader examination. Legal requirements are outlined in paragraph 14 et seq. of the EEX Exchange Rules and the German Exchange Act.

In addition to the wholesale market, energy producers and end users can engage in power purchase agreements (PPAs) like direct or virtual PPAs. PPAs are particularly useful when statutory subsidies do not apply or expire under the German Renewable Energy Sources Act.

Germany's electricity market is closely integrated with those of its neighbouring countries through cross-border interconnections and trading platforms. Germany participates in the European Internal Electricity Market, where the most favourable offer covers the electricity demand of a bidding zone (Gebotszone).

After the shutdown of the last nuclear power plant in April 2023, the German economy has produced significantly less electricity and consequently imported more in 2023. Therefore, for the first time in 20 years, Germany became a net importer of electricity. In commercial foreign trade, Germany imported a total of 54.1 TWh (2022: 33.2 TWh) and exported 42.4 TWh (2022: 56.3 TWh) in 2023. Compared to the previous year, according to the Federal Network Agency data on the electricity market for 2023, imports increased by approximately 63.0%, while exports decreased by 24.7%.

Germany exchanges electricity physically with 11 neighbouring countries: the Netherlands, Belgium, Luxembourg, France, Switzerland, Austria, the Czech Republic, Poland, Sweden, Norway and Denmark.

Interconnectors, mostly land-based (such as ALEGrO, a high-voltage direct transmission line between Germany and Belgium), facilitate electricity exchange. Further interconnectors are the Baltic Cable (which connects the German and Swedish electricity grids through the Baltic Sea), NordLink (a submarine cable connecting Norway and Germany via the North Sea) and KONTEK (a 400-kV-grid connection linking German and Danish power grids). Interconnector Kriegers Flak (Kriegers Flak Combined Grid Solution (CGS)) connects the Danish region of Zealand with the German state of Mecklenburg-Western Pomerania and enables electricity transmission and trading between two German offshore wind farms in the Baltic Sea, Baltic 1 (48 MW) and Baltic 2 (288 MW) and the Danish offshore wind farm Kriegers Flak (600 MW).

In April 2024, Amprion (German TSO) and Energinet (Danish TSO) agreed to explore the perspectives of developing a hybrid interconnector between the two countries. The goal is to connect the upcoming Danish North Sea Energy Island to the German transmission grid using future offshore hubs and grids in the German part of the North Sea. Furthermore, Norwegian TSO Statnett and Germany’s Amprion and TenneT are exploring the feasibility of further hybrid interconnectors in the North Sea.

According to information provided on the webpage of the German Federal Statistical Office (Deutsches Statistisches Bundesamt), the proportion of the different energy sources based on the gross electricity production in 2023 was as follows :

• coal – 26.1%;
• nuclear energy – 1.5%;
• natural gas – 13.6%;
• renewable energy sources – 56%:
1. wind – 31%;
2. hydropower – 4.1%;
3. biogas – 6.2%; and
4. photovoltaics – 11.9%.

The main laws governing market dominance and concentration limits are (i) Chapters 2 and 7 of the Competition Act (GWB) and (ii) EU rules (Article 102 TFEU and EC Merger Regulation).

According to Chapter 7 of the Competition Act, mergers must be prohibited if they create or strengthen a dominant position. Notification to the German Federal Cartel Office is mandatory if certain thresholds are met in the previous financial year: (i) combined global turnover of all parties exceeds EUR500 million, (ii) turnover of at least one party in Germany exceeds EUR50 million, and (iii) at least on other party has a turnover in Germany exceeding EUR17.5 million.

Violations of merger control rules, such as implementing a concentration without approval or after prohibition, can result in fines of up to EUR1 million or 10% of the preceding financial year’s group turnover.

Abuse of a dominant market position is prohibited under Section 19 paragraph 1 of the Competition Act. A single undertaking with a market share of 40% is presumed to have a dominant position. Dominance is also presumed when three or fewer undertakings have a combined market share of 50%, or five or fewer undertakings have a combined market share of 66%.

In the energy sector, any supplier of electricity, district heating or piped gas (utility companies) are prohibited from abusing their dominant position by demanding less favourable charges or terms compared to other suppliers or undertakings in comparable markets. This prohibition can be justified with objective evidence. Utility companies are also prohibited from demanding fees that unreasonably exceed their costs (cf. Section 29 Competition Act).

Due to energy sector liberalisation, a competitive environment exists for energy production, trading and distribution. The German Federal Cartel Office oversees and detects anti-competitive behaviour, including merger control and market abuse proceedings, under the Competition Act. The Federal Cartel Office has investigative powers, conducting raids, seizing records and gathering evidence to address cartel violations. It can impose fines of up to EUR1 million or 10% of preceding financial year’s group turnover. Sector inquiries are also conducted by the Federal Cartel Office to assess competition conditions in specific sectors. It monitors the electricity market together with the Federal Network Agency.

The Market Transparency Unit for Wholesale Electricity and Gas (Markttransparenzstelle für den Großhandel mit Strom und Gas), operating under the Federal Network Agency, collaborates closely with the Federal Cartel Office to detect insider trading, market manipulation and abuse of dominance in the wholesale energy market. Indications of violations are forwarded to the relevant supervisory authority. Enforcement of the REMIT Regulation falls under the purview of the Federal Network Agency, which may initiate administrative proceedings or involve the public prosecutor’s office.

The German Building Code (BauGB) regulates power plant construction, including renewable energy installations. For wind turbines, the Federal Emission Control Act (BImSchG) applies, addressing noise emissions and environmental regulations. The EEG 2023 imposes additional requirements for renewable energy installations. A major amendment to both, the BauGB, as well as the BImSchG, are being planned for implementation shortly (presumably by the end of 2024). The amendments are specifically aimed at significantly expediting the approval process for installations subject to emission control regulations, with a particular focus on renewable energy installations.

Generally, no building permit is necessary for roof-top photovoltaic installations. The process for granting building permits for ground-mounted photovoltaic installations differs from the permitting procedure for wind projects. Both permits cover construction and operation and are issued by the competent authority based on current laws, including nature conservation and animal protection. The authority has discretion in granting the permits, without ministry interference. Both permits can be legally challenged and examined by higher authorities or courts.

Building Permit for Ground-Mounted Photovoltaic Installations (“PV Installation”)

Ground-mounted PV installations are approved based on existing land-use plans or project-related land-use plans, in compliance with regional land development purposes set by state authorities.

Decision to set up a project-related land-use plan

The process begins with a formal decision to establish a land-use plan for a specific area.

Preparation of the draft plan

After the decision, the draft land-use plan is prepared in consultation with the municipality and the developer.

Early public participation

Citizen participation occurs in two stages. In the early stage, affected citizens are informed about the planned scope of the project and can influence its design. Measures may include displaying the draft plan in the authority or holding citizens’ meetings.

Participation of public bodies

Public interest bodies, such as district, nature conservation and water protection authorities, are involved in the planning process. Their participation allows them to provide comments on the project, but their consent is not mandatory.

Interpretation procedure

After evaluating private and public concerns, the municipality decides on the draft plan. The second stage of public participation involves making the draft plan available to the public for one month, allowing citizens to review and raise objections.

Examination of the suggestions

The municipality examines the suggestions received and may amend the draft plan accordingly. A shorter display period of two weeks is possible for amended parts.

Resolution

The municipality adopts the development plan through a resolution, marking the provisional conclusion of the municipal plan preparation procedure.

Approval procedure

Approval from the higher administrative authority is only required if there is no existing land-use plan. The authority comprehensively examines the project-related development plan for legality.

Completion and final announcement

The project-related land-use plan needs execution and final announcement to become effective.

Particularities of the project-related land-use plan

In addition to the land-use plan, a project and development plan prepared by the developer and an implementation agreement are required. These elements must be co-ordinated and shall not contradict each other. The implementation agreement is transferable in case of a change in the developer.

Permit for Wind Projects According to BImSchG

The permit for wind farms can be obtained through a formal procedure with public participation or a simplified approval procedure.

For wind projects with more than 20 turbines and a total height exceeding 50 metres, the formal procedure is required according to Annex 1 of the 4th BImSch-V, column c. The formal procedure is also necessary if an environmental impact assessment (EIA) is mandated under the Environmental Impact Assessment Act (UVPG).

The simplified procedure applies to wind turbines with a total height of 50 metres or less and fewer than 20 installations. Unlike the formal procedure, the simplified process does not involve public participation but still includes specific requirements.

Formal approval procedure with public participation, Section 10 BImSchG

The formal procedure with public participation is structured as follows.

Request for permit

Applicants initiate the approval procedure by submitting detailed information and documents about the turbine types, specifications and area of operation.

Participation of authorities (Behördenbeteiligung)

Competent authorities seek the opinions of relevant authorities responsible for the project’s impact on their areas of responsibility.

Participation of the public (Öffentlichkeitsbeteiligung)

Public participation is a crucial part of the formal approval process. Third parties have the opportunity to raise objections and discuss them in public consultation meetings. All project-related documents, including EIA reports, must be made available for public review.

Objections and public consultation meeting (Einwände und öffentliche Erörterung)

During a four-week objection period, written objections can be submitted, addressing the project’s compliance with applicable laws. Following this period, a public consultation meeting takes place to allow all parties involved to present their interests and address contentious issues.

Deficiencies in public participation may require additional documentation and renewed public involvement.

Changes in the law have altered the objection process, allowing substantive objections to be raised in court after public participation and discussion. This introduces uncertainties for the approval authority and weakens the consistency of licensing decisions.

Permit decision and notification to the applicant and the public

Upon completing the procedure, the authority issues the permit and notifies both the applicant and the public. The appeal period begins upon notification, and objectors must be notified of the approval. The decision must also be publicly announced, with the objector’s notice determining the appeal deadline.

Simplified procedure without public participation, Section 19 BImSchG

Section 19 BImSchG aims to streamline permitting procedures by excluding public participation in cases where a formal procedure would be excessive. However, applicants can still opt for a formal procedure if desired.

If the simplified procedure is mistakenly applied instead of the formal procedure, affected third parties, particularly environmental protection associations, can request the permit’s revocation under certain conditions. This applies when the EIA has not been conducted and cannot be reasonably completed.

EIA procedure (Umweltverträglichkeitsverfahren, UVP-Verfahren)

The EIA procedure was established in accordance with the European EIA Directive (2011/92/EU) and implemented in Germany through the Environmental Impact Assessment Act (Umweltverträglichkeitsgesetz, UVPG).

The EIA evaluates potential harmful effects on various aspects, including the environment, protected constitutional assets, human health, wildlife, installations, biodiversity, land, soil, water, air, climate, landscape, cultural heritage and other material assets.

EIA requirement in the formal approval procedure

The formal licensing procedure for wind projects necessitates an EIA, as specified in Annex 1 to Section 3 UVPG. This assessment is an integral part of the formal licensing process.

EIA obligation under the simplified permitting procedure

In addition to the assessment under the Federal Emission Control Act, an EIA is mandatory for wind farms with at least 20 wind turbines. The determination of whether a wind farm qualifies as such determines the need for an EIA. The spatial connection and influence of the installations on the protected objects and assets are key considerations. Projects with up to two wind turbines are exempt from EIA requirements.

For wind farms with three to five turbines, a case-by-case assessment is conducted by the permitting authority to determine if an EIA is necessary. The scope of this assessment is limited to the specific location and potential environmental impacts.

A general preliminary assessment is required for projects with six to 19 turbines. An EIA is only carried out if the authority’s assessment indicates potential adverse environmental impacts.

Furthermore, the obligation for an EIA may arise from other effects resulting from turbine erection, such as clearing forested areas.

If the wind energy project is located in the wind energy area that has already undergone a Strategic Environmental Assessment and is not simultaneously situated in a Natura 2000 area, a nature reserve, or a national park, certain simplifications in the approval process under Section 6 of the Act on Determining Land Requirements for Onshore Wind Turbine (WindBG) apply until 30 June 2024. For these projects, the obligation for an EIA is waived, and only a modified species protection assessment is required. The basis for this exemption is the EU Emergency Ordinance, which aims to expedite the expansion of renewable energy projects as well as electricity networks. Generally, the exemption applies to approval procedures where the application is submitted by 30 June 2024, as well as to ongoing approval procedures where the application has been submitted before 29 March 2023 and is still ongoing.

Typical Terms and Conditions Imposed in Approvals for PV Installations

Ground-mounted PV installations

Building permits for these installations are often based on project-specific development plans. Implementation agreements also include additional terms and conditions. Developers are obligated to construct the PV installation within a specified timeframe and on secured land. They must also implement compensation measures for any impact on nature and adhere to dismantling obligations. Building permits may include conditions to reduce glare effects, such as module orientation.

Rooftop solar systems

Building permits are generally not required for rooftop PV installations.

Typical Terms and Conditions Imposed in Approvals for Wind Energy Installations

Approvals for wind energy installations include terms and conditions to ensure compliance with applicable laws. The BImSchG permit imposes conditions related to regional planning, nature conservation, species protection and prevention of harmful impacts. It addresses concerns such as noise emissions, shadow casting and optical harassment.

Optical harassment from wind energy installations

To avoid unreasonable influence, wind turbines should be located at a distance more than twice their height. If the distance is between two to three times the height, a comprehensive examination of various factors is conducted to assess the impact on viewing angles, wind direction, location and alternative possibilities.

Noise emission

The BImSchG permit requires compliance with noise emission regulations (TA-Lärm) during construction and operation. Regular noise emission measurements are conducted, and if noise levels exceed the permitted limits, authorities may order sound-reduced operation, which is considered for assessing compliance.

Nature and species conservation

Wind energy installations must adhere to nature and species conservation measures. For projects with significant impacts on protected Natura 2000 sites, effective bird protection measures are imposed. The ban on disturbance and killing of protected species must also be respected.

Permitting process and burden of proof

As exact measurements of future emissions are not possible during the permitting process, forecasts and estimates are used. The burden of proof lies with the applicant to demonstrate compliance with public law standards. Suitable collateral clauses and operational controls are used to address any residual uncertainties.

Under German law, expropriation measures are only permissible in special cases for public benefit, such as for high-voltage power lines according to Section 45 EnWG.

Securing Plots of Land

To secure the necessary land for a renewable energy generation facility (EE-installation), the operator typically enters into a lease agreement with a fixed term and establishes a limited personal servitude. It’s important to note that lease agreements can generally be terminated 30 years after the land is handed over to the operator, which is usually at the start of construction. A personal servitude is required to protect the operator in case of the property owner’s insolvency and the potential termination of the lease agreement by an insolvency administrator.

Remuneration

The remuneration for land use is determined by the parties in the lease agreement. Typically, it includes an annual minimum remuneration and feed-in remuneration based on the revenues generated by the EE installation. If the feed-in remuneration is higher, it will be paid instead of the minimum remuneration.

Planned Regulation for Plots of Land Regarding the Cable Route

In accordance with the new Sections 11a and b EEG 2023, which were included in the Solar Package I, an obligation to tolerate the use of plots of land for cable routes was introduced for publicly owned land. The original draft of the Solar Package I had even provided for an obligation to tolerate for all property owners, but the obligation was limited to publicly owned land during the legislative process.

According to Section 11a EEG 2023, landowners of publicly owned land are in general obliged to tolerate the construction and maintenance of cables for connecting renewable energy systems to the grid connection point. The user of the land is obliged to pay a one-time payment in the amount of 5% of the market value of the area used. Section 11a EEG 2023 shall apply mutatis mutandis to cables for connecting installations for the production and storage of green hydrogen and other electricity storage systems.

According to Section 11b EEG 2023, landowners of publicly owned land are in general obliged to tolerate crossing and swinging over the property for the construction and dismantling of wind turbines. The user of the land is obliged to pay an amount of EUR28 per month per hectare of land used after construction or dismantling of the wind turbine for crossing the land; swinging over has to be tolerated free of charge.

The developer must decommission the facility in accordance with the permit or lease agreements for the sites. Decommissioning requirements are specified in either the permit or the lease agreement. Typically, the facility must be dismantled so that the land can be returned in its original condition.

As per the permit or lease agreement, the developer is generally required to provide a decommissioning guarantee before construction begins to ensure proper dismantling.

The ownership, construction and operation of transmission lines and associated facilities in Germany are primarily regulated by the German Energy Industry Act (Energiewirtschaftsgesetz, EnWG), the German Grid Expansion Acceleration Act Transmission Grid (Netzausbaubeschleunigungs-gesetz Übertragungsnetz; NABEG), the German Building Code (Baugesetzbuch; BauGB) and the Federal Immission Control Act (Bundes-Immissionsschutzgesetz; BImSchG). The remuneration of transmission service operators is governed by the German Electricity Grid Charges Ordinance (Netzentgeltverordnung).

The regulatory process for obtaining approvals to construct and operate transmission lines and associated facilities in Germany is generally the same as for generation facilities, as described in 3.2 Obtaining Approvals to Construct and Operate Generation Facilities. Depending on the emissions’ significance from the transmission line and associated facilities (such as transformers), building permits or permits under the BImSchG are necessary.

It is important to note that approvals for transmission lines and associated facilities within a generation facility (like a wind farm) and the lines connecting to the grid, are typically covered by the facility’s permit.

Similar terms and conditions apply to both proponents of transmission line construction and operation, as well as proponents of generation facility construction and operation, as described in 3.3 Approvals to Construct and Operate Generation Facilities.

Depending on the location, size and anticipated emissions of the planned transmission lines and associated facilities, measures to mitigate visual and noise disturbances, as well as measures for nature and species conservation, may be required of the proponent.

Under German law, obtaining surface access and usage rights for transmission line construction and operation involves a combination of negotiation, voluntary agreements and legal procedures.

Typically, the proponent negotiates with landowners to secure the required land. This leads to a lease agreement, compensating the landowner for land usage. The right of use is also protected by personal servitude.

However, Section 45 EnWG allows one to seek admission of possession or even expropriation of land through the competent authority. Yet, due to political reasons and the lengthy and uncertain legal proceedings, this option is rarely pursued.

In such cases, compensation for the landowner is negotiated by the project operator. If an agreement cannot be reached, the competent state authority determines the compensation based on the respective state’s expropriation law.

TSOs in Germany hold exclusive rights to provide electrical transmission services within specific geographic regions, granting them a monopoly in such areas. There are four entities (50Hertz Transmission GmbH, Amprion GmbH, TenneT TSO GmbH and TransnetBW GmbH) responsible for different regions, as specified in Section 3 No 10a EnWG.

These entities have sole authority to operate the transmission grid in their designated areas. Competitors are generally prohibited from constructing new transmission lines or offering transmission services within the same territory. This exclusivity shall promote co-ordination, efficient grid operation and system stability.

Transmission charges in Germany are determined by the Federal Network Agency (Bundesnetzagentur) through a regulatory process. The German Electricity Grid Charges Ordinance outlines the procedure and parameters for setting these charges. The terms of service for transmission services, including network access and connection, are governed by the EnWG.

The German electrical grid follows open-access and non-discriminatory principles. As per Section 12 paragraph 1 sentence 1 EnWG, transmission service operators must operate the grid without discrimination. Section 17 paragraph 1 sentence 1 EnWG requires these operators to connect end-users and other grids in a technically and economically reasonable manner, ensuring no unfavourable terms compared to similar cases (most-favoured customer clause). The Federal Network Agency serves as the regulator overseeing grid access and conditions. Grid connection is established through a connection agreement between the transmission service operator and the entity being connected.

In 2019, the NABEG introduced specific regulations for power grid construction and expansion. NABEG aims to simplify and expedite approval procedures for power line construction, reinforcement and optimisation. It emphasises better co-ordination between planning stages, covering needs assessment, planning, approval, financing and construction.

The operation of electric distribution facilities and grid access is governed by the following laws, ordinances and rules.

• EnWG provides the legal framework for Germany’s entire energy supply system. It addresses network access, network charges and network operators’ responsibilities.
• Electricity Network Access Ordinance (StromNZV) establishes conditions for network access, including access requirements, network charges, network connection terms and billing within the electricity network.
• Grid Connection Ordinances (NAV) regulate the connection of generators and consumers to power grids at different voltage levels.
• Technical connection rules, specific to various voltage levels, outline technical requirements for connecting generation plants to the distribution grid. They cover aspects such as electrical safety, power quality and connected load.

Battery storage systems are seen as generation systems and final consumers, but not as electric distribution facilities. The construction of battery storage systems requires planning permission, which is governed by the German Building Code. An operating licence is not required, but battery storage systems must be registered in the market master data register (Marktstammdatenregister). Microgrids, provided they do not reach a competitively relevant size, are not considered an electricity grid and are therefore not subject to grid regulation but are considered electrical infrastructure. They can therefore be installed on land without authorisation, provided the owner agrees. Like all energy systems, microgrids must be installed and operated in such a way that technical safety is guaranteed. Subject to other legal provisions, the generally recognised rules of technology must be observed (Section 49 EnWG).

The construction and operation of power lines and electricity grids in Germany require concessions or rights-of-way contracts, obtained through a concession procedure lasting up to 20 years. The concession procedure governs the awarding of concessions for network construction and maintenance. It involves several steps:

• invitation to tender – authorities issue a public invitation detailing conditions and requirements for potential concession holders;
• expression of interest – interested companies submit their interest;
• selection process – the authority evaluates applicants based on criteria like financial performance, technical competence, experience, infrastructure quality and EIAs;
• negotiations and contracting – the most qualified applicants enter negotiations, discussing concession details. If an agreement is reached, a contract is signed between the authority and the concessionaire;
• construction and operation – once the contract is in place, the concessionaire begins building the power grid, including transmission lines, transformer stations and other necessary facilities;
• regulation and supervision – throughout the concession period, the competent authority oversees and regulates the concessionaire; and
• for connection lines that aren’t part of a power grid, the property owner must provide permission through a lease or land usage agreement.

Concession contracts allow the concessionaire to utilise public transport routes for installing and running power lines that provide electricity to consumers. The municipality is eligible to receive a concession fee, with the maximum fee amount determined by the Concession Fee Ordinance (KAV). The grid operator can transfer these costs to the end consumer. When only individual connection lines are installed instead of an entire network, the specifics of the contract must be negotiated with the respective property owners. In this scenario, there is no price limit imposed.

Most electricity grids are situated alongside public roads and pathways, with their construction and operation rights granted through concessions. When it comes to installing new power lines, such as for grid connections, the builder and operator do not currently possess the authority for expropriation or confiscation. However, the proposed amendment in the EEG 2023, specifically Section 11a EEG, introduces an obligation for landowners to accommodate power lines that enable the connection of renewable energy plants. This amendment would greatly streamline and expedite the planning of renewable energy initiatives. However, the current draft law only provides for an obligation to tolerate the use of land for the laying of power lines on public land.

Electricity distribution networks are natural monopolies, where only one operator per voltage level manages the supply network in a specific area. This monopoly is mandated by law (Section 11 EnWG) to ensure the operation, maintenance, optimisation, strengthening and expansion of a secure, reliable and efficient energy network. The operator must meet demand economically and without discrimination. Additionally, Section 17 EnWG requires network operators to connect all end consumers, electricity networks, lower-level lines, electric vehicle charging points and energy storage facilities in a technically and economically appropriate, non-discriminatory and transparent manner. This avoids unnecessary infrastructure duplication.

The monopoly status of electricity grids subjects them to regulation by the Federal Network Agency and state regulatory bodies, allowing for competition in upstream and downstream markets. By granting access to all energy suppliers, competition is possible in the electricity market, unlike in grid operation.

The grid fees in Germany are determined based on energy consumption (kWh) or output (kW) and are regulated by legal provisions (Section 20 EnWG) and the Electricity and Gas Grid Charges Ordinance (StromNEV, GasNEV). The calculation of these fees involves the following factors:

• revenue cap – each network operator has a maximum revenue limit set by the Federal Network Agency. This limit considers the costs of network operation and a reasonable return on capital;
• cost items – various costs such as grid expansion, maintenance, operation, personnel, administration, metering point operation and billing are taken into account;
• grid expansion – if expanding the grid is necessary for supply security or connecting new power plants, the associated costs may be included in the fees; and
• levies and surcharges – along with grid charges, government levies and surcharges like the EEG surcharge for renewable energy promotion can be added to the electricity price.

The Federal Network Agency (Bundesnetzagentur) handles complaints and reviews grid charges.