Battery energy storage systems – the changing regulatory framework in Germany – White & Case LLP

Report on Regulatory Developments for Large Battery Energy Storage Systems (BESS) in Germany with Emphasis on Sustainable Development Goals (SDGs)

Large battery storage facilities are pivotal for Germany’s transition to a nearly greenhouse-gas-neutral electricity supply, aligning with SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). Recent regulatory changes present both opportunities and challenges for BESS project developers and investors.

Background

The rapid increase in planning and construction of large-scale BESS in Germany has created significant demands on the electricity network, surpassing current planning assumptions. This situation has triggered responses from German transmission system operators (TSOs) and legislative initiatives aimed at resolving network capacity bottlenecks. Additionally, reforms to the network tariff system are under consideration, which will impact investment decisions, especially as existing exemptions are reviewed. The Federal Building Code (BauGB) has been amended to provide a planning-law basis for large-scale BESS, supporting SDG 9 (Industry, Innovation, and Infrastructure).

1. Revision of Network Connection Procedures

According to Section 17 para. 1 of the German Energy Industry Act (EnWG), network operators must offer connections on reasonable, non-discriminatory, and transparent terms. The traditional “first come, first served” procedure is deemed inadequate to meet growing demand. Consequently, TSOs proposed a revised allocation procedure in February 2026, and the Federal Ministry for Economic Affairs and Energy (BMWE) is pursuing legislative reform through the “Network Package”. These initiatives aim to enhance efficiency and fairness in network connections, supporting SDG 9 and SDG 11 (Sustainable Cities and Communities).

1.1 TSO Initiative: “First-Ready, First-Served” Approach

The TSOs propose a “first-ready, first-served” allocation procedure prioritizing projects with high realization probability and quality for secure, affordable network connections. Key features include:

1. Cyclical processing of applications instead of continuous case-by-case review.
2. Compliance with minimum formal admissibility requirements.
3. Prioritization based on project maturity in cases of oversubscription.

Applicants must submit by a fixed deadline with a non-refundable fee of EUR 50,000. TSOs conduct cluster studies assessing admissibility, maturity, ranking, capacity allocation, and network compatibility. Successful projects receive connection reservation offers and must pay a realization deposit. This procedure aligns with legal rulings ensuring non-discrimination and promotes SDG 16 (Peace, Justice, and Strong Institutions).

The maturity assessment ranks projects on:

• Site security and approval status
• Technical plant and connection concept
• Financial and operational performance
• Grid and system value

BESS projects combining multiple technology categories may score higher, encouraging integrated sustainable energy solutions.

1.2 Legislative Initiative: Network Package

The Network Package addresses challenges such as speculative connection requests and facilitates grid-neutral battery storage co-located with existing facilities. Key legislative reforms include:

• Abolition of the “first-come, first-served” approach.
• Introduction of an approval requirement by the Federal Network Agency (BNetzA).
• Granting TSOs authority to prioritize connection requests based on security of supply, expansion targets, and spatial planning.
• Facilitation of “grid-neutral storage” allowing BESS co-located with renewable or consumption facilities without increasing network capacity load.

This initiative supports SDG 7 and SDG 13 by promoting efficient integration of renewable energy and enhancing grid stability.

2. Revision of Network Tariffs

The BNetzA has initiated the AgNes process to redesign Germany’s network tariff rules, impacting BESS operators. Currently, BESS commissioned by 4 August 2029 benefit from a 20-year network tariff exemption. However, BNetzA’s Orientation Paper proposes subjecting BESS to a two-component tariff system:

• Financing-function tariff
• Incentive-function tariff (which may be negative)

The potential introduction of feed-in tariffs is under discussion, aiming to avoid double-charging given BESS dual roles as generators and consumers. Early introduction of network tariffs is likely, affecting investment viability and aligning with SDG 8 (Decent Work and Economic Growth) by influencing economic frameworks for sustainable energy investments.

3. New Privileged Status for BESS Under Federal Building Code (BauGB)

Since December 2025, BESS have been granted privileged status in external areas, addressing previous permitting inconsistencies and supporting SDG 11 and SDG 9. Key points include:

3.1 The Two-Tier Privilege

• Section 35 para. 1 no. 11 BauGB: Privilege for BESS co-located with renewable energy installations, with capacity appropriate to the supported plant.
• Section 35 para. 1 no. 12 BauGB: Privilege for standalone BESS located within 200 m of qualifying substations or power plants, meeting capacity and municipal area caps.

Project-specific assessments remain essential to determine qualification.

3.2 Overriding Public Interest

Section 11c EnWG confirms BESS facilities serve overriding public interest, supporting public health and safety, and granting priority in regulatory balancing. This facilitates species protection exemptions and aligns BESS with renewable energy and grid infrastructure frameworks, advancing SDG 15 (Life on Land) and SDG 3 (Good Health and Well-being).

3.3 Investment Implications

The reform removes the need for special development plans for BESS in external areas, streamlining project timelines and establishing uniform approval standards. While some ambiguities remain, this enhances legal certainty and investor confidence, supporting SDG 8 and SDG 9.

Outlook and Recommendations

Although the described regulatory initiatives are not yet formally enacted, it is highly probable that the “first-ready, first-served” procedure will be implemented. Projects with advanced planning and readiness are expected to benefit. The introduction of construction cost subsidies and network tariffs will significantly influence the economic viability of BESS investments.

Stakeholders should:

• Closely monitor legislative and regulatory developments.
• Assess existing and planned projects against new criteria.
• Consider the implications for investment strategies and sustainable energy goals.

These developments contribute to Germany’s commitment to the Sustainable Development Goals, particularly SDG 7, SDG 9, SDG 11, and SDG 13, by fostering clean energy infrastructure, innovation, sustainable cities, and climate action.

References

1. BMWE, Draft Network Package, 2026.
2. TSO, Maturity Assessment Procedure for Grid Connections, February 2026.
3. Federal Court of Justice Judgment, July 2025.
4. BNetzA, AgNes Process and Orientation Paper on Storage Network Tariffs, 2026.
5. Federal Building Code Amendments, December 2025.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • The article focuses on large battery energy storage systems (BESS) as key components for achieving a virtually greenhouse-gas-neutral electricity supply in Germany, directly relating to clean energy access and sustainability.
2. SDG 9: Industry, Innovation and Infrastructure
   • It discusses regulatory reforms, infrastructure planning, and innovation in energy storage technologies, which are critical to resilient infrastructure and sustainable industrialization.
3. SDG 11: Sustainable Cities and Communities
   • The BauGB amendments granting privileged status to BESS in external areas support sustainable urban planning and resilient infrastructure in municipalities.
4. SDG 13: Climate Action
   • By promoting battery storage to enable a greenhouse-gas-neutral electricity supply and network stability, the article addresses mitigation of climate change impacts.

2. Specific Targets Under Those SDGs Identified

1. SDG 7 Targets
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • Target 7.3: Double the global rate of improvement in energy efficiency.
2. SDG 9 Targets
   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being.
   • Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors, including clean energy technologies.
3. SDG 11 Targets
   • Target 11.3: Enhance inclusive and sustainable urbanization and capacity for participatory, integrated and sustainable human settlement planning and management.
4. SDG 13 Targets
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.

3. Indicators Mentioned or Implied to Measure Progress

1. Indicators Related to SDG 7
   • Capacity of battery energy storage systems connected to the electricity grid (implied by references to cumulative BESS connection requests and capacity in GW).
   • Share of electricity generated from renewable sources supported by battery storage (implied by the role of BESS in stabilizing renewable energy supply).
2. Indicators Related to SDG 9
   • Number and capacity of large-scale battery storage projects approved and constructed (implied by regulatory reforms and planning procedures).
   • Implementation rate of revised network connection procedures and tariff reforms (implied by legislative initiatives and regulatory processes).
3. Indicators Related to SDG 11
   • Number of BESS projects granted privileged status under BauGB and integrated into municipal planning (implied by the new legal framework).
4. Indicators Related to SDG 13
   • Reduction in greenhouse gas emissions from electricity generation due to increased battery storage capacity (implied by the goal of a greenhouse-gas-neutral electricity supply).

4. Table of SDGs, Targets and Indicators

Source: whitecase.com