Report on German Federal Network Agency’s Draft Regulation for Energy Market Integration

Executive Summary

Germany’s Federal Network Agency has introduced a draft regulation, “Market Integration of Storage and Charging Points,” aimed at implementing the Electricity Peak Demand Act. This initiative is a significant step towards achieving several Sustainable Development Goals (SDGs), primarily SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), SDG 11 (Sustainable Cities and Communities), and SDG 13 (Climate Action). The regulation seeks to unlock the flexibility of battery storage and electric vehicles (EVs) to enhance the integration of renewable energy, stabilize the grid, and facilitate a market-driven energy transition.

Core Objectives and Alignment with Sustainable Development Goals

The primary goal of the proposed legislation is to remove existing barriers that prevent small-scale energy storage and EV charging systems from participating fully in the electricity market. This aligns directly with key global sustainability targets.

• Advancing Clean Energy (SDG 7): By enabling storage systems to interact with both on-site renewable generation and the grid, the regulation promotes a more efficient use of clean electricity. It directly supports SDG Target 7.2 by facilitating a higher share of renewable energy in the national grid.
• Fostering Innovation and Resilient Infrastructure (SDG 9): The proposal represents a regulatory innovation designed to build a more flexible, resilient, and sustainable energy infrastructure. It modernizes the grid to accommodate decentralized energy resources, a key component of SDG Target 9.4.
• Promoting Sustainable Cities and Transport (SDG 11): The specific inclusion of bidirectional EV charging integrates sustainable transport with the energy system. This contributes to SDG Target 11.2 by creating smarter, more efficient urban energy and transport networks.
• Strengthening Climate Action (SDG 13): The regulation is a direct policy measure to combat climate change. By improving the integration of renewables and reducing generation peaks, it helps decrease reliance on fossil fuels, thereby contributing to SDG Target 13.2.

Overcoming Existing Regulatory Hurdles

The current “exclusivity” regulation presents a significant obstacle to achieving clean energy goals. It stipulates that electricity from a storage system is only eligible for subsidies under the Renewable Energy Sources Act (EEG) if charged exclusively with renewable energy. This limitation discourages grid-supportive behavior and prevents the full potential of distributed energy resources from being realized. The draft legislation proposes to replace this restrictive rule to unlock systemic benefits.

Proposed Methodologies for Market Integration

The Federal Network Agency has put forward two alternative procedures to allow for the proportional allocation of electricity volumes, thereby enabling market participation while maintaining eligibility for EEG subsidies.

1. The “Allocation” Option: This method involves precise metering of electricity drawn from the grid in 15-minute intervals. Using fixed mathematical rules, it accurately determines the proportion of electricity in a storage system that originated from a renewable source. While requiring a higher degree of metering and billing, this option offers precision for all system sizes.
2. The “Flat-Rate” Option: Designed for smaller systems up to 30 kW, this alternative automatically classifies a fixed proportion of the electricity fed into the grid as EEG-eligible. The volume would be determined annually by a formula, with a proposed cap of 500 kWh per installed kilowatt per year. This simplifies participation for residential and small commercial operators.

Systemic Impact and Future Outlook

The implementation of this regulation is expected to yield significant economic and systemic benefits, accelerating progress towards a sustainable energy future.

Key Anticipated Outcomes

• Enhanced Grid Flexibility: The ability of small storage systems and EVs to respond to market signals will help balance the grid, facilitate load shifting, and mitigate generation peaks from variable renewable sources like solar and wind.
• Improved Integration of Renewables (SDG 7 & 13): The proposal directly addresses the challenge of integrating increasing amounts of renewable energy, making the overall electricity system more stable and sustainable.
• Empowerment of Prosumers: Owners of small-scale storage and EVs, including bidirectional charging points, will be empowered to participate actively in the energy market, creating new economic incentives for adopting clean technologies.

This draft legislation marks a critical milestone in Germany’s energy transition. By creating a regulatory framework that supports flexibility and market participation for decentralized assets, it strengthens the foundation for a reliable, affordable, and clean energy system in line with global Sustainable Development Goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 7: Affordable and Clean Energy
   • The article’s central theme is the integration of renewable energy sources into the electricity market. It discusses harnessing the “flexibility potential of battery storage and EVs” to support the “integration of increasing amounts of renewable electricity,” which directly aligns with the goal of promoting clean energy.
2. SDG 9: Industry, Innovation, and Infrastructure
   • The proposed legislation represents an innovation in energy market regulation. It aims to upgrade the electricity grid infrastructure by allowing technologies like battery storage and bidirectional EV charging to be “particularly well integrated into … grids.” This fosters a more resilient, sustainable, and technologically advanced infrastructure.
3. SDG 11: Sustainable Cities and Communities
   • The focus on “small, private battery systems” and “bidirectional EV charging points” is highly relevant to urban and residential settings. By enabling these distributed energy resources, the policy supports the development of more sustainable and resilient energy systems within communities, contributing to cleaner cities.
4. SDG 13: Climate Action
   • The article explains that the new rules will help “mitigate generation peaks from renewable energy plants” and achieve “better integration of renewable energy.” This is a crucial climate action strategy, as it facilitates a greater shift away from fossil fuels towards clean energy, thereby helping to combat climate change. The legislation is described as a measure to “overcome many of the challenges of the energy transition.”

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.
   • The article directly supports this target by proposing a solution to a key challenge in the energy transition: the integration of variable renewable energy. The draft regulation aims to remove the “exclusivity” rule that “complicates market-oriented optimization of storage operation and prevents the grid flexibility potential of such systems from being fully exploited,” thereby enabling the grid to handle “increasing amounts of renewable electricity.”
2. Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
   • The article discusses a regulatory upgrade to the energy infrastructure. The proposed legislation facilitates the adoption of clean technologies like battery storage and bidirectional EVs, transforming them from passive devices into active “flexibility resources in the energy system.” This enhances the sustainability and efficiency of the entire electricity grid.
3. Target 11.b: By 2030, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, and resilience to disasters.
   • The “Market Integration of Storage and Charging Points” regulation is an example of an integrated national policy that directly impacts cities and settlements. It promotes resource efficiency by enabling “load shifting” and climate change mitigation by facilitating greater use of renewables.
4. Target 13.2: Integrate climate change measures into national policies, strategies and planning.
   • The draft regulation is a direct implementation of the “Electricity Peak Demand Act,” demonstrating the integration of climate change measures into national energy policy. The article states the goal is to “strengthen the role of storage and EVs as flexibility resources in the energy system,” which is a strategic plan to manage the energy transition and address climate change.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Implied Indicators:
   • Capacity of flexible resources participating in the market: The success of the legislation can be measured by the total capacity (in kW or MW) of small battery systems and EVs that begin to “actively participate in the electricity market” as a result of the new rules.
   • Volume of electricity shifted: The article states a key benefit is to “facilitate load shifting.” Progress could be measured by the amount of electricity (in kWh or MWh) that is shifted from peak generation/demand times to off-peak times, improving grid stability.
   • Share of renewable energy integrated: An ultimate indicator of success would be an increase in the percentage of renewable energy in the national electricity mix, as the policy is designed to achieve “better integration of renewable energy into the electricity system.”
2. Mentioned Indicators:
   • Eligibility criteria for storage systems: The article explicitly mentions parameters that can be tracked, such as the number of “storage systems up to 30 kW in scale” that opt for the “flat-rate” option.
   • Volume of subsidized electricity: The regulation includes a specific, measurable cap that can be used as an indicator: the volume of EEG-eligible electricity is “capped at 500 kWh per installed kilowatt, per year” under the flat-rate option. This provides a direct metric for tracking the financial and energy-volume impact of the policy.

4. Summary Table of SDGs, Targets, and Indicators

Source: ess-news.com