Overview
On 15 July 2025, the German Federal Court of Justice (Bundesgerichtshof – “BGH”) made its awaited decision (case no. EnVR 1/24) on construction cost subsidies (Baukostenzuschüssen) for battery storage systems (“BESS”). Construction cost subsidies are levied by the grid operators and paid by the connecting user as an one-off expenses for the expansion of the grid when a grid connection is established. In the underlying case, the BGH ruled that the levying of a construction cost subsidies for a BESS is permissible and that the calculation must be made according to the same principles that apply to other end consumers.
The BGH’s decision will have significant implications beyond this individual case for the entire energy and storage industry and will affect the further development, financing, and economic profitability of numerous BESS projects in Germany. The BGH’s reasons for its decision have not yet been published, but the press release of the BGH’s decision already contains some key statements.
In Depth
Facts
The underlying case of the decision was as follows: The plaintiff operates BESS throughout Germany. The other party involved is the operator of an electricity distribution grid. The defendant is the German Federal Network Agency (Bundesnetzagentur –“BNetzA”). In May 2021, the plaintiff requested the other party to connect a BESS with a maximum charging and discharging capacity of 1.725 MW and a storage capacity of 3.45 MWh to its grid. The BESS was to be constructed and operated as a purely grid-connected stand-alone BESS, whereby consumption of the temporarily stored energy on site was not intended and instead marketing in the form of electricity trading on the intraday market and the provision of control and reactive power was planned. The other party involved allocated the plaintiff a grid connection point in its 20 kV medium-voltage grid and requested the payment of a construction cost subsidy. It calculated the amount of the construction cost subsidies on the basis of the BNetzA’s position paper on the levying of construction cost subsidies from 2009 (BK6p-06-003) in accordance with the so-called capacity price model (Leistungspreismodell; multiplication of the contractually agreed grid connection capacity by the published capacity price applicable at the time of conclusion of the grid connection agreement). On 20 June 2022, the plaintiff initiated a special abuse proceedings against the other party involved pursuant to Section 31 EnWG before the BNetzA, requesting the BNetzA to prohibit the other party involved from charging the construction cost subsidies for the BESS as such and, in the alternative, to prohibit the calculation method of the construction cost subsidies for BESS. However, the BNetzA rejected this application by decision dated 6 December 2022 (BK6-22-242) based on the grounds that the charging of construction cost subsidies by grid operators in the medium voltage range was permissible in principle. The BNetzA also considered the construction cost subsidies requested by the grid operator in the specific case to be reasonable and non-discriminatory.
Previous course of proceedings: Decision of the Higher Regional Court of Düsseldorf in favor of the BESS operators
The plaintiff lodged an appeal against the BNetzA’s decision at the Higher Regional Court of Düsseldorf. In its ruling dated 20 December 2023, the Higher Regional Court of Düsseldorf rejected the BNetzA’s decision dated 6 December 2022 and obliged the BNetzA to reconsider the case in accordance with the legal opinion of the Higher Regional Court of Düsseldorf. The Higher Regional Court of Düsseldorf concluded that the construction cost subsidies charged by the grid operator was abusive. The court assumed that the construction cost subsidies calculated by the grid operator on the basis of the capacity price model was not compatible with principle of non-discrimination laid down in Section 17 (1) sentence 1 EnWG. The Higher Regional Court of Düsseldorf shared the BNetzA’s view insofar as a grid operator at the medium-voltage level may generally be entitled to levy construction cost subsidies. However, when calculating the construction cost subsidies for the BESS of the plaintiff, the court came to the conclusion that there was an unjustified equal treatment of different situations. The gird operator’s claim for construction cost subsidies was based on the consideration that the BESS was an “end consumer” when purchasing electricity and should be treated as such without distinction. However, the Higher Regional Court of Düsseldorf emphasized that there was a significant difference between a BESS and the standard case of a grid connection of end consumer as the as the grid connection capacity for BESS is not used continuously. With its appeal before the Federal Court of Justice, the BNetzA has then challenged the decision of the Higher Regional Court of Düsseldorf.
In the meantime: New position paper published by BNetzA
Notwithstanding the ongoing proceedings at the Federal Court of Justice, the BNetzA has published a new position paper “on the levying of construction cost subsidies” in November 2024, which is based on its 2009 position paper (which also forms the basis for the proceedings before the Federal Court of Justice) and further develops this previous version in some respects. In the new position paper, the BNetzA maintains its previous basic position that grid operators are generally entitled to charge construction cost subsidies for grid connections of BESS projects above low voltage. With regard to the calculation method, the BNetzA also clarifies that the capacity price model has been acknowledged in the past and represents an appropriate way of levying construction cost subsidies. However, the BNetzA has also made further adjustments to the capacity price model: instead of the capacity price applicable at the time of conclusion of the grid connection agreement, the arithmetic medium of the capacity prices over five years will now be used as a basis. This should mitigate price fluctuations. In addition, the BNetzA has introduced the concept of differentiated discounts for construction cost subsidies at the transmission grid level according to which discounts of up to 80% of the capacity price can be granted. The BNetzA has also published a map of Germany showing various network nodes where a differentiation of the construction cost subsidies may be appropriate. In its new position paper, the BNetzA also refers to the ongoing BGH proceedings and makes its statements subject to the outcome of these proceedings.
Decision of the Federal Court of Justice
In its decision dated 15 July 2025, the BGH has now clarified that the grid operator is permitted to charge construction cost subsidies for a grid-connected BESS and that the same principles apply to the calculation of the construction cost subsidies as for other end consumers, meaning that a calculation based on the capacity price model is also permissible and non-discriminatory for BESS. In its decision, the BGH acknowledges that BESS differ from other end consumers in terms of their special function of withdrawn and feeding-in and their potential beneficial effect on the grid (Netzdienlichkeit) but nevertheless clarifies that these special features do not justify a different treatment in the specific calculation of construction cost subsidies. The BGH considers equal treatment of BESS and other end consumers to be justified in this respect. The BGH justifies this view with the aims of construction cost subsidies, which is intended to contribute to the financing of the distribution network and also has a steering and control function (Lenkungs- und Steuerungsfunktion) with regard the dimensioning of the grid connection at specific locations, and emphasizes that these aspects also apply equally to BESS insofar as they use the grid for the withdrawal of electricity. In view of the BGH, the purpose of construction cost subsidies is not negated by the fact that BESS can have a beneficial effect on the grid. With regard to the potential beneficial effect on the grid, it is noteworthy that the BGH stated that only grid operators can assess the beneficial effect on the grid of BESS and that they have a certain discretion in this matter in the assessment of this aspect.
Classification of the Federal Court of Justice ruling and outlook
The BGH ruling on beneficial effect on the grid for grid-connected BESS creates legal certainty for the BESS industry, as the continuously controversial question of the permissibility of levying construction cost subsidies and calculating its permissible amount has now been decided by the highest German court. The BGH has removed this uncertainty with its ruling and thus created investment security for BESS projects in Germany – although not in favour of BESS project developers or investors, for whom the outcome of this decision is likely to be somewhat sobering. Investors have repeatedly emphasized the legal uncertainty on the construction cost subsidies and now have clarity for further investments in BESS storage. Prior to the Federal Court of Justice ruling, it was often the existing legal uncertainty rather than the actual amount of the BKZ that was seen as an obstacle for investments. Nevertheless, construction cost subsidies represent a significant cost factor in the implementation of BESS projects, which have an impact on the economic profitability of investments in BESS projects. For the BESS industry, it is now clear that construction cost subsidies must be permanently included in development costs, resulting in higher overall project costs. If construction cost subsidies has only been paid under reserve in individual cases due to the ongoing proceedings before the Federal Court of Justice, no reimbursement by the grid operator can be expected.
However, the ruling of the Federal Court of Justice not only provides legal certainty but also raises some new questions. For example, the Federal Court of Justice emphasizes that the assessment of the beneficial effect on the grid of BESS projects is in the sole responsibility of the grid operators and that the grid operators have discretion in this regard, without outlining any further criteria for this assessment. Hopefully, the outstanding reasons for the decision will provide further clarification. Given that there are more than 850 grid operators in Germany, it is already clear that there will be significant differences in how grid operators handle this issue in practice, whereas greater standardization in all matters relating to the grid connection of BESS projects should actually be the interest of all stakeholders. The BGH ruling was also based on the calculation methods for the capacity price model according to the BNetzA position paper from 2009. These calculation methods were adjusted by the new position paper from November 2024 . Since the BGH did not express any significant criticism of the basic methodology of calculation based on the capacity price model, we also assume that the further developed calculation methods to the capacity price model provided by the BNetzA position paper of November 2024 will be used by grid operators in practice in the future.
Finally, it should be emphasized that the BGH’s decision does not clarify all (urgent) issues facing the BESS industry. In addition to the question of procedures for grid reservations and uncertainties under planning law, this also concerns other (individual) questions relating to the construction cost subsidies, including whether and to what extent advance payments on the construction cost subsidies are permissible, and the impact of the BGH ruling on grid connections for large-scale BESS above the 110kV level, which are subject to special regulations under the Power Plant Grid Connection Ordinance (Kraftwerks-Netzanschlussverordnung – “KraftNAV”) that are not addressed in the BGH ruling. The large number of unresolved legal issues should also motivate the German legislature to provide further legal certainty through new statutory rules.
Once the BGH has published the reasons for its decision, we will provide an update on this ruling.
Please do not hesitate to contact us if you have any questions about the construction cost subsidy or the details of this Federal Court of Justice ruling.
