Grid Connection Bottleneck Drives Reform Initiative
Federal Minister for Economic Affairs and Energy Katherina Reiche recently announced at a parliamentary event hosted by Eon that she plans to amend the grid connection rules for large battery storage systems this year through a fast-track revision of the Power Plant Grid Connection Ordinance (KraftNAV). The ordinance currently governs the connection of generation facilities above 100 megawatts, requiring strict adherence to a “first-come, first-served” principle.
Arne Genz, a department head at the ministry responsible for energy storage policy, confirmed the minister’s position at a subsequent 50Hertz event and explained the feasibility of an accelerated process. He stated: “In theory, the amendment could be implemented fairly quickly. In fact, one sentence would be enough to remove energy storage from the current legislation.”
For months, the grid connection process for large battery energy storage systems above 100MW has been a source of tension in the industry. Grid operators are struggling under a surge of applications that must be processed strictly in order of arrival, while investors are pushing to connect their projects and realize significant revenues. Germany’s four transmission system operators have now received over 500 gigawatts of connection inquiries, with a large proportion coming from storage project developers.
Staggering Scale of Application Backlog
Kerstin Andreae, CEO of the German Association of Energy and Water Industries (BDEW), emphasized the severity of the issue: “The number of grid connection requests for large-scale battery storage systems has increased so dramatically that new regulations are needed.” She noted that the more than 720 gigawatts of pending applications correspond to more than two and a half times Germany’s installed generation capacity of 263 gigawatts, which includes all renewable energy and conventional power plants.
The association also highlighted that at high and medium voltage levels, grid capacity has become a scarce resource given the high demands of large consumers such as data centers, large heat pumps, EV charging infrastructure, and industry. Germany needs storage technologies for a modern energy system, but they must be integrated coherently into the overall system.
Amendment Process and Timeline
Because KraftNAV is a government regulation rather than formal legislation, changes do not require approval from the Bundestag (German Parliament). Instead, an amendment must undergo interministerial consultation and then be adopted by the federal cabinet. After that, the Bundesrat (Federal Council) must approve it. According to Genz, several states have already signaled support for such a revision.
A spokesperson for the Federal Ministry for Economic Affairs and Climate Action confirmed the minister’s remarks, stating that Reiche had highlighted the need to improve the grid connection process. Possible measures include revising the KraftNAV for large storage facilities, tightening application requirements, adjusting the current “first-come, first-served” procedure, and improving transparency regarding available grid capacity.
Initial proposals are expected to be released for public consultation in the first quarter of 2026. Further details were not provided due to the ongoing development of the measures.
Industry Response and Complementary Policies
BDEW explicitly welcomed the minister’s announcement of swift action. Andreae continues to call for transparent grid connection procedures that better reflect current grid constraints than the existing first-come, first-served system. She believes that overbuilding, flexible grid connection agreements, and reservation procedures should play a greater role in the future.
Notably, just days earlier, the German Bundestag and Bundesrat approved legislation granting preferential treatment for battery storage systems above 1 MWh in outdoor areas as part of the latest amendment to the Energy Industry Act (EnWG). The reform is part of an “omnibus package” amending the EnWG and several related statutes.
However, grid operators view the preferential treatment as counterproductive in light of the mounting volume of large-scale storage applications. Resistance is reportedly building among the states as well.
Parallel Reforms Advancing Simultaneously
Beyond the KraftNAV amendment, the latest EnWG amendment also ends a long-standing disadvantage for mixed-use storage systems. Previously, only storage that charged exclusively from the grid and fed all electricity back into the grid qualified for a network charge exemption. The updated rule extends the exemption to multi-use systems, improving the business case for batteries paired with PV plants or customer-side installations.
Carsten Körnig, CEO of the German Solar Association (BSW-Solar), stated: “Multi-use storage is particularly useful because it makes very efficient use of grid-connection capacity and reduces export and consumption peaks.”
Udo Hemmerling, Managing Director of the Federal Association of Non-Profit Land Companies (BLG), also offered positive commentary: “For wind, biogas and ground-mounted PV plants, it is now possible to add battery storage to the plant with less planning effort and improve revenues on the electricity market.”
Market Outlook and Challenges
Despite policy-level reforms advancing, Germany’s energy storage market still faces multiple challenges. The eastern German transmission system operator 50Hertz has already exhausted its connection capacities through 2029. Distribution system operator Avacon received 1,100 inquiries with a total capacity of more than 75,000 MW between 2022 and 2024, and now has over 2,500 applications.
Project developers are pushing to be connected to the grid before 2029, as the reorganization of the grid fee system threatens to remove the grid fee exemption for battery storage systems. However, this goal appears highly ambitious given current circumstances.
Germany is set to integrate up to 24 gigawatts of utility-scale energy storage by 2037, creating substantial opportunities for the industry. With 2024 marking a key year for regulation in Germany, nearly 16 gigawatt-hours of capacity was installed in the first half of the year. With the advancement of the KraftNAV amendment, Germany’s energy storage market is poised for a new round of accelerated development.
