On 17 July 2026, the European Commission published a proposal for a regulation amending the Electricity Market Regulation (EU) 2019/943 (COM(2026) 600 final, 2026/0203 (COD)) as part of its electrification package. Methodologies for determining network charges currently differ across the EU. The new regulation aims to harmonise them more closely, while strengthening incentives to reduce network costs and eliminating tax barriers to electrification. For German industry, one of the most significant changes is the intention to tie special network charges explicitly to proven cost effects of a consumption profile, with further harmonisation of the eligibility requirements to follow through delegated acts. Businesses that rely on competitive energy prices should closely monitor these changes, as further harmonisation could severely limit Member States’ ability to grant relief to industry. The proposal coincides with the Bundesnetzagentur’s ongoing reform of Germany’s network tariff system.
Background and objectives
On average, network charges make up around a quarter of household electricity bills across the EU, and are a major location cost factor for industry. At the same time, the EU’s Agency for the Cooperation of Energy Regulators (ACER) estimates annual investment in grids to double or even triple by 2050, with total network costs expected to increase by 60 % compared to 2022. This prompted the Commission to identify network charges as a key area for action in its Affordable Energy Action Plan, published in February 2025. Rising electrification and more volatile feed-in patterns are shifting the regulatory focus from the mere funding of the grid to a broader debate over which users drive network costs and how tariff structures can incentivise beneficial grid use. The proposal goes beyond final consumers, explicitly considering the cost effects of electricity feed-in. It also introduces specific rules for storage installations, whose network charges are to reflect their contribution to costs and the benefits created for the network.
For the post-2030 period, the action plan published on 17 July 2026 as part of the electrification package proposes an indicative electrification target of 46 % by 2040. The proposed regulation seeks to advance this objective, focusing in particular on network charges and taxes. The proposal does not, however, mark a regulatory departure from the existing framework. Article 18 Regulation (EU) 2019/943 already requires network charges to be cost-reflective, transparent and non-discriminatory, and sets out rules for efficiency, locational and flexibility signals. What’s new, however, is the much more detailed specification of these requirements, the introduction of additional transparency and comparability obligations, and the Commission’s power to further harmonise tariff structures across the EU through delegated acts.
The European Commission adopted the proposal on 17 July 2026, initiating the ordinary legislative procedure; the proposal must now be reviewed and adopted by both the European Parliament and the Council of the European Union. The European Economic and Social Committee will be consulted. With the ordinary legislative procedure under Article 294 TFEU still in early stages, changes to the draft legislation are still possible, making early engagement in the legislative process particularly worthwhile. In the European Parliament, the Committee on Industry, Research and Energy (ITRE) is likely to be responsible for steering the proposal, while the Council’s relevant working groups are expected to begin consultations in autumn 2026.
Complementing these efforts, the Commission presented its European Grids Package in December 2025, with the goal of accelerating the grid roll-out and improving the use of existing infrastructure.
Key provisions of the proposal
The proposal centres around the following main regulatory areas:
- Revised Article 18 Electricity Market Regulation: The proposal expands the existing principles of cost-reflectivity, transparency and non-discrimination into a detailed catalogue of criteria for tariff methodologies. These methodologies will be required to reflect the costs of an efficient and structurally comparable network operator, provide investment and locational signals, and include incentives to reduce peak load consumption, with capacity-based charging expressly recognised as a potential mechanism. But tariff methodologies are to also include time-of-use elements. Storage installations, self-consumption, aggregation and demand response should not be disadvantaged; network charges should reflect the benefits that storage installations create for the network and be limited to the network costs they cause (Article 18(1) and (2) new version). National regulatory authorities are to establish standardised performance indicators. In addition, ACER will carry out regular efficiency benchmarking on TSOs.
- Justification requirement for special tariff regimes (Article 18(3) new version): Special tariff regimes for specific categories of users will remain permissible (the proposal refers explicitly to energy-intensive industries, data centres and energy communities). But national regulatory authorities must be able to demonstrate that the consumption profile of the users in question has a proportionally lower or higher impact on the overall cost of the network and that the principle of cost-reflectivity is respected. This rule explicitly ties the EU benchmark for justifying special tariffs to the demonstrable impact of the relevant consumption profile on network costs. It also significantly restricts Germany’s ability to grant network charge relief on industrial policy grounds. The precise scope for such special tariff regimes will, however, ultimately depend on the delegated acts that are yet to be adopted. The proposal introduces a dedicated cost-reflectivity standard for storage installations: their network charges must reflect any benefits created for the network and be limited to the costs that these installations create for the networks (Article 18(2), letter (n) new version); recital 9 seeks to avoid double charging for injecting and withdrawing electricity.
- Harmonisation through delegated acts (Article 61(5a) new version): The Commission will be empowered to establish guidelines on a common structure and harmonised methodology for transmission and distribution network charges. The guidelines are to detail the preconditions for special tariff regimes and harmonise the requirements for public consultations, with ACER providing a recommendation beforehand. This is where the proposal’s main harmonising effect lies: Member States will retain the power to set tariffs, but not in a merely abstract framework of principles under EU law; instead, they will have to apply a more detailed methodology framework. For Germany, this means that existing mechanisms for granting relief to industry – such as preferential treatment for high electricity consumption or for atypical network use – would need to meet the harmonised criteria. Stakeholder participation in the ongoing legislative process could help shape these criteria in a way that largely preserves established national instruments for lowering industrial electricity prices, rather than significantly restricting or even displacing them entirely.
- State funding of network costs (Article 18(4) new version): Member States may partially cover network costs through State funds if the funds are provided in a non-discriminatory manner without selectively favouring specific categories of users, do not undermine incentives for efficiency or particular behaviour, are temporary, and cover only the additional costs resulting from measures to accelerate decarbonisation, electrification of production processes and market integration. This should be distinguished from selective relief measures: The proposal expressly states that Member States may continue to notify such relief under the relevant State Aid rules provided that locational and consumption incentives to reduce system costs remain in place.
- Transparency and consultation obligations (Article 18(5) and (8) new version): In future, regulatory authorities must publish certain information including cost categories, tariff values per user group, the share of network charges covered through State funds, and any special tariff regime, together with the justification for such arrangements. Public consultations must be conducted before any tariff methodologies are adopted or approved. The package also introduces regular efficiency benchmarking for TSOs and DSOs, complemented by ongoing ACER reporting on best-practice tariff methodologies, which regulatory authorities must take into account.
In addition, the proposal contains a number of further measures with implications for electricity costs and network use:
- Taxation of electricity (Article 18c new version): Under the proposal, electricity will generally not be subject to higher excise duties (regulated in the Energy Taxation Directive 2003/96/EC) than the rate applied to gas; the Commission may grant Member States a deferral upon duly justified request. The new Article 18c(3) also stipulates that electricity supplied to energy-intensive businesses is deemed to satisfy the environmental and efficiency-related requirements of Article 17(4) Energy Taxation Directive. This means that Member States can grant the electricity tax relief permitted under Article 17(2) without having to prove compliance with these additional requirements, including lowering the tax rate down to zero; the proposal does not, however, oblige Member States to grant such relief, nor does it create a direct right for businesses to claim it.
- Grid connection, smart metering and digitalisation: Where connection capacity is limited, the new Article 18d allows regulatory authorities to permit measures to prioritise certain categories of users including energy-intensive industries and data centres, subject to objective, transparent and non-discriminatory criteria. Article 18b new version also introduces binding smart meter rollout targets of at least 50 % of final customers by the end of 2030 and 75 % by the end of 2033. For Member States with deployment rates below 30 % at the time the amended regulation enters into force, both deadlines are extended by one year. The proposal also seeks to promote the greater use of non-wire, smart and digital solutions as well as harmonised network data access.
Reform of Germany’s network tariff system by the Bundesnetzagentur
Alongside the ongoing European legislative procedure, Germany’s network charge regime is already undergoing a fundamental transformation. Following the ECJ’s judgment of 2 September 2021 (C-718/18) on the independence of the regulatory authority, the Electricity Grid Charges Ordinance (Stromnetzentgeltverordnung) is set to expire on 31 December 2028. Going forward, the Bundesnetzagentur will take greater responsibility for establishing the methodologies governing network charges. The agency’s Grand Ruling Chamber for Energy is currently conducting proceedings to develop a new network tariff system (“AgNes”).
On 6 August 2026, the Bundesnetzagentur published the full draft of its AgNes determination for consultation, with stakeholders having until 18 September 2026 to submit comments. Notably, many of the proposed changes mirror the approach taken by the Commission’s proposal. For large customers, the existing demand-based price will be supplemented and/or replaced by a capacity-based price for the capacity ordered, with a surcharge if the capacity is exceeded. The aim is to avoid discouraging additional demand during periods of low electricity prices. Under the framework determination, transitional rules will apply to industrial network charges: Existing customers will generally continue to benefit from provisions on high electricity consumption until the end of 2031, and the existing discount structure for atypical network use will remain in place for large consumers on an interim basis. The Bundesnetzagentur plans to decide on a successor regime for industrial customers in early 2027, taking into account the results of the pilot projects to run until the end of 2026.
The reform also extends to generators and storage installations. In future, generating facilities are to contribute to network financing through a limited annual capacity-based charge; the key points already published indicate that the entry tariff will initially be set at around 4 to 7 EUR/kW per year, though existing installations will benefit from grandfathering protection for twenty years from the date of commissioning. For electricity storage installations, a moderate capacity-based price at a comparable level is also envisaged; consumption-based network charges with a financing function are to be phased out. Existing storage installations will only be subject to charges once any exemption under section 118(6) Energy Industry Act (Energiewirtschaftsgesetz) has expired.
In the case of generation and storage assets in particular, the two reform processes are increasingly moving in the same direction. Both AgNes and the Commission’s proposal make network charges more closely reflect the actual cost impact on the respective network, while strengthening incentives for network-benefiting behaviour and flexibility. As regards storage installations, Article 18(2), letter (n) new version requires that the benefits they create for the network be considered when calculating charges and that these charges be limited to the network costs these installations actually cause. How the emerging national framework will ultimately interact with the future EU regime remains uncertain and will depend on the outcome of the legislative process, as well as the delegated acts to be adopted at a later stage. The binding European requirements may end up severely restricting the German legislature’s scope of action and potentially block future industrial policies aimed at lowering energy costs.
Conclusion and outlook
Companies should monitor both the European legislative procedure and Germany’s AgNes reform. In the short term, the Bundesnetzagentur will be deciding on the new German methodology framework and then the successor rules for industrial network charges. At the same time, the European Parliament and Council could change the EU legal framework, which is to be fleshed out later through delegated acts. Energy-intensive businesses, in particular, should keep a close eye on both lines of development, reviewing their options on the basis of solid legal assessment. Given the early stage of the European legislative process, stakeholders still have an opportunity to engage with both German and European policymakers and argue in favour of preserving Member States’ capacity to lower industrial electricity prices.
Forward
