In a ruling issued on 15 July 2025, the Federal Court of Justice held that grid operators can continue to charge construction cost contributions under the capacity price model for connecting battery storage systems (BESS). The reasoning for the judgment is not yet available. The decision is a significant economic setback for the battery storage sector.
Construction cost contributions
Construction cost contributions fulfil an important guidance and control function and are intended to prevent grid customers from requesting more capacity than they actually need. The aim is to build grid connections that are both cost-effective and sized for the actual capacity needed, preventing unnecessary grid expansion. Construction cost contributions are a direct financial incentive to size grid connections efficiently in line with demand.
However, since these contributions represent a large portion of investment costs, they can also hinder investment. They are typically only charged to end consumers, not producers. Battery storage systems are an exception, as they both draw from and feed into the grid. This dual function has created uncertainty about whether, and how, construction cost contributions apply to them.
Background
The Federal Court of Justice’s decision of 15 July 2025 (EnVR 1/24) was issued in response to an appeal of Düsseldorf Higher Regional Court’s ruling of 20 December 2023 (VI-3 Kart 183/23). Düsseldorf Higher Regional Court had ruled that grid operators were not permitted to charge a construction cost contribution under the Bundesnetzagentur’s existing capacity price model for connecting grid-bound battery storage systems to the grid. Under the capacity price model, the capacity provided is multiplied by a fixed capacity price. This model had been the basis for calculating construction cost contributions, including for battery storage systems.
Although the Higher Regional Court generally recognised the permissibility of construction cost contributions for grid-connected battery storage systems, it clarified that they could not be charged on the basis of the existing capacity price model. Applying the model without changes would be discriminatory, according to the court, as it would treat battery storage systems – which both draw and supply power – the same as consumption-only systems. According to Düsseldorf Higher Regional Court, this was incompatible with the requirements of sections 17 and 31 Energy Industry Act (Energiewirtschaftsgesetz, “EnWG”). In the Federal Court of Justice’s view, the lower court’s decision failed to address the unique functions of battery storage systems in the grid, effectively treating unequal circumstances as if they were equal, which is unlawful. However, Düsseldorf Higher Regional Court did not set out any specific requirements for charging construction cost contributions for battery storage systems, leaving that task to the Bundesnetzagentur.
The Bundesnetzagentur then published a position paper in November 2024 concerning the charging of construction cost contributions, which expands on its 2009 position paper. In its 2024 position paper, the Bundesnetzagentur adheres to the existing capacity price model for calculating construction cost contributions independently of the connected load, including for battery storage systems. Despite the Bundesnetzagentur’s efforts to make construction cost contributions more transparent and fair, battery storage systems remain subject to these charges. The Bundesnetzagentur was clearly waiting for the Federal Court of Justice’s judgment before it adjusted how it calculates these contributions; the wait is now over.
Decision of the Federal Court of Justice
The Federal Court of Justice has ruled that Düsseldorf Higher Regional Court was wrong to assume that charging a construction cost contribution calculated under the capacity price model for purely grid-bound battery storage systems was discriminatory within the meaning of section 17(1), sentence 1 EnWG. The Federal Court of Justice acknowledged that battery storage systems are not traditional end consumers, as the former do not use the electricity directly but instead feed it back into the grid later. However, it found that treating this use the same as pure consumption was objectively justified. The Federal Court of Justice maintained that the construction cost contribution under the capacity price model fulfilled an important guidance and control function. The higher the requested capacity, the higher the construction cost contribution. This was intended to encourage grid customers to size their grid connection in line with demand, thereby avoiding excessive and costly expansion of the grid. The Court emphasised that battery storage systems were no exception and that the grid connection should be based exclusively on the requested withdrawal capacity. The feed-in function was irrelevant in this regard.
According to the Federal Court of Justice, the fact that battery storage systems could also be beneficial to the grid did not change anything about the permissibility of the contributions. The potential reduction of the load on the overall grid did not necessarily benefit the local grid for which the construction cost contribution was charged. The court maintained that it was solely the responsibility of the grid operator obliged to provide the connection to assess whether and, if so, how a storage system contributed to local grid stability. For this reason, it grants the grid operator a certain scope of discretion. For example, the court stated that the grid operator could, when charging contributions, decide whether standardised, transparent and non-discriminatory incentives should be provided.
The Federal Court of Justice did not accept Düsseldorf Higher Regional Court’s arguments under EU law, either. It asserted that the requirements formulated in the Electricity Directive (EU) 2019/944 and the Internal Electricity Market Regulation (EU) 2019/943 were to be understood as general target provisions giving the Member States leeway with respect to implementation. It found that this EU legislation could not justify a general ban on construction cost contributions for storage systems.
Grid fee reform
It should not be forgotten that the Bundesnetzagentur is currently planning an extensive overhaul of the General Grid Fee System for the Electricity Sector (Allgemeine Netzentgeltsystematik Strom, “AgNeS”). This includes examining whether battery storage systems that feed into the grid should be obliged to contribute to the costs of constructing or expanding the grid. Accordingly, the construction cost contribution could be made as a one-off payment by grid customers, alongside a feed-in charge, when connecting to the grid or expanding an existing connection. The aim is to incentivise – by means of a targeted price signal – a more efficient use of grid connection capacities and promote the establishment of new power generation facilities at locations beneficial to the grid.
Implications for the battery storage industry and outlook
The hopes of the storage industry that were raised by the decision of Düsseldorf Higher Regional Court – specifically that it would not have to pay construction cost contributions – were not realised. Grid operators may also charge construction cost contributions for battery storage systems, regardless of whether they benefit the grid. The Federal Court of Justice’s decision did not come as a surprise after the hearing on 27 May 2025, but it is nevertheless sobering for storage system operators.
This decision will most noticeably impact investment security for large-scale storage projects, project planning and the entire regulatory framework for the energy transition. In some cases, construction cost contributions will substantially increase project costs, particularly for projects with high capacity needs. Anyone intending to connect a battery storage system to the grid should therefore factor possible required contributions from the outset when calculating profitability and deciding on a location. Storage projects will have to be planned even more carefully, including with regard to sizing and grid compatibility. As the Federal Court of Justice leaves the decision to the grid operators, there is still no definitive clarification for evaluating how battery storage benefits the grid. Grid operators can still make their own decision on charging construction cost contributions.
The Court’s decision will likely further fuel the debate around a more nuanced regulatory framework for energy storage systems. Given rising grid expansion costs, growing flexibility demands and European requirements for energy storage subsidies, policymakers will need to establish a clear and fair framework for both grid and storage operators.
Forward
