Germany: Government adopts Grid Package (Netzpaket)

Why should I read this?

On 29 July 2026, the German Federal Government adopted a draft law amending energy industry legislation to better align the expansion of energy generation assets with grid development and to improve the grid connection process (the so-called “Grid Package”). The main objective of the Grid Package is to provide grid operators with greater flexibility and expanded financing options. This is intended to enable a more efficient management and processing of the rapidly growing number of grid connection requests – particularly from power plants, large-scale battery storage systems, and data centres.

What do I need to know?

The following aspects are of particular importance for project developers and investors:

Capacity-limited grid areas and (limited) redispatch reservation: Distribution network operators may in the future designate areas as capacity-limited for a period of up to six years if the active power generation of the connected installations was reduced by a total of more than 5%in the preceding calendar year as a result of redispatch measures. The designation may be made for ground-mounted solar installations and onshore wind energy installations and must be notified to the Federal Network Agency (Bundesnetzagentur) by 31 March of a calendar year.

In capacity-limited grid areas, the unconditional right to grid connection for new installations no longer applies. However, the network operator is obligated to offer the connection applicant a grid connection agreement in which the connection applicant waives the right to financial compensation for redispatch-related generation adjustments for the duration of the capacity limitation, whereby the waiver is limited to 20% (or 18% for onshore wind energy installations in wind energy areas) of the total annual electricity yield of the installation. If the conditions for designation as a capacity-limited area continue to exist after the expiration of the validity period, the waiver shall be extended once by 18 months, unless the network operator is at fault for the failure to complete the grid expansion.

Thus, the provisions of the first ministerial draft, which provided for the designation of capacity-limited grid areas from a redispatch-related curtailment of only 3%, a designation period of up to ten years, and a complete exclusion of the compensation claim for the entire duration of the capacity limitation, have been partially relaxed.

System-beneficial grid connection capacity: From 1 January 2027, new grid connections will no longer be based on maximum generation capacity, but will instead be limited for new ground-mounted solar installations to 70% of the installed capacity and for new onshore wind energy installations to 280 watts per square meter of rotor swept area (so-called peak curtailment). This limitation applies permanently and regardless of any capacity bottlenecks at the grid connection point.

Prioritization of grid connection projects: The previously prevalent “first-come, first-served” approach (the so-called Windhundprinzip), under which the timing of a grid connection application was decisive, will no longer be eligible for transmission system operators (TSOs). TSOs – which have recently already introduced a “first-ready, first-served” approach for connection requests from storage facilities and large consumers (the so-called maturity grade procedure (Reifegradverfahren) – will now be required to jointly develop transparent, non-discriminatory, and efficient procedures for granting access to the transmission grid. In addition, TSOs may prioritize connection projects that meet certain qualitative criteria. These criteria include:

• the security and reliability of the electricity supply system (in particular, priority may be given to projects in regions where additional capacity does not significantly exacerbate existing bottlenecks or stability constraints, or may even alleviate them);
• statutory targets for the expansion of generation capacity, energy storage facilities, and consumption assets (e.g., expansion targets under the EEG);
• the assumptions underlying the Federal Network Agency’s grid development plan scenarios (e.g., regarding industrial electrification, the chemical sector, or the development of data centers);
• the needs of upstream or downstream electricity grids;
• the efficient use of grid connection points, in particular by multiple users (so-called “cable pooling”); and
• designated land uses of particular importance under spatial planning law or zoning law (e.g., wind priority areas within the meaning of the Wind Energy Area Requirements Act or specifically designated areas such as sites for data centres);
• site-specific nature (e.g., for industrial facilities expanding an existing grid connection).

Priority treatment may also be implemented by retaining grid connection capacity and allocating it on a quota basis to priority connection projects. Furthermore, transmission system operators may, subject to approval by the BNetzA, condition a grid connection on the conclusion of a flexible grid connection agreement.

In addition, distribution system operators (DSOs) may also apply prioritization measures by adopting the prioritization framework developed by the TSOs and notifying the competent regulatory authority accordingly. Furthermore, DSOs are required to develop joint, transparent, and non-discriminatory rules governing the reservation of grid connections with a rated capacity of at least 135 kW.

Construction cost contributions for power plants: Going forward, grid operators will be permitted to collect construction cost contributions (Baukostenzuschüsse) – used to finance grid expansion – not only from end consumers but also from operators of generation facilities. This applies to facilities generating electricity from renewable energy sources, combined heat and power plants, and other conventional power plants. Separately, the Federal Network Agency may issue requirements regarding construction cost contributions specifically for operators of renewable energy generation facilities. The amount of such contributions may be set as a flat rate or structured on a regionally differentiated basis. Differentiated charges are intended to create targeted incentives for grid connections at grid-compatible locations while simultaneously limiting new installations in already heavily congested grid sections.

Facilitating the deployment of co-located BESS: Grid operators may not deny connection of battery energy storage systems (BESS) co-located with generation facilities at existing grid interconnection points on the grounds of insufficient capacity, provided that the connection does not require any additional grid capacity.

Grid connection digitalization and transparency: Among other measures, the draft provides for the introduction of a shared online platform across all DSOs, through which information on the grid connection process will be made centrally available. Going forward, the entire grid connection process is to be handled fully digitally. In addition, grid operators will be required to provide applicants with information on the further processing timeline within three months of receiving a grid connection request, with subsequent updates to be provided at three-month intervals. Distribution system operators will also be required to update available grid connection capacities on a monthly basis and present this information in grid maps. No later than 2028, they must provide an online tool on their websites through which non-binding information on grid interconnection points can be obtained for grid connections with a nominal capacity of at least 135 kW.

What does this mean for stakeholders?

In capacity-limited grid areas, operators of new affected generation installations will in future bear part of the economic risk of redispatch-related curtailments: The waiver of financial compensation for up to 20% (or 18% in wind energy areas) of the annual electricity yield shifts the cost risk partly from end consumers to installation operators. This requires an even more careful site assessment taking into account the congestion situation at the respective grid connection point. In addition – regardless of any capacity limitation – there is the limitation on active power feed-in and the levying of construction cost contributions. Developers, financiers, and operators must take all these factors into account in their economic calculations, in addition to other energy law developments – such as the introduction of the skimming of any excess revenues under Contracts for Difference (CfDs) pursuant to the EEG 2027 (Eversheds Sutherland: Federal Government adopts draft bill for EEG 2027) as well as possible adjustments to network charges through the introduction of the General Network Tariff System for Electricity (AgNes).

For project developers, the non-discriminatory and transparent grid connection reservation frameworks – including reservation fees – that grid operators will be required to develop jointly are likely to bring a significant improvement in planning certainty. The current inconsistent reservation practices, which varied considerably depending on the individual grid operator, will be largely standardized. As a rough benchmark for the appropriateness of reservation fees, the BNetzA, which is responsible for approving these frameworks, has indicated a figure of approximately EUR 1,500 per MW of grid connection capacity.

The increased system orientation based on qualitative criteria that is envisaged under the draft law will elevate the importance of site selection. The online tools to be introduced on grid operators’ websites can make an important contribution in this regard by enabling early-stage assessment of potential grid interconnection points. However, given the absence of binding review deadlines, it remains to be seen whether the proposed notification obligations and the digitalization of the application and information process will actually result in faster processing of grid connection requests.

What should I do next?

Given that the draft law sets deadlines for transmission system operators as of 1 January 2027, the Federal Government is seeking enactment of the bill before the end of 2026.

In particular, the design of capacity-limited grid areas and the associated partial elimination of the compensation entitlement for redispatch measures remain subject to considerable criticism from the industry, despite the relaxation of the provisions. It remains to be seen to what extent the current draft will be further amended during the parliamentary process.

In addition, in July 2026 the German federal government announced a distribution grid package to be introduced later in the year, which is expected to bring further changes to the distribution network sector.