Federal Court of Justice in Germany Approves Financing for Battery Storage Facility Operators
The German Federal Court of Justice (BGH) has made a landmark decision regarding the charging of building cost subsidies for battery energy storage systems (BESS). In a ruling that upholds the discretion of the Federal Network Agency (BNetzA), the BGH confirmed that distribution system operators (DSOs) are entitled to charge these subsidies for BESS in the same way as for other grid users.
The legal dispute began when a BESS operator was charged a building cost subsidy for the connection of a new BESS to a distribution grid. The operator appealed the decision, successfully winning the case before the Higher Regional Court of Düsseldorf (OLG Düsseldorf). The OLG Düsseldorf ruled that charging building cost subsidies from BESS operators was discriminatory and inadmissible under EU law.
However, the BGH has now overturned this decision, stating that there is no violation of EU law in charging BESS operators building cost subsidies. The EU Electricity Directive and Regulation contain political objectives, not directly enforceable rights to exemption from costs.
The BGH emphasizes that DSOs have entrepreneurial freedom in deciding whether to charge building cost subsidies, provided that the conditions are transparent and non-discriminatory. The court acknowledges fundamental differences between BESS operators and other grid users but considers their equal treatment to be permissible.
This ruling is in line with the prohibition of energdiscrimination under the Energy Industry Act (EnWG). The BGH states that BESS may reduce the need for grid expansion, but the grid-beneficial effects are not necessarily geared towards the demands of the local distribution grid.
The BGH also clarified that the charging of building cost subsidies is only linked to the withdrawal of electricity. The core functions of building cost subsidies - serving as an economic incentive for grid users to request only the grid capacity they actually need (steering function), and directly contributing to the costs of the local distribution grid to which the user is connected (financing function) - must also be ensured in case of BESS.
This decision will have significant implications for financial investors in BESS projects, as they now have legal certainty. The cost factor will have to be taken into account in the financial model for new BESS projects.
For more information about Mergers & Acquisitions, Energy, Germany, and Western Europe, contact Thomas Burmeister, Verena van Eik, and Dr. Karen Sievert respectively. The companies behind operators of battery energy storage systems involved in the Bundesgerichtshof ruling include energy utilities and grid operators who were required to pay building cost subsidies like other grid users.
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