In brief
A recently leaked draft bill ("Referentenentwurf") from the Federal Ministry for Economic Affairs and Energy (BMWE) concerning a "Grid Package" with a working draft date of 13 January 2026 has triggered significant political and market debate in recent weeks. While not yet formally introduced by the Federal Government, the proposal could materially reshape the regulatory and bankability landscape for new renewable energy (RES) projects and large scale battery storage, particularly in grid areas with recurring congestion. This client alert outlines the proposed new regulatory framework and the potential impacts on the industry.
Why the ministry is acting: Grid areas at their technical limits
The draft is a response to growing congestion across many German grid areas, where renewable build out has outpaced grid expansion. Network operators increasingly curtail generation and deploy balancing measures ("redispatch"); curtailment compensation plus balancing costs are ultimately borne by end consumers, with approximately EUR 2.7 billion in redispatch costs in 2025.
At the same time, more parties are competing for scarce grid connection capacity - RES projects and large batteries alongside industrial loads, data centers, charging infrastructure, and telecom networks. The current "first come, first served" approach contributes to a flood of applications, especially for large battery projects, tying up operator resources even though only a fraction of requested projects may ultimately be built.
Against this backdrop, the draft bill pursues two goals: Firstly, synchronizing renewable energy deployment with grid expansion, and secondly, comprehensively reforming grid connection law to allow quality based prioritization of grid connection requests and to enable grid operators to steer projects toward suitable grid connection points.
"Redispatch Reservation" in capacity limited areas (new RES only)
The draft would allow grid areas to be designated "capacity limited" if, in the prior year, more than 3% of potential feed in could not be delivered due to congestion. The designation may remain in place for up to 10 years and would be lifted only after the threshold is not met for three consecutive years (§ 14 (1d) EnWG-Draft).
For new wind and solar installations connecting to the grid after an area is designated capacity limited, the draft would condition the grid connection on a waiver of compensation for congestion related curtailment (redispatch) for the duration of the capacity limitation (§ 13a (6) EEG-Draft). In contrast, existing plants and new conventional plants (e.g., gas fired plants) would retain compensation rights.
Grid expansion contributions for new RES projects (Baukostenzuschüsse)
According to the draft, grid operators would be authorized to require reasonable grid expansion contributions from operators of new RES plants (§ 17 EEG-Draft). The Federal Network Agency (BNetzA) would be empowered to set detailed rules on process and calculation criteria, including standardized or regionally differentiated amounts and adjustments to reflect local grid build out status. The policy objective is to create incentives for grid friendly site selection.
Transmission grid: Mandatory unified procedures and prioritization of grid-connection requests following objective criteria
Consistent with the German TSOs' recently published joint concept for a maturity evaluation procedure (Reifegradverfahren), the TSOs would be required to jointly develop transparent, efficient, and non discriminatory transmission grid connection procedures and submit them to BNetzA for approval, with BNetzA authorized to require changes (§ 17a (1) EnWG-Draft).
TSOs could condition a connection on the applicant entering into a flexible grid connection agreement if BNetzA has approved limits on injection or withdrawal (§ 17a (2) EnWG-Draft). An exception would apply where the applicant commits to covering the costs required to remove the relevant constraint, including grid capacity expansions.
Furthermore, TSOs would be permitted to prioritize certain connection requests, including reserving capacity for expected prioritized requests. The draft enumerates the permitted criteria for such prioritization exhaustively, including statutory targets for the expansion of generation, storage, and consumption facilities as well as efficient use of grid-connection points. This would give grid operators a clear legal framework to rank grid‑connection requests based on transparent and objectively defined factors.
Distribution System Operators (DSOs): Standardized rules for reserving grid‑connection capacity
Similarly, DSOs would be required to jointly develop objective, transparent, and non‑discriminatory rules for reserving and releasing grid‑connection capacity for projects with a rated capacity of at least 135 kW (§ 17f (1) EnWG‑Draft). The draft requires that the reservation must be split into individual, successive reservation periods and tied to demonstrated project progress. DSOs may also charge reasonable, non‑discriminatory reservation fees. The jointly adopted rules must specify, among other things, the duration of reservation periods, required documentation of project progress, and calculation methods for reservation fees. BNetzA approval of the rules would also be required.
Moreover, DSOs may apply the BNetzA‑approved prioritization rules for transmission‑grid connections correspondingly within their own grid areas (§ 17b (2) EnWG‑Draft).
Transparency on available grid‑connection capacity
Operators of extra‑high‑, high‑, and medium‑voltage grids will be required to publish available grid‑connection capacities on their websites via a geographical map, updated monthly. They may also indicate areas where certain types of connections have priority (§ 17c (1) EnWG‑Draft).
Starting 1 January 2028, DSOs must offer an online process for a non binding grid-connection assessment for projects ≥135 kW.
Additional transparency and digitization requirements
The draft includes several additional transparency and process standardization measures:
All grid operators must comply with uniform information and communication deadlines regarding the processing status of grid connection requests (§ 17d EnWG Draft).
DSOs must implement digital grid connection portals handling the entire process - from application to commissioning (§ 17e EnWG Draft). A single nationwide DSO platform is not mandated, but DSOs must coordinate on uniform rules for the procedural steps and data formats, thereby significantly harmonizing today's fragmented and inconsistent DSO level procedures.
Co‑location: Facilitated connection for "grid‑neutral" battery storage
The draft seeks to facilitate the connection of "grid‑neutral" battery storage systems co‑located with RES plants or large consumers (e.g., charging hubs, data centers). Grid operators would no longer be permitted to deny a battery connection for lack of capacity if the addition does not increase the site's maximum injection/withdrawal (relative to existing limits) and this is secured via a flexible connection agreement (§ 17 (2b) EnWG-Draft).
Practical implications for future project developments
The draft's most commercially significant feature is the proposed redispatch compensation waiver for new RES projects in capacity‑limited areas. This requirement is expected to create major investment barriers. Securing project financing may become considerably more difficult if the commercial viability of the project is no longer secure or state backed. Experts estimate that the 3% congestion threshold triggering the "capacity limited" designation will be met in large parts of Germany, which could significantly slow the expansion of renewable energy generation nationwide.
The proposed grid expansion contributions - whose amounts remain uncertain - could further impact project economics. Notably, no transitional provisions are currently included. Given substantial industry opposition, there is hope that the draft may be softened at least in this respect.
Outlook: Process and next steps
The Grid Package has not yet been officially presented by the Federal Government, and the content of any bill introduced into the parliamentary process after cabinet approval remains uncertain. A stakeholder consultation (Verbändeanhörung) is expected before further formal steps. Given significant opposition from industry associations and experts, revisions to certain provisions remain possible. Project developers and investors should closely monitor these regulatory developments.