Key takeaways

• Battery storage system operators should finally have legal certainty: The operators of decentralized battery storage systems are entitled to avoided grid fees.
• In addition, the decision of the Federal Court of Justice also confirmed the positive reasoning for the storage industry of the decision of the Düsseldorf Higher Regional Court's subsequent decision. The courts recognized the complex and grid-serving role of battery storage systems. 
• However, the decision does not have any impact on the legislator's decision to abolish the claim to avoided grid fees for new battery storage systems that were commissioned since 1 January 2023.

In detail

The importance of avoided grid fees

Avoided grid fees are a payment made by the distribution grid operator to operators of decentralized power generation systems. These are power plants connected to the distribution grid that are situated close to the place of consumption and load (verbrauchs- und lastnah). The entitlement of these plant operators to avoided grid fees is provided for by law in Section 18 (1) of the Electricity Grid Charges Regulation (Stromnetzentgeltverordnung, StromNEV). The payment of the avoided grid fees is intended to compensate the operator of a decentralized power generation system for the fact that less electricity has to be purchased from the upstream grids as a result of its feed-in directly into the distribution grid, thus saving the upstream grid fees that would otherwise be incurred. The calculation of the amount of avoided grid fees is based on a complex procedure. Starting points of this calculation are the avoidance work (Vermeidungsarbeit), the avoidance capacity (Vermeidungsleistung) and the grid fees of the upstream grid level.

The payment of avoided grid fees was viewed more and more critically over time. This ultimately led to them being abolished for new systems with volatile generation commissioned after 1 January 2018, and finally for all new systems commissioned after 1 January 2023. This means that avoided grid fees are not paid for systems commissioned after 1 January 2023. In addition, avoided grid fees are not paid for systems that are subsidized under the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz).

The entitlement of battery storage operators to avoided grid fees

Problem outline

From the outset, it was disputed whether battery storage system operators are also entitled to payment of avoided grid fees. This was doubted in some cases, as the entitlement to avoided grid fees only exists in favor of decentralized power generation systems. However, it has often been doubted that battery storage systems are power generation systems, as storage systems do not generate energy, but "only" temporarily store the electricity generated by other systems.

The decision of the Düsseldorf Higher Regional Court of 2 February 2022

As some grid operators refused to pay avoided grid fees to storage system operators on the basis of this argument, one storage system operator initiated an abuse proceeding (Missbrauchsverfahren) before the Federal Network Agency (Bundesnetzagentur). In December 2020, the Federal Network Agency obliged the grid operator to pay avoided grid fees to the battery storage system operator. Also in the next instance, in February 2022, the Düsseldorf Higher Regional Court ruled in favor of the storage operator. Although, according to the Düsseldorf Higher Regional Court, battery storage systems are not actually decentralized power generation facilities and Section 18 (1) StromNEV therefore does not apply directly to battery storage systems, the provision should be applied analogously (analog) because battery storage systems are comparable to power generation systems with regard to the subsequent (re-)feed-in of the stored energy into the grid. If the battery storage system feeds the stored electricity directly into the distribution grid, the storage system operator should therefore also be entitled to avoided grid fees because the transfer of electricity via the upstream grid levels is also avoided in this case.

However, this decision by the Düsseldorf Higher Regional Court still did not provide final clarification, as the grid operator filed an appeal against it to the Federal Court of Justice. 

The decision of the BGH of 26 November 2024

After more than two years of further uncertainty for the battery storage system industry, the BGH has now rejected the appeal and confirmed the decision of the Düsseldorf Higher Regional Court. Unlike the Düsseldorf Higher Regional Court, the BGH assumed that an analogue application of Section 18 (1) StromNEV was not even necessary. However, the provision is directly applicable. Battery storage systems regularly already qualify as decentralized power generation systems. Background to this, according to the BGH, is the dual role of battery storage systems. On the one hand, when drawing electricity from the grid, they are consumers. On the other hand, however, when converting the stored energy and (re)feeding it into the grid, they are energy producers. Like any other "traditional" generation plants, a battery storage system generates new energy from another energy source (the stored energy) in the form of electricity fed back into the grid. Contrary to the opinion of the Düsseldorf Higher Regional Court, this function of energy generation is therefore not only "comparable" with conventional generation systems, but even identical. Furthermore, the BGH clarified that the question of entitlement to avoided grid fees depends solely on the generation side of a plant and no balancing of the withdrawal and feed-in side takes place in this respect.

The BGH's decision means that the legal recourse has now been exhausted. Therefore, there is now clarity that the operators of (decentralized) storage systems commissioned before 1 January 2023 are entitled to avoided grid fees.

Effects

On the one hand, the decision is of great importance due to the sometimes considerable financial impact that depended on the question of entitlement to avoided grid fees. In addition, the battery storage system sector now finally has legal certainty. This is also important because it means that many contracts can now finally be fully implemented. In view of the existing legal uncertainties, revenue-based contracts in the battery storage system sector often provided for transitional arrangements until the eligibility of storage operators was clarified.

On the other hand, the decision could also be of greater significance beyond the question of storage operators' entitlement to avoided grid fees. With its decision, the BGH confirmed the need to apply energy industry regulations to battery storage systems even if these regulations do not explicitly address battery storage systems. This may be of greater importance in the future, as the special features of storage systems are often not taken into account in the legislative process. The emphasis on the dual role of energy storage systems also appears to be positive - particularly as this is somewhat at odds with recent announcements by the Federal Network Agency, which focuses solely on the consumer side of battery storage systems (see our Client Alert on construction cost subsidies for the grid connection of battery storage systems).

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