The energy impulse: The overbuilding of grid connection points in the amendment to the German Energy Industry Act (EnWG) – windswept and sunburnt?

Unfortunately, it is becoming more and more commonplace for grid operators to receive a large number of grid connection requests from wind and solar projects. This can sometimes lead to waiting periods (of years) before grid operators are able to connect renewable energy plants to the public electricity grid, which in turn results in significant delays in the completion of wind or solar parks. This fact is unknown to some project developers in its current and sometimes extreme form. In the worst case, where a project developer has already made firm commitments such as to supply electricity under a power purchase agreement (PPA), this can trigger severe (penalty) payments. In short, the economic viability of entire projects can be jeopardised by the backlog of connection requests to the grid operator.

The main reason for this is that the grid capacity for feeding in and drawing electricity from the grid is limited and the necessary grid expansion has not kept pace with this for years. On the other hand, the medium and high-voltage grid in particular has grid capacities that are not being fully utilised.

Overbuilding of grid connections has been discussed for some time

The energy industry has long since recognised the problem and has a solution at hand: the grid compatibility check of the grid operator is based on the plant’s installed capacity. This is the active electrical power that a plant can theoretically generate (see Sec. 3 No. 31 of the German Renewable Energies Act (Erneuerbare-Energien-Gesetz – EEG) 2023). As a rule, however, wind and solar plants generate significantly lower quantities of electricity than would theoretically be possible based on their installed capacity. This legally prescribed constellation means that grid capacities are regularly "wasted". For most of the year, a renewable energy plant will not generate enough electricity to even come close to the installed capacity. In addition, data has shown that the weather conditions for wind and solar energy are often not good at the same time.

After calls from the industry went unheard by legislators for a long time, the German Renewable Energy Federation (Bundesverband Erneuerbare Energie e.V. – BEE) commissioned a study on the joint use of grid connection points, which was published in April 2024. This showed that, even with a considerable wind and solar energy overbuilding of 250% of the grid capacity at the grid connection point, only an average of around 6% of the electricity volumes would be overproduced and thus not be able to be fed into the grid. In case of 150% overbuilding, this value is less than 1%.

"Flexible grid connection agreements" in the cabinet draft

Despite the clear results of the study, the draft bill of the Act Amending the German Energy Industry Act (EnWG amendment) and the EEG (EEG-D) from August 2024 initially did not contain any regulations on the overbuilding of grid connection points, which promptly led to further criticism from the industry. The cabinet draft of 15 November 2024, in contrast, introduces numerous innovations for the grid connection of renewable energy projects with Sec. 8a to 8g EEG-D and, with Sec. 8f EEG-D ("flexible grid connection agreement"), contains a regulation on the overbuilding of grid connection points for the first time.

According to para. 1, grid operators and plant operators can agree on a connection-side limitation of the maximum supply of active power into the grid (flexible grid connection agreement). The limitation can be both static and dynamic, i.e. limited to time windows and variable in amount. In addition to the amount and duration, the flexible grid connection agreement must also regulate the (fulfilment of the) technical requirements, the liability of the plant operator in the event of exceedance and - if available - the consent of other plant operators at the grid connection or of electricity storage system operators (para. 2).

According to the wording ("may ... agree"), the conclusion of a flexible grid connection agreement is at the discretion of the parties. However, according to para. 3, the grid operator is obliged to check the fundamental possibility of a flexible grid connection agreement and to inform the plant operator of the outcome of the check together with the grid compatibility check if the technically and economically most favourable connection point is not the shortest connection point as the crow flies.

In addition to this, according to the new sentences 2 and 3 in Section 8 para. 2 EEG-D, the plant operator can also choose a connection point that is already used by an existing plant as an optional connection point, provided that the operator of the existing plant agrees to the shared use. The plant operator can then combine the selection of such a connection point with an offer to the grid operator to conclude a flexible grid connection agreement.

In addition, the EnWG and EEG amendment also regulates the obligation of the grid operator to connect to the grid prior to any necessary optimisation, reinforcement or expansion of the grid anew with Sec. 8 para. 4 EEG-D. In situations in which the grid capacity is not yet sufficient for the plant’s entire installed capacity, the grid operator must first establish the grid connection by concluding a flexible grid connection agreement as a interim solution.

Multiple design options conceivable

That the regulation’s purpose is to accelerate the expansion of wind and solar power comes as no surprise. The flexible grid connection agreement increases the scope for appropriate grid connection solutions for both plant operators and grid operators. A further interesting option is the possibility of "cable pooling". Here, different plant types (e.g. wind and solar) and different plant operators can jointly overbuild the existing grid capacity at a grid connection point. This can also be combined with an electricity storage system. The wording of Sec. 8f EEG-D does not provide for any major restrictions here, meaning that the players will probably be able to allocate the available grid capacity internally at their own discretion.

According to the explanatory memorandum of the draft bill, a fully dynamic limitation is also possible. In this case, the plant operator can generally utilise the grid connection to the extent of the maximum grid connection capacity. The grid operator has the right to limit the amount of the connected load (up to an agreed lower limit if necessary) on an event-driven basis depending on the grid load.

The mandatory check of the connection at the nearest grid connection point by means of a flexible grid connection agreement, if this is not the technically and economically most favourable connection point, does not only increase the scope for flexible solutions. This provision in Sec. 8f para. 3 EEG-D also serves to implement European requirements in the amended Electricity Market Directive (Art. 6a, 31 (3) of Directive (EU) 2019/944, amended by Directive (EU) 2024/1711).

The limitation through a flexible grid connection agreement can fundamentally represent a temporary or a permanent grid connection solution. A permanent solution can be the sensible option for projects where, according to the operator’s own profitability calculations and taking into account the site conditions, a certain generation quota is not regularly exceeded and/or if the project is linked to an electricity storage system.

Effective in theory, in practice...

With the regulation on flexible grid connection agreements, the legislator is continuing the trend towards flexibilising the electricity grids and the energy industry as a whole. The regulation is likely to at least alleviate the precarious grid connection situation in many parts of Germany if it is applied sensibly across the board.

While it would seem obvious that project developers could be open to flexible grid connection solutions in many cases, it remains to be seen how grid operators will deal with the instrument. The implementation of the requirements could initially lead to additional work for grid operators, some of which are already overloaded, as far as grid compatibility checks are concerned. As the envisaged standards give the parties in question a great deal of freedom in terms of implementation, the grid operator, for example, could favour permanent flexible grid connection agreements, while the party requesting the grid connection may view the instrument merely as an intermediate step towards unrestricted grid connection.

Irrespective of this, the adoption of the EnWG amendment, which aims to amend a number of other energy laws besides the EnWG (like the EEG), is still uncertain. As the German coalition government has come to an end and new elections are pending, the EnWG amendment, which is very extensive at over 450 pages, may take on a completely different form or fail in its entirety. On the other hand, it cannot be ruled out that individual parts of the regulation will be separated from it and find a majority in parliament. However, it is not possible to predict how and when the further fate of the EnWG amendment will be decided.

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