Federal Court of Justice approves construction subsidies for battery storage systems

Construction subsidies can account for a significant portion of the investment costs for building a battery storage facility. Whether, when and how much these subsidies are actually payable is therefore of crucial importance for battery storage projects.

Following the decision of the Higher Regional Court of Düsseldorf (appeal court) on 20 December 2023 (VI-3 Kart 183/23), the Federal Court of Justice (BGH) has now ruled in its decision of 15 July 2025 (EnVR 1/24) that distribution network operators may also levy construction cost subsidies for battery storage facilities connected to medium and high voltage networks. The Federal Network Agency is not obliged to prohibit a distribution network operator from charging a construction cost subsidy for the grid connection of a battery storage facility. The BGH thus makes it clear that this practice is not to be considered discriminatory.

Background of the decision

An operator of battery storage facilities (the applicant) applied to an electricity distribution network operator for a grid connection for a purely grid-connected storage facility with a charging and discharging capacity of 1,725 kW. The distribution network operator then demanded payment of a construction cost subsidy for the construction of a grid connection point. The applicant objected to this demand and sought to have the Federal Network Agency prohibit the distribution network operator from charging the construction cost subsidy. The Federal Network Agency rejected this application in its decision of 6 December 2022, ruling that the construction cost subsidy was lawful. The applicant lodged an appeal against this decision with the Higher Regional Court of Düsseldorf. In a decision dated 20 December 2023, the Higher Regional Court of Düsseldorf overturned the Federal Network Agency's decision and referred the legal dispute back to the Federal Network Agency. In its decision, the Higher Regional Court of Düsseldorf stated that the levying of construction cost subsidies for grid-connected battery storage systems was permissible, but that the existing special features of battery storage systems had to be taken into account in all cases. However, the power price model – as applied to end consumers – could not simply be applied to the calculation of the construction cost advance, as this application was discriminatory (Section 17 (1) sentence 1 EnWG) and abusive (Section 31 (1) EnWG). The Federal Network Agency lodged an appeal against the decision of the Higher Regional Court of Düsseldorf with the Federal Court of Justice. The Federal Court of Justice overturned the decision of the Higher Regional Court of Düsseldorf and thus dismissed the applicant's appeal.

The decision of the Federal Court of Justice

In the opinion of the Federal Court of Justice, battery storage systems differ from other end consumers in that they do not consume the electricity drawn from the grid, but feed it back in. Nevertheless, according to the BGH, equal treatment is objectively justified because the construction cost subsidy under the power price model fulfils a steering and control function in accordance with its meaning and purpose. The aim is to avoid an expansion of the distribution networks that is not in line with demand and the associated network expansion costs by encouraging connection applicants to only apply for a grid connection in line with their actual needs. In addition, the construction cost subsidy should also contribute to the financing of the distribution networks. Both would also apply to battery storage systems. As with other end consumers, the grid connection must be dimensioned according to the requested withdrawal capacity. The Federal Network Agency was entitled to assume that the construction cost subsidy requested was proportionate to the objectives pursued. Any further privileges for battery storage facilities would also lead to the costs being passed on to other end consumers, while only the operator of the storage facility would benefit from any potential revenues (e.g. due to price fluctuations on the electricity market). Finally, there are no EU regulations that mandate a complete exemption from construction cost subsidies. The reasons for the decision have not yet been published.

Assessment of the decision

The good thing about the Federal Court of Justice's decision is that it brings us closer to clarifying the economically important issue of construction cost subsidies. Unfortunately, it only clarifies some of the issues. Economic issues can usually be resolved if there is a reliable basis for calculating investment decisions. It will therefore be important to see what the Federal Court of Justice writes in detail in its reasoning.

Incidentally, there are still other legal uncertainties that battery storage projects have to deal with, such as the question of building law privileges in the approval process and how the expansion of battery storage facilities should be managed overall. It remains to be seen whether the BGH's decision will slow down the desired expansion of battery storage facilities, which is essential as part of the energy transition. The behaviour of grid operators will also play a significant role here.

Please feel free to contact us if you have any questions about your battery storage projects.