GERMANY Trends and Developments Contributed by: Gregor von Bonin, Natascha Doll, Andreas Ruthemeyer, Stefan Schröder and Mirko Masek, Freshfields
for energy arbitrage and peak shaving as power price volatility increases. This has created a business mod- el based on “revenue stacking” – combining income from multiple services, which requires sophisticated trading capabilities. Germany’s installed storage capacity grew by 50% in 2024 alone, and the market is forecast to expand. This has made specialised battery project develop- ers highly attractive M&A targets for utilities and infra- structure funds looking to acquire project pipelines and operational expertise. Regulatory reforms are also improving the business case by easing burdens like the double-charging of grid fees on stored elec- tricity. New commercialisation structures developed, including tolling agreements, which guarantee a stable secured cash flow, and can also be combined with a profit-sharing element. This enhances bankability and is driving M&A as companies position themselves to capture the growing need for grid flexibility. Gas, hydrogen and CCUS infrastructure Germany’s vast gas network is at a crossroads, with a significant portion set to be repurposed for hydro- gen. The gas TSOs have proposed a hydrogen core network of over 9,700 km by 2032, with roughly 60% coming from retrofitted natural gas pipelines. This transition will require huge capital injections, and it is anticipated that gas network companies will invite equity investments specifically for these regulated hydrogen projects, which are expected to operate under a new tariff framework. In this regard it is note- worthy that the BMWE has reiterated its intention and support regarding the expansion of hydrogen energy in Germany. The new LNG import terminals, built at record speed, represent another new infrastructure asset class. These terminals, often designed to be “H₂-ready”, could see partial privatisation as operations stabilise and long-term capacity contracts are secured. Looking further ahead, Germany’s policy stance toward carbon capture, utilisation and storage (CCUS) is evolving. The CCS Strategy Paper 2024 and a draft CO₂ Storage Act 2025 propose to legalise offshore CO₂ storage and define conditions for pipeline and shipping transport to port hubs such as Wilhelmshav-
en, Rostock and Brunsbüttel. These measures aim to support hard-to-abate industries, particularly cement, chemicals and steel, and will ultimately create new investable infrastructure segments in CO₂ transport, compression and export facilities. Heat and district energy Decarbonising heat is a new frontier for German infra- structure, representing nearly half of the country’s final energy consumption. The Municipal Heat Plan- ning Act now requires every municipality to create a legally binding plan for climate-neutral heating, with deadlines in 2026 for large cities. Municipal utilities that run relevant networks face huge investment needs and are increasingly seeking private partners. This creates M&A opportunities for inves- tors and specialised developers, though these deals require careful navigation of municipal law, regulated tariffs, and public-private partnership structures. Transport and mobility infrastructure With a government goal of one million public charge points by 2030, Germany is scaling up its charging infrastructure. The market remains highly fragmented, with participants ranging from utilities and oil majors to specialist start-ups, making it ripe for consolidation. The modernisation of rail and ports is also driving activity. Ports are being repurposed as strategic ener- gy hubs for importing hydrogen and handling offshore wind components. MSC Group’s recent strategic expansion in Hamburg illustrates continued investor interest in German ports as gateways for both trade and the energy transition. Meanwhile, the government is investing record sums to upgrade the national rail network, exploring public-private partnership models for specific corridors that will create opportunities for construction and financing. Digital infrastructure Germany is one of Europe’s largest data centre mar- kets, with demand surging due to cloud computing, AI and data sovereignty needs. These assets have become highly sought after by both infrastructure funds and major energy consumers, placing them squarely within the scope of energy regulation.
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