GERMANY Law and Practice Contributed by: Udo Olgemoeller, Nicolaus Ascherfeld, Johann von Pachelbel and Janina Müller, A&O Shearman
Grid access is subject to curtailment for system secu- rity, with compensation mechanisms defined by law, and congestion management follows transparent, non‑discriminatory procedures. The regime ensures that market participants can rely on access rights while enabling system operators to maintain security and efficiency through regulated tools. 5. Distribution 5.1 Constructing and Operating Electricity Distribution Facilities Principal Laws Please see 1.1 Law Governing the Structure and Ownership of the Power Industry regarding the relevant regulations. However, the use of municipal public ways for distribution networks is governed by Section 46 of the EnWG and related concession law, requiring operators to hold a concession from the municipality and to pay concession fees set under statutory rules, with concessions awarded through a transparent, non‑discriminatory process at expiry. Private microgrids and customer‑side networks are permissible under specific conditions and remain sub- ject to access, metering and, in some cases, regula- tory oversight. Kundenanlagen Under Section 3 no 24a of the EnWG, Kundenanla- gen (customer installations) have been exempted from network regulations. The ECJ ruled on 28 November 2024 (Case C-293/23) that this exemption was incom- patible with EU law. In response, the German Parlia- ment ( Bundestag ) introduced a transitional provision in Section 118 para 7 of the EnWG, preserving the existing legal position for installations already con- nected until 31 December 2028 whilst a permanent, EU law-compliant solution is developed. 5.2 Regulatory Process for Obtaining Approvals to Construct and Operate Electricity Distribution Facilities The permitting process is basically in line with what has been outlined in 4.2 Obtaining Approvals to Con- struct and Operate Transmission Lines and Associ- ated Facilities .
More specifically, under Section 46 of the EnWG, municipalities must publicly announce the expiry of existing rights-of-way contracts ( Wegenutzungsver- träge ) for electricity and gas networks at least two years before their end, publishing the notice in the Federal Gazette. The concession has a maximum term of 20 years. Municipalities must select the new concessionaire through a transparent, non-discrimi- natory procedure, primarily applying the objectives of Section 1 of the EnWG (secure, affordable, efficient and environmentally sound energy supply), and must publicly announce their decision with reasons. 5.3 Terms and Conditions Imposed in Approvals to Construct and Operate Electric Distribution Facilities Please see 4.3 Terms and Conditions Imposed on Approvals to Construct and Operate a Transmission Line and Associated Facilities . 5.4 Eminent Domain, Condemnation or Expropriation Rights to Construct and Operate Electricity Distribution Facilities Please see 4.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Transmission Lines and Associated Facilities . For works in public streets, statutory rights and municipal permits govern occupation and reinstatement, with concession arrangements under Section 46 of the EnWG providing the overarching right to use munici- pal public ways subject to agreed conditions and fees. 5.5 Monopoly Rights for Electricity Distribution Entities Electricity distribution is a regulated natural monopoly within the concession area defined by the municipali- ty’s award of the right to use public ways for electricity networks under Section 46 of the EnWG; in practice, a single distribution operator serves each area for the term of the concession. Exclusive rights arise from the legal structure of the concession and from the eco- nomic logic of network natural monopoly, not from an absolute statutory prohibition on alternative networks. Upon concession expiry, municipalities must conduct a transparent, non‑discriminatory award process open to competitors, and a new concessionaire can require the transfer of the local network at appropriate com- pensation determined by law and, if necessary, judi-
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