Netzdienlichkeit and BESS in Germany

What is Netzdienlichkeit?

In Germany, the term Netzdienlichkeit frequently appears in debates about storage and grid regulations, as well as in appeals to policymakers. At the same time, BESS (battery energy storage system) project owners are potentially facing a double-edged sword: Incentives for being netzdienlich or drawbacks for not being netzdienlich. But what does Netzdienlichkeit even mean? In this article, we explain the terminology and investigate its cause and effect, which is easier said than done because Netzdienlichkeit technically doesn’t exist.

The first point of contention is the translation. Grid-friendly (grid-friendliness in noun form) is most commonly used to describe the quality of being netzdienlich, but this term lacks conclusive nuance. A literal translation would be grid-serving, and this small change makes a big difference because it implies an active role rather than mere compatibility.

We also have to keep in mind that Netzdienlichkeit doesn’t have a binding or even agreed-upon definition. The only legal document that cites the word Netzdienlichkeit is Bavarian building law, but it’s missing a clear-cut definition there all the same. To understand Germany’s grapple with Netzdienlichkeit, we need to take a closer look at the power grids and the problems they’re facing.

The German power grid

The transportation grid was invented to move power from production sites to consumption areas. Construction began in the 1920s when Essen-based energy company RWE set up power lines from the lignite reserves in the Rhineland to the Ruhr area northeast of it. Four years later, the power lines were extended to Vorarlberg in Western Austria. To this day, the need to transport power between production and consumption sites remains unchanged, but the topology of where these centers are located has evolved. The majority of Germany’s power is now produced in the north (offshore wind farms), or in neighboring countries, while a large share of the consumption moved south.

The power grid now is connected all over Europe, from Portugal to Ukraine and from Sweden to Italy. Within this system, markets determine the flow of electricity based on price, but the power flow doesn’t follow price signals – it follows physics. Since the grid infrastructure didn’t develop in line with changing market structures, this mismatch now leads to more congestion, especially in areas where congestion is difficult to manage. Similar problems are observed with photovoltaic (PV) energy production, where excess solar power causes instabilities in the high- and low-voltage grids because the network can’t faultlessly handle oversupply.

Long story short, the capacity to transport power is scarce, which complicates the grid’s ability to keep up with the new geographical reality of supply and demand. We have several ways to mitigate this. Grid expansion is an obvious but expensive, resource-intensive, and time-consuming solution. Alternatively, grid operators can intervene in the generation profile of power units, instructing them to ramp production up or down. These measures are known as curtailments (shutting down renewables) and redispatch (adjusting previously logged schedules of flexible plants). Affected power producers are entitled to compensation, and grid operators then refinance these costs in the form of grid fees. As simple math dictates, higher congestion management costs for grid operators lead to higher grid fees for electricity consumers. Local markets and amended bidding zones could also be part of the solution, but this option is politically sensitive given the potential impact on the industry.

Contextualizing Netzdienlichkeit

Without a legal definition of Netzdienlichkeit, the term can only be explained with reference to political discourse, including proposed strategies, studies, and discussions. This brings us back to the current debate, which approaches the challenge of grid congestion by flipping the relationship between server and served. Instead of asking what the grid can do for BESS, it asks what BESS can do for the grid, and how the two can benefit from each other. Two contextual categories emerge:

In a monitoring report published by BET and EWI and commissioned by Germany’s Federal Ministry for Economic Affairs and Energy (BMWE) in September 2025, Netzdienlichkeit is investigated mostly in the context of modifying the behavior of grid users so that supply and demand can be better aligned. The document focuses primarily on commercial and regulatory incentives as instruments to encourage grid-serving behavior. One example is §14a EnWG (Energiewirtschaftsgesetz – Energy Industry Act), which enables a grid fee structure with the possibility of downward regulation in exchange for cost-saving potential. A second example involves flexible connection agreements (FCAs), where asset owners accept limitations on marketable flexibility in return for certain benefits such as faster grid access.

Another perspective on Netzdienlichkeit can be found in a different study from September 2025, published by Neon Energy and commissioned by ECO STOR, which addresses price-based incentives for specific asset locations. This could be achieved through regional differentiation of one-off costs (e.g. building subsidies) or regional grid fees. By nature, this approach is less dynamic because once constructed, BESS sites are final, while the location of future projects can change.

What do these two views have in common? For both, Netzdienlichkeit ultimately comes down to cost reduction in building and redispatch efforts. This aligns with the definition proposed by FfE (Forschungsstelle für Energiewirtschaft – Research Center for Energy Economics) in their 2021 paper on the subject, which describes Netzdienlichkeit as contributions to the reduction of grid costs and associated cost drivers, e.g. congestion costs. The graph below shows the development of congestion management costs since 2019, underscoring the relevance of the cost focus. Lowering these costs, borne by all customers, is the central idea of implementing Netzdienlichkeit.

Source: SMARD (BNetzA)

Flexibility and requirements for Netzdienlichkeit

Both possibilities require flexibility, either in location or behavior, and this is where storage plays a vital role. Battery storage is one of the most flexible assets: Its behavior can be easily adapted, and there are no geographical requirements. Paradoxically, this could cause challenges for storage in the future: Because of this flexibility, regulations might be designed specifically with storage in mind, which could mean that BESS will have to disproportionately shoulder the responsibility of Netzdienlichkeit.

Robust Netzdienlichkeit requires a comprehensive view of the grid and its needs, including forecasts of grid conditions and planning processes, from grid operators of all voltage layers.

Ensuring grid stability

The reliable transportation and distribution of power depends on grid stability. This includes, among other things, voltage stability, frequency stability, and the ability to provide technical reserves for faults, as well as the ability to restart the grid after failure. In most debates, these attributes are categorized as systemdienlich (system-serving) because they focus on grid operations without accounting for topology and congestion.

What can be expected for BESS?

Netzdienlichkeit is on the political agenda and part of a discussion paper published by the Bundesnetzagentur (BNA – Federal Network Agency) in May 2025 regarding grid fee reforms (AgNes). With the rollout of flexible connection agreements, storage is already heavily affected by the concept of “behavioral Netzdienlichkeit.” As more rules and guidelines materialize, it will be important to assess the practical outcomes of Netzdienlichkeit to ensure that BESS can remain a competitive and value-adding participant in the energy transition.

enspired is actively working on a robust and healthy approach to Netzdienlichkeit with relevant entities before it enters legislation.

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