German grid agency explores lowering connection costs for batteries, electrolysers in renewable-rich areas

New large scale batteries and hydrogen electrolysers could see their grid connection fee lowered in areas where there is surplus electricity, according to proposals made by Germany's Federal Network Agency (BNetzA). In a position paper, the grid regulator proposed reforming the one-off connection charge that transmission system operators (TSOs) are allowed to make when adding these large-scale consumers to the grid.

"Grid users should contribute to grid costs at different levels, depending on how beneficial it is for the overall system to be located at the respective site," said BNetzA head Klaus Müller. Each grid connection point should be assigned to a pricing level depending on how well or poorly electricity can be transported to the new connection, according to the proposals.

If connecting a hydrogen electrolyser or large-scale battery to a specific location would not add to the costs of transporting electricity from where it is generated, then the connection cost could be lower. This should, in future, incentivise large-scale consumers to be located where there is surplus electricity or where grids are already well developed. New projects in the country's windy north should benefit most from the proposals, while those where the grid is already overburdened would see higher costs. 

"Expanding the electricity grid for the energy transition comes at a cost," Müller said. "That is why a price signal for the conscious and economical use of connection capacities and more cost efficiency is important." This would in turn reduce overall grid expansion costs, he added.

The BNetzA gave the example of a consumer using 600 megawatts of electricity per year, which is equal to that of a large and energy-intensive factory. Under the current grid fee scheme, this consumer would have to make a one-off payment of up to 60 million euros. If different levels of grid costs resulting from the connection are factored in, the one-off payment could drop to only twelve million euros if the grid operator assumes an operation cost of, for example, 20 percent of the current standard fee.

In 2023, Germany had to curtail around 19 terawatt hours of green electricity due to grid congestion – equal to around four percent of Germany’s total annual electricity generation.