BNetzA: Tariff Components with Financing and Incentive Functions

On the one hand, components with a financing function are intended to ensure that grid costs are refinanced through constant cash flows. On the other hand, the agency plans to introduce grid fee components with an incentive function, which are intended to encourage behavior that benefits the system and the grid and thereby contribute to reducing the overall system’s costs. In this way, the impact of investment and operational decisions on grid costs is to be internalized through price signals.

The financing component is to consist of a capacity price (KP) for a capacity that can be freely selected annually, as well as two energy-based charges (AP). If a consumer’s electricity consumption falls below the self-selected capacity, an AP 1 applies to that quantity. If consumption exceeds the selected capacity, a higher AP 2 is charged. For consumers, this results in a clear optimal choice for capacity selection given known parameter settings for the two energy-based components (APs); however, this capacity may be exceeded at any time—in which case the AP 2 surcharge applies. The intent is to impose moderately higher costs for each instance in which the selected capacity is exceeded, rather than extremely high marginal costs when the capacity is exceeded.

From the industry’s perspective, it is correct that deviations from the booked capacity are not penalized and that the contractually guaranteed grid connection capacity remains available for use. Nevertheless, the BDI points out that the introduction of a price premium could lead to load maximization, which is not conducive to a stable overall system. This requires appropriate parameterization of the pricing components that does not create perverse incentives.

Planned: two energy-based components for financing, a third as an incentive

According to the plan, this dynamic grid fee component is to be designed to be symmetric and sign-consistent, thereby incentivizing behavior that benefits the system and enabling the possibility of positive returns in cases where the system benefits. The dynamic grid fee is to have a quarter-hourly and spatial granularity, thereby approaching full dynamization.

From the BDI’s perspective, this component must aim to reduce grid expansion and operating costs by incentivizing grid-friendly behavior. We welcome the fact that, ideally, the possibility of negative grid fees (opportunity for revenue) will create a business model for grid-supporting operation. Nevertheless, there is a risk of creating complexities that industrial consumers will find difficult to manage. In the worst-case scenario, the costs of the necessary bureaucratic infrastructure would exceed the achievable cost savings resulting from the introduction of a dynamic component. In this regard, the BDI advocates considering alternative instruments, such as a time-varying static grid fee. Predictability and feasibility are fundamental for industry and grid operators and should not be jeopardized by excessive complexity.

Storage facilities and electricity providers should be integrated into the grid tariff system in accordance with the “polluter pays” principle.

From the BNetzA’s perspective, storage facilities and feed-in providers should also be integrated into this basic model so that grid users contribute to the directly incurred grid costs in accordance with the polluter-pays principle. Under Section 118(6) of the Energy Industry Act (EnWG), storage systems are currently exempt from grid fees for 20 years, provided they are connected to the grid before August 4, 2029.

The BDI agrees that a permanent exemption from grid fees for storage facilities would be inappropriate and that, therefore, a follow-up regulation to Section 118(6) of the EnWG is necessary. Nevertheless, the economic viability of storage projects that were connected to the grid on the basis of the grid fee exemption must not be jeopardized retroactively. It is therefore essential to continue exempting existing storage facilities, as well as projects for which investment decisions are made before the grid fee system is finalized, from grid fees. For future storage projects, however, the BDI considers a full exemption from grid fees to be inappropriate.

The principle of protection of legitimate expectations should not be set aside for electrolyzers either; at this critical juncture in the hydrogen ramp-up, such an adjustment would run counter to the federal government’s goals of decarbonization and hydrogen ramp-up. Regardless of the discussion surrounding the protection of legitimate expectations, the BDI advocates offering an incentive component on a voluntary basis in the future and, in this case, reducing the financing component or eliminating it entirely. From the industry’s perspective, incentivizing storage facilities to behave in a manner that benefits the grid is more important than participation in pure financing.

Feed-in providers should also contribute to grid costs on a polluter-pays basis and be integrated into the basic model comprising financing and incentive functions. The BNetzA, however, is open to doing away with financing components entirely, provided that revenues from incentive fees generate sufficient financing contributions. The BDI points out the risk of passing on grid fees to consumers, which could lead to higher market costs. Here, too, incentivizing grid-friendly feed-in should be at the heart of the new framework.

The BDI welcomes the transparent process but calls for quantification to be provided soon.

The division of the framework into individual topics, each with an opportunity for comment, facilitates a constructive, open exchange between the Bonn-based authority and all affected stakeholders. The industry expressly views the proposed framework’s focus on cost-efficient grid use as positive. Both consumers and generators must—provided that flexibility potential can be economically harnessed—be incentivized to choose locations and operating modes that serve the system and contribute to grid costs on a polluter-pays basis.

Nevertheless, the qualitative discussions must now be quickly supplemented with quantified application examples and cost-benefit analyses in order to comprehensively assess the practical feasibility of the proposed framework. This could be done, for example, through time-limited pilot projects with participants selected transparently according to clearly definable criteria. This would eliminate any remaining uncertainties in the final evaluation of the proposals and ensure their smooth implementation in practice.