Author: Derek Michalski, Editor.
Germany’s battery storage market has moved rapidly from a relatively small development segment to a major source of new grid connection demand. Network operators received 9,710 applications for battery storage at medium-voltage level and above in 2024, representing around 400 GW of planned power capacity and 661 GWh of storage capacity. By the end of 2024, only 2.3 GW of such storage was operational. Around 3,800 applications received connection approval, representing approximately 25 GW, although an approval does not guarantee that a project will ultimately be built.
The scale of the pipeline makes site selection and development discipline increasingly important. A grid connection request is not a development right, and a technically attractive connection point does not by itself establish that a project can obtain planning consent. For projects being developed through the remainder of 2026 and into 2027, the key questions are now whether the site has a clear planning route, whether the grid connection is deliverable and whether the project remains commercially viable as Germany changes its network charging and electricity-market framework.
Planning law is becoming a central development issue
The current planning framework under §35 BauGB provides important privileges for battery storage in the Außenbereich — the parts of a municipality that lie outside the built-up areas covered by the local development plan system. In practice, this generally means undeveloped or sparsely developed land outside towns and villages, including agricultural and other open land. Development in the Außenbereich is normally more restrictive because planning law is intended to prevent uncontrolled development of open countryside. Certain projects are nevertheless privileged under §35 BauGB, meaning they can be permitted without first requiring a new local development plan, provided the statutory conditions are met.
One route applies to a battery storage installation that has a spatial and functional relationship with an existing renewable-energy installation. A second applies to standalone BESS meeting specific conditions. Under the current §35(1)(12), the project must be within 200 metres of the boundary of an eligible high-voltage substation or an operating or decommissioned power plant with a nominal capacity of at least 50 MW. The battery must have a nominal capacity of at least 4 MW, and the total land occupied by qualifying BESS and associated areas in the municipality may not exceed 0.5% of the municipal area or 50,000 square metres.
These provisions can provide a substantially clearer planning route than a project located on an arbitrary greenfield site. They do not, however, remove the need to assess other public-law constraints. §35 specifically provides that a project can conflict with public interests where, among other things, it can cause harmful environmental effects or requires uneconomic expenditure on infrastructure.
Noise therefore needs to be assessed at the site-selection stage. For a BESS, the relevant assessment can include inverters, transformers, HVAC systems and other equipment, with particular attention to residential receptors and night-time operation. A site that satisfies the distance requirement under §35 can still face permitting problems if its environmental impacts cannot be adequately addressed.
The 2026 planning-law review matters for 2027 projects
Developers also need to monitor the proposed amendment to the BauGB. A draft submitted by the Federal Ministry for Housing, Urban Development and Building in April 2026 would amend the standalone BESS provision in §35(1)(12)(a). Under the proposal, the qualifying project would have to be located at least 100 metres and no more than 200 metres from the property boundary of the relevant substation. The current provision permits the full area up to 200 metres.
This is a proposal, not the law currently in force, and it should be treated as such. Its significance for developers is nevertheless clear. Projects relying on the existing 200-metre privilege need to establish their planning position and development timetable rather than assuming that the current provision will remain unchanged throughout the development period.
The practical implication is that the exact location of the battery within a site matters. Land immediately adjacent to a substation may not necessarily provide the most useful planning position if the proposed amendment enters into force. Developers should therefore assess the statutory distance requirement against the actual property boundary, not simply the physical location of the substation or connection equipment.
Grid connection is becoming a separate investment decision
The size of Germany’s BESS connection pipeline makes grid access one of the most important development risks. The Bundesnetzagentur reported that, at the end of 2024, the four transmission system operators already had around 650 large-scale battery connection requests representing 226 GW. Battery projects also require capacity for both electricity import and export because of their dual role as consumption and generation assets.
The distinction between an application, an offer and a binding connection commitment is therefore critical.
A serious development assessment should establish the proposed connection point, available capacity, required reinforcement, connection costs, technical requirements and expected timetable. For a battery, it should also establish the import and export capacity that will actually be available to the project and whether the network operator requires separate allocation procedures.
The regulatory treatment of battery connection applications has also been clarified. The Bundesnetzagentur states that the Kraftwerks-Netzanschlussverordnung does not apply to battery storage facilities, following an amendment adopted in December 2025.
This makes the project-specific network connection process even more important. Developers should not assume that a large BESS will be treated in the same way as a conventional generating plant simply because it can export electricity to the grid.
Network charges are moving into the investment case
A further change that will matter for projects progressing into 2027 is the reform of Germany’s electricity network tariff system, AgNes.
The Bundesnetzagentur is proposing to involve both generators and storage operators in network financing. For new storage projects, the regulator intends to introduce a capacity-based network charge at a level broadly comparable with the charge proposed for generators. The regulator has indicated that these charges would apply to new storage projects for which a final investment decision is made after the relevant determination enters into force. Existing storage installations would receive transitional protection under the proposed framework.
The framework is not yet final. The Bundesnetzagentur expected the framework determination to be issued at the end of 2026, with more detailed determinations following in 2027.
This distinction is important for investment committees. Network charges should not simply be added as a generic development contingency. The final rules, the project’s connection date and the timing of its final investment decision will determine how the new regime affects the economics.
Solar and storage need to be assessed together
The regulatory position for solar is also relevant to BESS development, particularly for co-located projects.
Under §35 BauGB, a battery with a spatial and functional relationship to an existing renewable-energy installation has a specific privileged planning route. This makes the relationship between a solar project and its associated storage asset relevant beyond the usual optimisation of generation and storage economics.
The solar market itself remains heavily dependent on the EEG auction framework. For the 1 July 2026 ground-mounted solar auction, the Bundesnetzagentur set an auction volume of approximately 2.135 GW and a maximum bid value of 5.90 ct/kWh. Several changes introduced by Solarpaket I remained dependent on EU state-aid approval, including the increase in the maximum bid size from 20 MW to 50 MW. The Bundesnetzagentur specified that, without the required approval by 30 June 2026, the existing 20 MW limit would continue to apply for that auction.
For developers, the important point is not the auction deadline itself but the wider regulatory transition. Solar projects entering development in 2026 and 2027 need to be assessed against their applicable EEG support route, planning status, grid capacity and exposure to market prices. Where BESS is added, the storage asset should be evaluated as part of the overall project architecture rather than as an independent piece of equipment.
2027 brings a new market dimension
Germany’s emerging capacity-market framework will add another element to the investment landscape.
The Bundesnetzagentur currently lists an auction for 2 GW of generation capacity for 18 May 2027. Further capacity auctions are planned for 2027 and 2029, with the volumes for those later auctions still to be determined.
The capacity market should not be treated as an automatic revenue stream for every BESS project. Its relevance will depend on the final market design and the eligibility and technical requirements applying to individual technologies. It does, however, mark a broader change in the German electricity market: storage is increasingly being considered as infrastructure providing system value rather than solely as a merchant arbitrage asset.
That makes the revenue model an increasingly important part of development due diligence. A project should be tested against wholesale arbitrage, ancillary services and other available flexibility revenues, with any future capacity-market revenues treated according to the rules that are actually confirmed.
What developers should have established before committing further capital
For projects targeting 2027, the development process should therefore be more rigorous than simply securing land and submitting a grid application.
The first question is whether the site has a defensible planning route under the applicable version of §35 BauGB. The second is whether the proposed grid connection is technically and economically deliverable, including both import and export requirements. The third is whether noise, environmental, access and other site constraints can be resolved without undermining the project.
The fourth is regulatory exposure. Developers need to track the BauGB amendment, the final AgNes framework and the continuing development of the electricity-market and capacity-market rules. Finally, the investment case needs to be tested against the network charges and revenue arrangements that will actually apply to a project reaching final investment decision and commissioning in 2027.
Germany still offers a substantial opportunity for utility-scale battery storage. The development environment, however, is becoming more selective. The scale of connection applications means that grid access alone no longer demonstrates project quality. Planning status, site constraints, connection certainty and revenue quality need to be assessed together.
For developers, the objective for the remainder of 2026 is therefore clear: secure the planning route, validate the grid position and establish the regulatory assumptions before committing material development capital to a 2027 project.
