Abolition of Avoided Network Charges by the Federal Network Agency
The Federal Network Agency (BNetzA) plans to abolish the so-called avoided network charges by the year 2029. These charges were originally introduced to promote decentralized electricity generation by reducing the costs for the expansion of the higher-level electricity grids when electricity is consumed where it is generated. However, it has become apparent that this measure is now acting more as a subsidy for power plants, to the detriment of consumers.
Background and Motivation
The avoided network charges were introduced in 1999 to strengthen decentralized electricity generation. The idea behind it was that when electricity is consumed where it is generated, less well-developed higher-level electricity grids are needed. This was intended to reduce the expansion of the grids and thus save costs. However, it has become clear that this measure did not have the desired effect and instead functions as a subsidy for power plants, at the expense of consumers.
Impacts and Planning
The BNetzA plans to gradually abolish the charges for decentralized feed-in. Starting from January 1, 2026, the charges are to decrease by 25 percent annually. By 2029, no charges are to be paid out anymore. This is expected to lead to savings of about 1.5 billion euros for electricity consumers over three years.
Market Behavior and Energy Costs
The abolition of the avoided network charges could influence market behavior in the energy sector, as it alters the cost structure for decentralized generation facilities. Without these charges, the economic framework for decentralized plants could deteriorate, potentially leading to an adjustment in investment strategies. At the same time, consumers and businesses benefit from the reduced energy costs, which could strengthen the competitiveness of companies and the purchasing power of consumers.
Consultation Process
The draft determination for the abolition of the avoided network charges has been put out for consultation. Interested parties can submit comments until May 23, 2025. This process allows various stakeholders to express their opinions and concerns before the final decision is made.