Political engagement

The fundamental transformation of the energy system leads to regular discussions about adjustments to the electricity market design. At the German level, the discussion was initiated within the framework of the Climate-Neutral Electricity System (PKNS) platform. The Federal Ministry for Economic Affairs and Climate Protection then presented its concept of a capacity market in an options paper in summer 2024. With the end of the traffic light government, however, the implementation of a capacity market in Germany remains open for the time being. At the European level, reforms for the electricity market are pending, including the support mechanisms for renewable energies. The legislative process at the European level was only formally ended in May 2024.

During the European legislative process, EnBW strongly advocated maintaining the existing, highly efficient market framework based on marginal cost-based pricing and advised against abolishing or significantly changing this framework. Although the final legislative package does not affect the core of the market framework, there may be changes in the future within the framework of the European market design regulation that we view critically, in particular:

• The creation of “virtual regional hubs”, i.e. cross-price zone reference prices that would deprive the German price zone of liquidity, complicate trading and promote the discussion about splitting up the German single price zone.
• The creation of a "peak-shaving instrument" for transmission system operators, with which they could independently mobilize flexibility in the market and intervene in price formation, which does not correspond to their role and is done by the market itself.
• The introduction of two-sided contracts for difference (CfDs) as a Europe-wide binding funding instrument for renewable energies. Two-sided CfDs represent only a slightly modified form of fixed remuneration and hinder market integration and the desired private financing of renewables by means of long-term power purchase agreements (PPAs), and thus represent a step backwards compared to the funding framework currently in place in Germany (sliding market premium).

As part of the Power Plant Safety Act (KWSG), the traffic light government intended to fill the need for secure power, which arose not least due to the phase-out of nuclear energy and coal, by tendering for gas and hydrogen power plants. Details of the tenders under the KWSG included, among other things, a tender volume of 12.5 GW for gas and hydrogen power plants. Two thirds of this tender volume was intended for the south of the grid, which is essential for reasons of system stability.

EnBW was actively involved in the consultation on the KWSG provided for under European law and clearly formulated its positions. Among other things, EnBW advocated a rapid implementation of the KWSG in consistency with the other long-term market design. With the end of the current government, the adoption of the KWSG in its current form is no longer possible in time. Since there is cross-party consensus that there must be tenders for hydrogen-capable gas power plants, it remains to be seen how the next federal government will take up the issue.

In the area of ​​open-space PV systems, EnBW makes the following demands:

• No customs duties and import restrictions for the import of PV modules and similar
• Tax credit for open-space PV systems on agricultural assets in order to be exempt from inheritance tax.

For the small PV system segment, we demand the following:

• As part of the debate about so-called generation peaks, an extension of mandatory control to very small PV systems (between 2 kW and 7 kW) is currently being discussed again and again. We reject such a requirement for this system class because the threat to security of supply posed by these systems is marginal.

For the same reasons, we reject a 50% active power limitation for this system class. In addition, we demand that system operators with systems from 7 kW to 25 kW can choose between remote control and an active power limitation of 70%. This would mean returning to the previous regulation - with the exception of the system segment up to 7 kW - and for reasons of security of supply would no longer only include systems from 25 kW, but from 7 kW.

When it comes to grid connection, we are calling for the application processes to be accelerated, including by setting binding deadlines. At the same time, we are committed to digitizing the processes and standardizing the requirements for connection holders.

With regard to onshore wind some important regulatory improvements were made between 2022 and 2024, such as the new Wind Energy Area Requirements Act (WindBG), the codification of the overriding interest of renewable energies in the EEG, the amendment to the Federal Nature Conservation Act (BNatSchG) and the major amendment to the Federal Immission Control Act (BImSchG). Nevertheless, further measures are still required in order to be able to achieve the expansion targets for onshore wind:

• The WindBG, which gives each federal state clear legal quantity requirements for the designation of area, is fundamentally very welcome. However, the law only provides for an interim area target by the end of 2027. The necessary 2% of the state's area does not have to be designated until the end of 2032, which is far too late. It would make sense to require the designation of areas in line with the final area target in one go by 2027.

Timely 1:1 implementation of the Renewable Energy Directive (RED III) for onshore wind energy to German law, without excessive national regulations.

• Immediate mandatory digitization of approval procedures.
• Better personnel and technical equipment for planning and approval authorities.

As part of the amendment to the Federal Nature Conservation Act, the regulations on the collision risk of birds of prey were standardized at least nationwide. Unfortunately, the amendment did not regulate the requirements for bat protection and the prohibition of disturbing protected species (for wind turbines: noise). Uniform national requirements would also be necessary for these topics.

In order to be able to really assess the operational risk of birds of prey being killed, a scientifically sound method for assessing the collision risk is required. The first method that is really suitable for this would be probabilistics (probability calculation). To this end, a specific threshold must be set at which point there is a significantly increased risk of death. It must be taken into account that birds of prey are exposed to a general risk to their lives even without wind turbines (predators, poisoning, road traffic, power lines, etc.).

The auction design for areas that have not been pre-investigated is currently limited to pure price competition. As a result, there is a risk of the field of suppliers in the offshore sector being narrowed in favor of a few companies with extremely strong financial resources. There are no signs that this development will change if the current regime is maintained in future auctions.

The result is a threat of oligopolization in the operator segment and thus an end to the traditional diversity of players in Germany. In order to prevent this development, an adjustment must be made for the next auction rounds, in which very large quantities will once again be auctioned.

We therefore propose the following changes to the auction design in the short term:

• Limitation of award for one area per participant and tender year (pre-developed and non-pre-developed areas), for example according to the principle of one lease per bidder per round based on the US model (“New York Bight”) or a limit of 2 GW.
• Switching between areas is possible during the auction in combination with an exit bid procedure in a transparent, anonymous auction. Prices and the number of bidders are then publicly visible during the auction.
• Qualitative criteria should not serve as a decision criterion, but rather as an incentive to ensure high-quality and sustainable offshore development in Germany.

We support the coal phase-out decided by the federal government. EnBW itself is planning to phase out coal by 2028. However, the conditions for this must be created, including with regard to maintaining available capacity.

In order to help maintain available capacity, we are planning a socalled double fuel switch at various of our coal sites (Heilbronn, Altbach-Deizisau, Stuttgart-Münster). This will initially involve switching from coal to more climate-friendly natural gas until hydrogen is available in sufficient quantities. This will immediately reduce CO₂ emissions and at the same time ensure security of supply by maintaining secure capacity. A fuel switch also makes a significant contribution to maintaining locations and jobs. However, in order to implement these projects, the provision of hydrogen must be accelerated, both by setting up domestic production facilities and by creating an efficient international market.

EnBW is consistently implementing the politically desired phase-out of nuclear energy. Following the phase-out decisions in 2002 and 2011, EnBW developed a long-term strategy for the dismantling of its nuclear power plants, which it has been consistently implementing since then.

The dismantling plans for GKN II were severely affected by the extension of electricity production initiated by the federal government and must be revised. Even if delays compared to the original plan are likely, EnBW's estimates are still that the dismantling of GKN II will take around ten to 15 years within the framework of nuclear law.

EnBW demands to be connected to the national hydrogen network by 2030 at the latest in order to be able to supply industry, medium-sized businesses and possibly also the first private customers with hydrogen and to convert gas-fired power plants from natural gas to hydrogen.

To achieve this, the national infrastructure in the form of the H₂ core network must continue to be implemented by the private sector in the future. Ontras and terranets BW, two EnBW subsidiaries, are currently actively working on the H₂ core network. The financing of the core network must enable companies to raise the necessary investment funds under the conditions of an international capital market.

The majority of industrial and commercial companies (approx. 1.6 million companies) are connected to the gas distribution network, and this is also the case in Baden-Württemberg. While the focus in the core network is predominantly on the transport level, the distribution networks create the connection from the transport network to the customer and thus represent the important "first and last mile". In this context, it is important to close the existing regulatory gap for distribution network operators, especially with regard to perspective, financing and non-discriminatory grid connection.

For this reason, EnBW expressly supports integrated network development planning for gas and hydrogen as well as a stronger alignment with the electricity grid in order to find optimal solutions for the design of the future climate-neutral energy system. The creation of a resilient climate-neutral network in the complementary interplay between electrification and hydrogen use can only be found with the participation of all network operators.

The changes to the Climate Protection Act will lead to a tightening of the sector targets for 2030 and to the advancement of climate neutrality in Germany to 2045. In addition to greater electrification in all sectors, the transformation of the gas industry to climate-neutral gases is necessary. To achieve this, the infrastructure must be converted and expanded even faster in the coming years than previously planned. This applies to both the electricity and gas infrastructure. EnBW is therefore committed to ensuring that

• the planning and approval processes for networks are standardized and shortened nationwide;
• the investment conditions in the networks are adapted to the requirements of a global capital market and are not continually deteriorated;
• the costs of network expansion are reduced by giving priority to overhead line construction over underground cabling in new projects in the high-voltage range. A changeover would reduce costs by roughly two thirds. According to EnBW's assessment, an amendment to the Federal Requirements Plan Act (BBPlG) should provide for the construction of overhead lines on a larger scale than before.

EnBW supports the comprehensive expansion of digital infrastructures, especially in the area of ​​fiber optics and passive mobile communications infrastructures. The decisive factors for the urgently needed acceleration of expansion are streamlined approval procedures, comprehensive and unbureaucratic white and gray spot funding for projects that cannot be implemented independently, especially in rural areas, and the avoidance of building over existing, subsidized fiber optic lines.

Demand-side funding instruments, such as voucher funding for end customers, can make an additional positive contribution to the accelerated expansion of gigabit networks.

The conception of the so-called gigabit land register, which can show transparency about the route and expansion needs, but at the same time increases the vulnerability of critical infrastructures in the telecommunications sector, must be critically questioned. It is important to identify a viable middle ground between the necessary transparency and ensuring the resilience of the telecommunications infrastructure in the current amendment to the TK-NABEG

EnBW is committed to better shared use of its passive mobile communications infrastructure by mobile network operators. This would enable gaps in mobile communications coverage in Germany to be closed much more quickly.

EnBW regards itself as a pioneer in the expansion of the fast-charging infrastructure in Germany. A demand-oriented and rapid expansion of the charging network can only be achieved through market competition. We consider the federal government's target of one million charging points by 2030 to be outdated and are in favor of a target corridor of 130,000-150,000 HPC charging points.

The following points are crucial for the success of the development of a charging network that meets customer needs:

• Regulatory hurdles must be kept as low as possible.
• It is also important to accelerate the development of charging infrastructure throughout Germany, particularly by removing obstacles in the official approval procedures and in the context of the network connection processes.
• With the adoption of the AFI-R (Regulation on Alternative Infrastructure for Fuels), Europe-wide targets (based on distance and performance) were set for 2030. It should act as a regulatory benchmark and over-regulation with unnecessary technical specifications should be avoided. The same applies to other specifications and requirements that can drive up costs for customers (e.g. the so-called pass-through model).
• Making public areas available (federal, state and municipal level) would also accelerate expansion. To this end, the Master Plan Charging Infrastructure 2.0 should be implemented promptly for the expansion-related measures.
• It is important that fair competition and access to the market for all market participants are ensured. This particularly applies to customers' data sovereignty over vehicle and charging data. These must not be restricted by individual market participants.

The EU Green Deal does not only contain climate policy, but is a comprehensive industrial policy modernization and investment program to ensure the future viability of the EU. EnBW expressly welcomes this holistic nature of the program and the level of ambition, but we also call for a pragmatic sense of proportion in some of the detailed regulations. We also see the tightened climate protection targets as fundamentally positive - EU-wide climate neutrality by 2050 and the increase in the EU climate target for 2030 to at least -55%.

From EnBW's point of view, it is now important to implement the ambitious goals with vigor. Nevertheless, the legal framework at European level for the recognition of low-carbon gases should be adopted as quickly as possible in order to send the appropriate investment signals for the development of a hydrogen economy.

There is still a need for sufficient scope for the use of natural gas in the transition phase, as well as framework legislation for the fastest possible development of the hydrogen economy:

• EnBW sees the rapid development of the broadest possible EU internal hydrogen market, including the corresponding infrastructure, as an important building block for achieving the decarbonization goals.
• It is important that hydrogen becomes a European and globally traded commodity - not the "champagne of the energy transition". We expect a relevant price degression through technology development and scaling. Regulation that is open to applications is required: market regulation instead of sector allocation or exclusion of sectors.
• It should be noted that low-carbon "blue" hydrogen will make an extremely important contribution to achieving the climate goals. This is absolutely necessary and must be able to be used across the board.
• In the area of ​​gas distribution networks, options for decarbonisation through hydrogen are to be maintained where this is technically and economically necessary – especially with regard to medium-sized industries which are connected at the distribution network level, sometimes far away from the H₂ backbone.

EnBW supports the federal government's climate protection legislation. It confirms our transformation course with the goal of greenhouse gas neutrality by 2035 at the latest and gives us greater planning security.

However, EnBW rejects the abandonment of the binding sector targets in the new Climate Protection Act. The abandonment of the sector targets will mean that the energy industry will have to contribute disproportionately to the emission reduction targets by 2030. We are aware that the energy industry must take the lead in terms of achieving the targets, as around 2/3 of the additional CO₂ reduction required by the law must be achieved by the energy industry. However, the other sectors must also make their contribution to reducing emissions. In particular, the dynamism in the transport sector must be significantly increased. The energy industry's goals can only be achieved under the following conditions:

• The expansion of renewable energies must be significantly accelerated. The federal government has made considerable progress here, but this must be further consolidated.
• Work have to get a quick start on the creation of an international hydrogen market suitable for mass production.
• The expansion of infrastructure must be accelerated.
• This primarily means expanding the gas network in the south, integrated electricity-gas-hydrogen infrastructure planning and the availability of climate-neutral hydrogen in sufficient quantities and at reasonable prices by 2035 at the latest in southern Germany, at least for the power plants.

Effective CO₂ pricing as a central market control element is to be sought in all sectors. It provides the right incentives to efficiently implement climate targets. The European Emissions Trading System (EU ETS) is a central pillar of CO2 pricing. The companies affected by the EU ETS (sectors: oil refineries, steel and aluminum production, energy generation, aviation, etc.) must deposit their emissions of climate-damaging gases (CO2, nitrogen dioxide and perfluorocarbons) with an emissions certificate. These certificates must be acquired through auctions or through trading between companies. The total emissions in the EU ETS are defined politically and the number of available certificates is reduced in line with the climate targets.

With the reform and expansion of the EU ETS initiated as part of the “Fit for 55” package, a number of EnBW's core positions were implemented. The general level of ambition for emission reductions within the EU ETS was raised from -43% to -62% by 2030 (base year 2005).

EnBW also welcomes the introduction of a separate emissions trading system for the building and transport sectors (so-called “EU ETS II”). An immediate expansion of the original EU ETS to the above-mentioned sectors would have led to massive distortions in the existing emissions trading system. EnBW's demand for an EU ETS minimum price, which would have sent a long-term investment signal, was not taken into account.

The continued high tax burden on the electricity end customer price in Germany, despite the abolition of the EEG surcharge, is hindering sector coupling and climate-friendly investments. A realignment of the tax, levy and surcharge system to the CO₂ intensity of the various energy sources is urgently needed. This should also play an important role in the decisions to be made in the coming years on future electricity market design, price signals and suitable incentives. In the short term, a reduction in electricity tax to the European minimum rate is necessary and a reduction in VAT should be considered.

EnBW supports the gradual increase in the price path in the Fuel Emissions Trading Act (BEHG) and a continued important role for CO₂ pricing.

We consider the creation of a classification system for sustainable economic activities by means of clear standards and instruments, as sought by the EU taxonomy, to be an important instrument for creating more transparency about sustainable business activities, especially for investors in the financial markets. EnBW welcomes the approach of the Action Plan for Sustainable Finance, in particular the definition of sustainability in the taxonomy regulation. EnBW also welcomes the fact that the European Commission intends to review EU sustainability legislation as a whole with regard to reducing unnecessary reporting obligations. A clever balance between effort and benefit must be found:

• From EnBW's point of view, it is important to also include the necessary investments for the intermediate steps of the transformation, as laid out in the taxonomy regulation as part of a transition category: Natural gas in particular is an important energy source for some member states, including Germany, as an intermediate step for cost-effective decarbonization until sufficient green/decarbonized gas is available.
• This was taken into account by the Commission when setting the specific limit values, the so-called technical screening criteria, albeit with extremely narrow criteria that can only be met to a very limited extent.

EU Regulation on Artificial Intelligence (AI Act):

The EU AI Act regulates the use of artificial intelligence in the EU. Special requirements apply to high-risk AI applications. Various operational use cases are in use within EnBW, from predictive maintenance in distribution networks and offshore wind turbines, forecasting the feed-in of renewable electricity and consumption to optimizing wind farm layouts.

The main demands from EnBW are:

• There needs to be a clear definition of AI, which does not include conventional software.
• Restriction of the category of "high-risk AI systems" to systems that are undoubtedly associated with high risk and are not yet covered by applicable European and national product safety law.
• Compliance with the requirements of the legislation must be carried out for companies of all sizes with as little bureaucratic effort as possible.
• Assessments of AI applications should, if possible, be carried out using the so-called "self-assessment" process and not laboriously by third parties (third-party assessment). Overall, the implementation of AI regulation must be as unrestrictive as possible and have a much greater impact on innovation. This is particularly true against the backdrop of global technological competition in the field of AI. In order to create legal clarity, relevant aspects should be implemented into national law as soon as possible.

EU Data Act:

The aim of the legislation is to create an EU internal market for data by sharing data on a much larger scale and thereby generating added value across sectors and member state borders.

In this context, new rights to data, particularly product and industrial data, have also been defined. From EnBW's point of view, the basic principles of data access rights include both opportunities and potentially greater costs. It is important that this new law fits in with sector-specific regulation and that data security is guaranteed when operating critical infrastructures.

EnBW operates numerous critical infrastructures in various sectors (including energy, telecommunications, transport, water, municipal waste) and attaches great importance to the protection of critical systems. Increasing the resilience of critical infrastructures (cybersecurity + physical protection) is essential due to the increase and increasing complexity of the risks.

The implementation of the European NIS2 Directive (cybersecurity) and CER Directive (physical protection) via the NIS2 Implementation Act and the KRITIS Umbrella Act is therefore supported. It is important that an increase in resilience requirements remains economically feasible. For the overall system to function, an exchange between KRITIS operators and the relevant authorities (BSI, BNetzA, BBK) is essential. Reporting obligations and reporting channels for critical events should be designed to be as tight, efficient, secure and non-redundant as possible. Incongruent multiple regulations should be avoided.

Effective support for KRITIS operators is only possible if the responsible authorities have sufficient know-how and capacity. Entrusted government agencies must ensure that sensitive information is not made accessible to unauthorized persons.

EnBW welcomes the Federal Heat Planning Act (Wärmeplanungsgesetz, WPG), which came into force on January 1, 2024, and in particular the associated decarbonization of the heat sector in order to contribute to achieving climate protection goals.

The WPG lays the foundations for the introduction of nationwide heat planning in Germany. The federal states are obliged to ensure that heat plans are drawn up on their territory by June 30, 2026 for large cities with more than 100,000 inhabitants and by June 30, 2028 for municipalities with fewer than 100,000 inhabitants. The obligation to plan heat is already part of state law in some federal states (including Baden-Württemberg) (Climate Change Adaptation Act (KSG BW). In Baden-Württemberg, the "mandatory" heat planning for the 104 large and independent cities in Baden-Württemberg has already been completed. To date, 240 smaller municipalities have also submitted voluntary heat plans. The KSG BW is currently being amended in order to implement the WPG's requirements for municipal heat planning, which will also be mandatory for smaller municipalities from 2028 (keyword: "simplified procedure").

From our point of view, the Heat Planning Act pursues a fundamentally sensible goal, but there are challenges in practice. In the context of municipal heat planning, the following points must therefore be considered:

Measures resulting from municipal heat planning are currently mostly not economically viable. A heat plan that makes sense from an economic point of view does not automatically mean a business case that makes sense from a business perspective.

In our view, it must therefore be clear to those implementing heat planning how the measures resulting from municipal heat planning will be financed.

To facilitate the financing of investments, two key aspects must be addressed here: A larger number of investor groups and more capital must be activated for the heat transition.

From an economic perspective, the technologies that cause the lowest economic costs should be used.

Nevertheless, investment decisions must be made individually by private individuals, companies and municipal authorities. The focus here is on the business perspective and thus the question of whether an investment will pay off over its lifetime.

In order to accelerate the implementation of the heat transition, a reliable legal and economic framework for the next 10 to 15 years is a natural necessity - for companies such as EnBW, municipal utilities and for private investors.

The federal government presented an electricity storage strategy at the turn of the year 2023/24. It aims to stimulate and simplify the expansion of storage capacities by reducing obstacles. In EnBW's view, the fields of action listed in the strategy are complete and essential.

It is now important to implement them consistently through legal measures. On the one hand, this concerns the acceleration and simplification of approval procedures for large-scale storage, especially for pumped storage, and a significant improvement in the economic framework conditions for large-scale storage.

It is also important for all storage sizes to abolish the previously applicable "exclusivity principle" with the aim that in future electricity storage systems will not only be able to store electricity directly from renewable energy systems (green electricity), but will also be able to store and withdraw electricity from the grid (gray electricity) at the same time without losing the funding for the temporarily stored green electricity share. This is the only way storage can be used optimally in the electricity system.

It is also important that the legal definition of electricity storage systems is supplemented by a definition of electricity storage as such in order to make it clear that the storage of electricity does not constitute final consumption.

The situation with regard to network charges for the storage of electricity remains unsatisfactory. The current legal regulations on the exemption of network charges for storage facilities expire by 2029. In the future, responsibility for this issue will lie exclusively with the Federal Network Agency (BNetzA). It has announced a consultation process for 2025. If a complete exemption of storage facilities from network charges is not possible (if the associated costs are distributed nationwide), the network charges must be reduced to the lowest possible minimum.