German storage association to file EU complaint over capacity market law

German energy storage association BVES plans to file a complaint with the European Commission over the design of the country’s proposed Electricity Security of Supply and Capacity Act (StromVKG), arguing that the legislation effectively excludes storage technologies from key parts of the future capacity market.

The German government introduced the bill to secure electricity supply after the country’s coal phaseout through competitive auctions for dispatchable generation capacity.

Under the current proposal, Germany would tender 9 GW of new capacity in the coming months. Eligible projects must be capable of supplying electricity continuously for at least 10 hours and, after a one-hour recovery period, provide a further 10 hours of operation. According to BVES, those requirements can currently only be met by gas-fired power plants. A separate 2 GW auction scheduled for next year would also allow battery storage participation.

Speaking during a parliamentary hearing on the legislation, BVES Managing Director Urban Windelen argued that the auction design restricts competition and conflicts with European principles of technology neutrality and non-discrimination.

The association said storage projects are formally eligible to participate but are effectively excluded through the combined impact of several design features rather than a single rule.

Among its main concerns is the proposed limitation on pooling arrangements. BVES said multiple storage assets should be allowed to combine their capacity to provide the same security-of-supply services as a single large generating unit, potentially at lower cost and with shorter development timelines.

The association also criticized proposed resilience requirements mandating that at least 50% of project components originate in Europe. While supporting efforts to strengthen supply-chain resilience, BVES argued that comparable standards should apply across all technologies. It said gas-fired generation remains exempt from equivalent requirements despite relying on imported fuels.

BVES broadly supports the inclusion of inertia-related services in the capacity mechanism, noting that battery storage systems are well suited to provide such services. However, it said the requirement should not be structured in a way that increases costs while limiting participation by storage projects.

Germany’s renewable energy association BEE expressed similar concerns during the hearing. The organization said the proposed auction design would distort competition in favor of gas-fired generation while disadvantaging lower-cost and more flexible technologies.

BEE highlighted the proposed “10+1” requirement, under which assets must be capable of operating for another 10 hours after only one hour of replenishment. The federation said the rule would effectively exclude batteries and biogas plants from the 9 GW tender despite providing limited additional value for security of supply.

The association also criticized local-content provisions requiring at least half of project components to come from Europe, arguing that no comparable obligations apply to imported fossil fuels or to components used in gas-fired power plants.

In addition, BEE said the draft legislation lacks a clear pathway for converting future gas-fired generation assets to operate on green hydrogen or biomethane. The federation warned that the absence of binding conversion requirements could slow the development of a domestic hydrogen economy and create a long-term dependence on fossil-fuel infrastructure.

The organization also raised concerns about regulatory uncertainty, noting that key aspects of future auction design would be determined later by Germany’s economy ministry and federal network regulator. According to BEE, greater clarity within the legislation itself would improve transparency and provide stronger investment signals.

Germany’s gas industry association took a more favorable view of the proposal. The group said the legislation provides a framework for attracting investment in dispatchable generation capacity but argued that several elements require adjustment.

Among its concerns were the proposed maximum payment of €173 ($196.47)/kW, which it said may not adequately reflect project costs and risks, and the inclusion of inertia requirements within the capacity mechanism. The association argued that such services should instead be procured through a separate process managed by transmission system operators.

The group also said regional incentives included in the legislation are broadly appropriate but stressed that new generating assets will require suitable sites, faster permitting procedures, and timely access to electricity, gas, and future hydrogen infrastructure.

From pv magazine Deutschland