In decarbonised electricity markets, electricity storage systems provide the flexibility urgently needed for grid operation and enhance the utilisation of volatile electricity generation from renewable sources. In the future Austrian Electricity Market Act (ElWG), electricity storage will be regulated for the first time, placing them on an equal footing for grid connection and, if operated in a system-friendly manner, batteries will be exempted from grid usage fees, among other things. But does this mean that all obstacles have been removed?
New regulatory framework for the operation of electricity storage systems
The good news is that the ElWG not only implements the minimum requirements of the EU Directive for the internal market for electricity 2019/944 (DIR 2019/944) and implements the EU regulation on the internal market for electricity 2019/943, but the legislator (or its drafters) recognises the practical significance of electricity storage systems by providing additional clarification. The ElWG contains a definition of electricity storage that literally implements the DIR 2019/944 (sec. 6), as well as a basic general provision (section 82).
In the electricity grid, 'energy storage' will mean either
- deferring the final use of electricity to a moment later than when it was generated, or
- the conversion of electrical energy into a form of energy which can be stored, the storing of such energy, and the subsequent reconversion or use as another energy carrier.
Accordingly, generating new electricity does not constitute storage
A 'storage facility' will be a facility that is or is to be connected to the electricity grid and where energy such storage occurs. Electrolysis plants are also electricity storage facilities because there conversion of electricity into hydrogen and subsequently either its reconversion or its chemical or energetic use of hydrogen happens.
A significant innovation is the inclusion of energy storage in the functions an electricity undertaking performs. This means that storage facilities, and therefore also batteries, are to be treated either as consumers or suppliers to the grid and are subject to the corresponding rights and obligations.
Moreover, the question of whether the installation of batteries requires a licence under electricity or trade law is also moving closer to its clarification. According to the explanatory notes of the draft law, the operation of a battery storage facility (including an electrolysers) constitutes an activity of an electricity company and therefore falls within the scope of the ElWG as far as permitting is concerned.
The explanations qualify their statement as above insofar as storage facilities that purchase electricity or generate it by themselves through self-supply facilities and are subject to a permit or notification requirement under the Austrian Trade Regulation Act must be approved or obtain a permit under this Act. Otherwise, the ElWG applies. This, however, should be read as meaning that batteries operated by end customers fall under trade law because end customers are no electricity undertakings. Similarly, active customers only consuming self-generated electricity and isolated facilities, and thus also active customers only feeding surplus energy into the grid, must fall under the Trade Regulation Act with regard to both generation and storage.
This is in line with Regulation 2016/631 establishing a network code, according to which batteries are not considered generators, at least with regard to grid connection. Finally, it must be kept in mind that
batteries perform storage in the narrower sense, i.e. just postponing of the final use of electricity in contrast to a conversion and reconversion via a storable form of energy.
Operation of electricity storage facilities by network operators
Other provisions will apply to storage operations by network operators in accordance with Article 54 of the Directive 2019/944. Network operators remain being prohibited from owning, constructing, managing or operating storage facilities. This does however not apply to
- fully integrated network components (as determined by the regulatory authority E-Control) or
- where E-Control has granted an approval and all of the following conditions are fulfilled:
- The storage facility is necessary for efficient, reliable, cost-effective and secure grid operation and is used exclusively for this purpose.
- An open, transparent and non-discriminatory tendering procedure for the construction, management or operation of a third-party storage facility has been carried out using tender conditions approved in advance by E-Control. Since Article 54 of the EBM Directive takes precedence over the Sector Procurement Directive 2014/25, the sector public procurement law must be obeyed in addition to Article 54 and Section 84 of the ElWG.
- No bids were submitted in this procedure to which the contract can be awarded or the bidders could not deliver those services at a reasonable cost and in a timely manner.
- E-Control has reviewed the necessity and assessment of the procedure.
- Proven, ex ante assessment of alternatives to the technical purposes of storage and cheaper or more readily available alternative measures, including market-based procurement of flexibility services, has been conducted. If cheaper alternatives are available, the procurement of storage facilities is not permitted. As storage costs are included in grid fees, there is a general interest in this regulation.
Nevertheless, for such awarded storage facilities a public consultation must be carried out every five years to assess whether third parties are interested in purchasing it. If so, the network operator must sell the facility in an open, transparent and non-discriminatory procedure at its residual book value.
The ElWG also implements the operating obligations of DIR 2019/944. These include the rapid restoration of operational readiness, documentation of use and of the quantities of electricity fed in and taken out, and the publication of this information.
Grid connection
According to BMWET, 1 'The electricity market is under pressure – with grid congestion, rising costs and lack of access'. The ElWG will indeed introduce innovations that can accelerate or facilitate grid connection for storage facilities or make the use of storage even more commercially sensible. We will deal with the future regime for grid access in a separate article. The general connection obligation, the grid connection point and grid level allocation, the notification of new equipment, the right to a different grid connection point if costs are covered, transparency and the reservation of available grid connection capacities, and the regulated grid access will also apply to electricity storage facilities. However, electricity storage facilities are not affected by peak shaving.
The ElWG aims to introduce 'flexible grid access instead of long waiting times'. This is particularly good news for battery operators. The draft ElWG also provides for 'partial connections', aiming at a 'faster grid start-up' of new facilities: According to BMWET, instead of 'waiting for a full connection, they can start with partial capacities and expand gradually'. As co-location facilities or so-called 'energy storage at the same location', batteries can store unused electricity generated by wind turbines or PV systems affected by peak shaving for later consumption or sale. This also applies to the new flexible, limited or restricted forms of grid access.
Transparency and dispute resolution procedures, as well as the right to a different grid connection point, are particularly important for the grid connection of electricity storage facilities themselves. In the past, despite their (at least potentially) system-friendly operation, grid connection was often not possible precisely because of a lack of grid capacity. The obligation to state reasons and the improved procedure may give rejected projects a second chance, while grid operators can avoid civil lawsuits.
Costs of grid usage
'System-friendly behaviour will be financially rewarded. Those who consume electricity flexibly or use electricity storage will relieve the grid and pay lower grid fees in future,' promises BMWET. This is correct insofar as storage facilities do not have to pay a part of the fees. However, the announced clear incentive structure (within the meaning of Article 32 of the Electricity Market Directive) still needs to be created by E-Control.
Operators of electricity storage facilities will be classified as electricity consumers, electricity suppliers or both. Since storage facilities are generally to be treated as consumers or suppliers depending on the direction of energy flow and are subject to the associated rights and obligations, storage facilities must in principle pay network charges twice. However, this only applies unless otherwise specified in the new Section 119(3), because of which a large proportion of storage facilities will only pay grid usage fees when feeding electricity back into the grid. This is because storage facilities are exempt from grid usage and grid loss fees for 20 years from commissioning, taking into account their system-supporting operation.
However, with the somewhat vague phrase 'taking into account' system-supporting operation, the ElWG leaves open whether and to what extent any form of system-friendly operation leads to an exemption. E-Control is to specify the criteria for assessing system-friendly operation in a regulation. As to what falls under the new term 'system-supporting' or 'system-supporting operation', the ElWG remains vague too: 'system-supporting operation' is defined as a type of operation that provides a 'system-supporting benefit'. According to the explanatory notes to the draft bill, this can take three forms:
- through the provision of flexibility services,
- by operating at a specific location identified in the network development plan, which must be published on the common internet platform for distribution networks, or
- by operating in accordance with the requirements of the network operator.
Since the ElWG refers to these types of operation as 'in particular' only, others may be added. This enables E-Control, among other things, to take technical developments or future flexibility products into account. A formulation such as, for example, that the regulatory authority may specify additional system-supporting forms of operation if there is a given system-supporting benefit would be clearer. Defining “system-supporting” operation using the same term, namely “system-supporting” benefit, provides little additional information. The overview at Sm is helpful here.
At least, system-relevant operation will go beyond the 2024 draft ElWG. According to this, the ability of a plant to be system-supporting would have been sufficient, not only its actual operation. Furthermore, only flexibility services (now lit. a) would have constituted system-supporting operation.
System-supporting operation is, in any case, an umbrella term. It includes flexibility services that, in accordance with EU law, encompass both ancillary services (e.g. balancing) and congestion management. In addition to flexibility services, this also includes operation at a location specified in the network development plan (lit. b) or in accordance with the requirements of the network operator (lit. c). The same installation may be operated in a system-supporting manner only temporarily (at least with regard to lit a and lit c), which should mean that it would only be exempt from withdrawal charges on a temporary basis under certain circumstances. Since the subsequent use of the electricity to be stored may not yet be clear at the time of drawing it from the grid, further regulations are required.
Missing regulations and open questions
Finally, the ElWG provides a definition for bi-directional recharging (simplified: the use of car batteries as electricity storage devices in the grid, V2G or Vehicle to Grid). The ElWG refers to Regulation 2023/1804, which defines bi-directional recharging as a smart recharging operation where the direction of the electricity flow can be reversed, allowing that electricity flows from the battery to the recharging point it is connected to.
It remains unresolved whether and how charging devices for electric vehicles must enable bi-directional recharging. The cited Regulation 2023/1804 merely provides targets and a national policy framework, which the ElWG does not provide. The Battery Regulation 2023/1542 is silent on this issue, and the ElWG apparently does not want to fill this gap on its own in Austria.
Confusion could arise from the fact that, according to the BMWEF's explanations, electric vehicles can also function as storage facilities in conjunction with bi-directional recharging infrastructure. Insofar as they feed electricity into the grid (see above), they could be regarded as electricity traders or suppliers and have corresponding obligations. It is equally possible that owners of electric cars using V2G could fall under the trade law or require an aggregator that complies with those provisions.
CMS will deal with the details in a separate article.
Recommendation and outlook
The consultation period has recently been extended until 15 August 2025. Those affected should consider submitting comments. Potential investors should consider whether to wait for improvements in the grid connection procedure or to apply for grid connection as soon as possible. After the review, the draft must pass the National Council, for which it needs the support of an opposition party, and then the Federal Council. Nevertheless, the ElWG is expected to come into force in 2025.
