Network charges reform: Draft regulation on system usage charges published – comments due by 24 July

Austria’s energy regulator E-Control published the long-awaited draft System Usage Charges Framework Regulation (Systemnutzungsentgelte-Grundsatz-Verordnung - SNE-G-V) on 29 June (Current consultation drafts – E-Control – available in German only). The regulation is intended to enter into force on 1 January 2027, and stakeholders may submit comments until 24 July.

The SNE-G-V establishes the methodology and principles under the new network tariff design introduced by the Electricity Industry Act (Elektrizitätswirtschaftsgesetz - ElWG), forming the basis for the annual determination of network tariffs. 

The regulation is therefore relevant for all network users. For energy storage operators, the exemptions available to “system-supportive storage facilities” are of particular importance. Below is a summary of the most critical points – primarily those affecting storage – which also raise a number of open questions:

1. New structure of network charges

The three principal recurring system usage charges – (a) the Network Usage Charge (Netznutzungsentgelt - NNE), consisting of a capacity component and an energy component, (b) the Network Loss Charge (Netzverlustentgelt - NVE) and (c) the Balancing Reserve Charge (Regelleistungsentgelt - RLE) – will be calculated on the basis of the highest monthly quarter-hour value recorded at the network connection point (Netzanschlusspunkt – NAP). Additional components include a gross charge for network levels 1 and 2 in cents per kWh of energy drawn, as well as the charge for attributable reactive power if separate measures are required at the network connection point.

However, the SNE-G-V will also introduce incentives and exemptions:

Medium- and long-term storage facilities (i.e., primarily pumped-storage facilities) will benefit from separate, standardised system usage charges.

At grid level 7 (i.e., for household customers), a new Winter Off-Peak Energy Charge (Winter-Nieder-Arbeitspreis - WiNAP) will be introduced, while the existing Summer Off-Peak Energy Charge (Sommer-Niederarbeitspreis - SNAP) mechanism will remain in place. For flexible grid access, i.e., for grid users who contractually grant the grid operator the right to limit capacity dynamically or statically to a certain extent, the capacity price for flexible withdrawal is exempted from the NNE (network usage fee) and reduced through percentage discounts (Section 10 SNE-G-V). This benefit can be obtained either through an agreed flexible grid access within the meaning of Sections 103 or 104 ElWG, or by the grid user granting the grid operator the right to restrict its capacity withdrawal within defined time windows if needed. At grid levels 5 to 7, the grid operator must even enter into such an agreement at the customer's request without there being a lack of grid capacity. However, E-Control is not particularly generous on flexible off-take. In order to qualify for a discount, the contract term must extend well beyond the periods covered by the ElWG and span generally at least 10 years. In other words, the interruptible portion of the connection capacity is exempt, but where that capacity is used, the energy component remains payable. 

2. Exemptions limited to “re-injection”: co-located storage and behind-the-meter storage excluded

Section 23 SNE-G-V provides that energy storage facilities are exempt from the NNE and NVE on the withdrawal side only where they are operated “exclusively for re-injection into the grid”. This means that only energy storage systems as defined in the ElWG that are charged exclusively from the grid are eligible for an exemption. This requirement applies in addition to the cumulative conditions for a system usage charge exemption in the case of system-supportive operation (see below).

The SNE-G-V thus limits the fee exemption to stand-alone battery storage systems. Co-located battery storage systems (whether combined with generation, consumption or other storage technologies) and pumped-storage facilities are excluded from the fee exemption for withdrawal. Green hydrogen reconverted to electricity at the same site should also be able to benefit from the exemption.

Re-injecting operators are also exempt from the NVE on the injection side. This is a welcome innovation that avoids a double burden in relation to the NVE.

This restriction in the SNE makes maximum use of the discretion granted in the ElWG. The regulation-making authority under Section 135(1) of the ElWG refers specifically to the “basic rules for calculating system usage charges” and points to Section 127(2)(1) to (5) of the ElWG in accordance with Sections 128 to 132. At first glance, at least, the regulation-making authority does not appear to cover the imposition of restrictive conditions on the exemption for system-supportive storage facilities which is already enshrined in Section 127(3). Furthermore, the authorisation covers “criteria for assessing system-supportive operation”, but may not extend to differentiating between various types of system-supportive operation. Further discussions are to be expected.

Under the SNE-G-V, eligibility for the exemption appears to depend not (only) on system-supportive benefits as required by the ElWG (cost reductions, network security and security of supply), but also on the premise that combined facilities, i.e. co-located and behind the meter (with grid connection) – already enjoy “inherent pricing advantages for the network user”, which should in principle preclude an exemption. This can be understood as a legal policy assessment; however, the legislator appears to have taken a different view in Section 127(3) of the ElWG, namely in favour of all storage systems, provided they are operated system supportive.

3. System-supportive exemption clearer, yet still highly restrictive

The new set of criteria in Sections 23-26 of the SNE-G-V is leaner than the version included in the market consultation.

In the distribution network, a re-injection facility is exempt from the NNE, NVE and REE if: 

1. no grid expansion is required for the grid connection, i.e. if free capacity is available at the transformer substation;
2. the facility is connected to a grid node at network level 4 where the transformer is utilised at more than 80% capacity during at least 20% of the hours in a year;
3. available connection capacity is calculated in accordance with E-Control’s methodology;
4. the facility has a connection capacity of more than 1 MW
5. an agreement with APG for congestion management in the form of flexibility services via the flexibility platform has been concluded
6. the network operator is entitled to restrict the operating range of the storage facility free of charge for at least five years. The actual restriction is to be announced by 06:00 on the previous day.

In the transmission network, re-injection facilities are exempt from the NNE, NVE and REE if:

1. the facility is connected to the transmission network;
2. the grid connection point is designated in the Network Development Plan for system-supportive operation;
3. an agreement with APG for congestion management in the form of flexibility services on the flexibility platform is in place (as described above);
4. the TSO is entitled to restrict the operating range of the storage facility for at least five years (as above); unlike in the distribution network, the express provision for this to be free of charge is missing here;
5. the facility makes reactive power available to the TSO free of charge; and
6. the facility complies with any restrictions on grid connection imposed by the TSO (affording the TSO greater discretion than in the distribution network).

In both the distribution and transmission networks, the possibility for the network operator (apparently meaning the operator of the network at the connection point) to restrict the facility’s operating range must apply for at least five years. After one year, a reassessment may take place, but only by mutual agreement.

As a further incentive, a reduced NNE is available to all providers of balancing reserves (irrespective of the conditions set out above) in proportion to the balancing reserve capacity and balancing reserve energy actually provided.

There has already been extensive discussion amongst experts as to whether several additional criteria should apply cumulatively and beyond a system-supportive operation. The draft SNE-G-V retains several requirements and their cumulative application. The principal counter-argument is that the ElWG already defines under Section 6(1) Z 148 what ‘system-supportive operation’ means, namely a mode of operation in which ‘system-supportive benefits in the form of cost reductions, cost avoidance or the maintenance of grid and supply security are provided’. Furthermore, the ElWG identifies three operating models that are each, in any event, deemed to be system-supportive – the provision of flexibility services, the operation of storage at a site specified in the grid development plan or operation in accordance with the grid operator’s requirements – as well as an example of a cost-sensitive mode of operation – namely the protection of the grid during peak load periods. The use of “or” in the definition, as well as the (clear) explanatory notes on the ElWG, indicates that the criteria are alternative rather than cumulative.

Under the draft SNE-G-V, it is not sufficient for exemption that, for example, flexibility services are provided or that the plant’s location was specified in the network development plan. The discussions mentioned earlier are likely to continue, as the Austrian Constitutional Court views a further restriction through rigid requirements in a regulation – where a term is already defined in a statute, as in this case – as problematic.

Battery storage project developers who do not expect commissioning before 2031 should bear in mind that the provisions on re-injection and system services will cease to apply on 31 December 2030 (although they will continue to apply to storage facilities commissioned by that date). What will apply thereafter remains to be seen.

4. Overall cap on exempt storage capacity

The draft introduces an Austria-wide cap of 5 GW of congestion capacity for exempt storage facilities (apparently in line with Section 53 of the Erneuerbaren-Ausbau-Beschleunigungsgesetz - EABG). All storage connection agreements must be registered centrally on a common online platform together with their congestion capacity. Once registered capacity exceeds 5 GW, priority will be granted to facilities connected at the most heavily utilised network connection points. Anyone who is late will have to wait until older installations are phased out – but only until 31 December 2030. After that, it remains unclear what criteria new storage facilities will have to meet in order to benefit from the exemption.

This procedure could be further improved: transmission-connected facilities appear to have been overlooked, as they cannot participate in the ranking process based on the most heavily utilised connection points, which applies only to the distribution network. Furthermore, all grid connection agreements for system-supportive storage facilities are subject to a condition precedent: they only become effective if the facility remains below the 5 GW threshold and must otherwise be expressly terminated. This creates considerable investment risk for operators. If they fail to stay below the 5 GW limit, they lose their grid connection entirely and are also unable to operate their storage facilities free of any exemption. Operators of networks with lower-ranking connection points lose the potentially system-supportive facilities – or their flexibility capacity – and must either do without them or put them out to tender in accordance with the ElWG and pay more.

5. How will aggregators and virtual storage projects benefit from the exemption?

The rules for aggregators require a more nuanced approach. One positive aspect is that the draft recognises the aggregation of storage facilities by aggregators– so-called swarm storage – as a permissible means of obtaining the exemption. This also opens up access to system services – and thus to the network charge exemption – for smaller storage systems which, on their own, do not meet the minimum congestion capacity of 1 MW. Each of the bundled storage systems must have a congestion capacity of at least 50 kW and be suitably metered; the total of the aggregated portfolio must reach the minimum congestion capacity of 1 MW.

However, the provision in Section 24(3) raises a number of unresolved questions:

Section 24(3) first states that the bundling must take place “via a network node within the meaning of paragraph 1(1)”. This reference is likely to be incorrect, as paragraph 1(1) merely concerns the criterion that no further network expansion may be caused; the reference is presumably to the grid node at grid level 4 within the meaning of paragraph 1(2). Furthermore, it remains unclear exactly what is meant by ‘grid node’, as the term is not defined either in the Regulation or in the ElWG – this lack of clarity could significantly restrict the geographical scope and flexibility of virtual storage. Similarly, the reference to the “requirements for restricting operating modes pursuant to paragraph 1(5)” appears to be incorrect: paragraph 1(5) concerns the contract for the provision of flexibility services, whilst the restriction of operating modes (Hüllkurve) is regulated in paragraph 1(6). These requirements must be met by the totality of the storage facilities involved, although it remains unclear to what extent the Hüllkurve must be redefined if a participant leaves the virtual storage. In our view, the (currently reasonable) interpretation according to which the exemption from network usage and network loss charges is to lapse as soon as even a single grid user (apparently meaning: a facility) ceases to participate in the aggregation is critical. This apparently applies regardless of whether the remaining virtual storage would still fulfil all the requirements. Irrespective of this interpretation and in combination with the 1 MW requirement, the aggregator would in any case lose the exemption from network charges if, following the withdrawal of a participant, it falls below the threshold of 1 MW of total congestion capacity. This ‘all-or-nothing’ rule creates considerable legal uncertainty for aggregators and their customers. Finally, it also remains unclear how the exemption from network charges is to be implemented in practice: the aggregator has neither its own metering point nor its own network connection agreement – these remain with the respective network user, who merely concludes an additional aggregation agreement. It therefore remains unclear how billing to the network operator is to be carried out in practice and whether, for example, the storage operator must submit confirmation from the aggregator that the system service criteria have been met, so that the grid operator waives the charging of network usage and network loss charges.

The ElWG itself provides no basis per se for such a restrictive interpretation of the aggregator’s role: Section 127(3) of the ElWG links the exemption from charges exclusively to “energy storage facilities” and their “system-supportive operation”, without excluding bundling by aggregators or subjecting it to such strict conditions. Nor does Section 23 of the ElWG, which governs the contractual and market role of the aggregator in the bundling of loads or generated electricity, provide for any corresponding restrictions on the exemption from network charges.

6. Local energy sharing 

Section 9 of the SNE-G-V governs the network access charge for shared energy use in the local area and provides for a reduction in the network access charge for participating grid users. With regard to the capacity price, capacity netting applies in the case of shared energy use via communal line installations: the capacity price is calculated on the basis of the quarter-hourly capacity values in the direction of consumption, reduced by the amount attributable to the grid user from the shared energy use in the respective quarter-hour. With regard to the energy price, the Tariff Regulation stipulates that percentage discounts, depending on the infrastructure used, must be set uniformly for all network areas. According to the explanatory notes, these discounts may amount to up to 90 per cent or 100 per cent for shared energy use via the main line or the site area, respectively. A positive aspect worth highlighting is that, in accordance with the statutory requirements of the ElWG, the draft no longer differentiates according to the legal structure of shared energy use – such as shared generation facilities, community energy cooperatives or renewable energy communities (EEGs) – but is based exclusively on the extent of the network used. Conversely, the net metering of power is restricted to shared energy use via the main line or the site area; for other forms of energy use in the local area, only a discount on the active energy price applies.

7. Comparison with more advanced EU markets

In Spain, battery storage systems have been generally exempt from system usage charges since March 2026, at least until flexible grid access arrangements are introduced.

In Romania, three categories of charges applicable to electricity withdrawn from the grid for storage purposes have been abolished: (i) the transmission tariff (for withdrawal), (ii) distribution tariffs and service charges for stored and re-injected energy, and (iii) payments for, or the cancellation of, green guarantees of origin for energy permanently consumed during the storage process (similar to the cancellation applied to account for efficiency losses).

Compared with Germany, the Austrian approach also appears restrictive. The German exemption for electricity withdrawn by battery storage systems is not linked to system-supportive operation but instead pursues a technology-neutral investment support model directly embedded in legislation. However, it is currently limited to projects commissioned by the end of 2029.

In the Netherlands, there is no general exemption for storage facilities. However, reduced network charges are available through so-called alternative transport rights, which function in a manner similar to flexible grid access. The most relevant of these incentives is the “time-limited transport right”, which includes a system-supportive element. Under this arrangement, transmission network users contractually waive guaranteed capacity in one or both directions during periods requiring congestion management, in return for a lower network charge. Similar reductions also exist at the distribution level and for time-variable capacity products. In all cases, the decisive factor is the reduction of congestion and the lowering of overall network costs. 

In summary, other EU Member States provide substantial exemptions from network charges for energy storage facilities. Unlike in Austria “inherent pricing advantages for the network user” play no role in those frameworks.