Legal Framework of Decentralized Energy Business Models in Germany: Challenges and Opportunities for Municipal Utilities

Feasible and profitable business models to better integrate and harness decentrally generated renewable energy are expected to constitute a key element for the energy transition in Germany. Until now, generated electricity of decentralized systems is to the largest extent only used by the property owner directly or fed into the public grid. To make better use of the generated electricity, it is necessary to find business models that provide an opportunity for different market actors, such as municipal utilities and residential prosumers. Due to the importance, yet low-anticipated monetary potential of such solutions, the legislator encourages their implementation by exemption of statutory fees, levies and taxes as well as by offering public remunerations, premiums and compensations in some cases. Capitalizing on these benefits, however, is only feasible under compliance with the legal requirements. In the light of the considerations above, this work states and analyzes the legal and regulatory framework of different business models within the German energy landscape. The major aim is to identify opportunities and challenges for the implementation of the business models self consumption, direct consumption, direct marketing, demand response, community electricity storage and net metering at the municipal level. The findings show that the profitability of various decentralized on-site business models depends primarily on the current statutory cost exemptions and compensations. At the same time, the regulation is characterized by unsystematic specific exemptions which leads to uncertainty regarding long-term planning. Additionally, although not directly privileged by the existing legal framework, municipal utilities are better suited to handle the legal burdens due to their experience and their administrative infrastructure.