BGH on customer installations: Decision orders application in line with the directive

In a ruling dated May 13, 2025, the BGH classified the supply infrastructure in the specific case of a residential complex in Zwickau as a distribution network and thus rejected the appeal of an infrastructure operator (Ref. EnVR 83/20). In doing so, it took into account the landmark ruling of the ECJ (Ref. C-293/23). On November 28, 2024, the ECJ ruled that the German regulations on the infrastructure category of customer facilities pursuant to Section 3 No. 24 a) EnWG are not in line with EU law.

The supply infrastructure in German energy law

German energy law regulates energy industry activities regardless of whether a company carries out energy supply as a core activity or requires it as a prerequisite for its production activities. As a result of this principle, companies of all sectors and sizes have to deal with the question of the extent to which their energy industry activities trigger legal consequences and regulation. This affects, for example, companies that operate combined heat and power plants, PV systems, supply infrastructure such as lines and transformers at production sites or that supply energy to group or third-party companies. Even before the BGH ruling, this was a complex and dynamic task, as the legal framework continues to evolve and a number of official and court decisions require action to be taken at short notice.

This previously applied to customer installations in Germany

Under current German energy law, a customer installation is downstream of an energy supply grid and largely exempt from regulatory obligations. Customer systems are separate from the energy supply grid in regulatory terms, with the result that operators do not need to implement comprehensive grid regulatory requirements. In practice, not only decentralized supply districts, but also a number of large production and industrial sites have benefited from this. The list of possible applications can be extended indefinitely: Hospitals, university locations, data centers, research facilities, shopping centers or campsites are also users of this infrastructure category.
In addition to the lowering of regulatory requirements, there are also economic incentives for classification as a customer facility. For both residential areas and industrial sites, it was previously more cost-effective to generate, distribute and consume electricity at the location “behind” the grid connection. This electricity is not subject to grid charges or grid-side levies and surcharges (such as CHP and offshore surcharges, etc.). The classification of an electricity distribution infrastructure as a customer installation is also a mandatory requirement in various support mechanisms, such as tenant electricity in accordance with Section 21 (3) EEG, as corresponding support surcharges are only granted if the grid is not used.

The question referred by the BGH

The background to the decision was the classification of a customer facility used for residential purposes. This consisted of two separate energy systems, one comprising four blocks of flats with 96 residential units and the other six blocks of flats with a total of 160 residential units. The apartment blocks were supplied with 288 MWh/a and 480 MWh/a of electricity on a decentralized basis.

In the context of the question referred, the BGH was of the opinion that the two energy distribution systems used for residential purposes must be considered separately from each other, meaning that two customer systems pursuant to Section 3 no. 24a EnWG should be assumed. Due to doubts arising from the size of the customer installations, the BGH referred the question to the ECJ as to whether EU law requirements regarding the distribution of energy and distribution system operators preclude classification as a customer installation. The ECJ answered in the affirmative. The BGH has now interpreted the requirements for customer installations in light of the European internal market requirements and ruled that the extensive application of customer installation privileges in the specific dispute was not legally compliant.

Affected infrastructure managers must now check which category they belong to

The BGH ruling has far-reaching consequences for all operators that have previously classified themselves as customer installations. Not only the companies that operate the supply infrastructure are affected, but often also the companies affiliated with these companies, which in turn carry out energy-related activities, such as the operation of a PV system on the administration building, central purchasing of energy for the group or the supply of energy to a canteen or a security service.
Unfortunately, however, the BGH has not published any specific characteristics (the reasons for the decision are still pending) that would make it possible to assess with legal certainty whether companies can continue to claim unregulated status.

How operators of customer systems should act now

For operators of customer systems, it will now be important to promptly review the respective individual case constellation against the background of the reasons for the decision and, if necessary, initiate individual measures. These may include

• Legal, economic and tax analysis of the location and consideration of alternatives
• Derivation of impending legal consequences and evaluation of the changes, for example implementation of accounting unbundling and disclosure of business results
• Calculation (and approval) of grid fees and changes to price structures for energy procurement at locations
• Adjustment of (intercompany) contractual relationships at affected locations
• Rethinking business models and the supply concept
• Short-term initiation of countermeasures such as submitting an application for approval of a closed distribution network
• Separation of site infrastructures through to the sale of assets

Conclusion

It would have been desirable if the BGH had provided legal clarity. The interpretation now to be applied in conformity with the directive will in all likelihood lead to further detailed casuistry, which means legal uncertainty for many companies in the housing sector and industry. This affects both existing and future supply concepts as well as a number of business models. It is to be hoped that the legislator will quickly provide clarity, as otherwise a controversial discussion about the status of companies and an otherwise imminent accounting unbundling threatens with the next annual audit at the latest. Affected companies should already consider now which legal and regulatory obligations must be complied with.
The Federal Network Agency and the state regulatory authorities should find a practical approach for dealing with the decisions described until a welcome change in the law is made.