Germany is set to revise its regulatory framework for electricity and gas grids, with a minimum 1.4% increase in allowed revenues for the 2029–2033 period. The measure, announced by the Federal Network Agency (Bundesnetzagentur), aims to enhance the sector’s investment appeal without weakening performance discipline. It is part of the NEST process (Neues System der Entgeltregulierung), which reshapes remuneration and incentive rules for over 900 electricity and gas operators.
Investor pressure and capital requirements
Major operators such as Amprion and E.ON have for months called for a regulatory adjustment, arguing that current rates – around 7% pre-tax for new assets – are too low to attract the capital needed. Cumulative investments to modernise grid infrastructure by 2045 are estimated at over €450bn, according to company forecasts.
The moderate increase is intended to improve the risk-return profile of operators without directly translating into higher end-user tariffs. In parallel, the Bundesnetzagentur plans a phased reduction of feed-in subsidies between 2026 and 2028, lowering network charges from 2029.
Performance-based revenue distribution
Under the NEST framework, the revenue increase will not be applied uniformly. The most efficient operators will receive a greater share of the uplift, through a benchmarking mechanism. The reform will also introduce new parameters to better integrate long-term investment signals into the revenue calculation.
Gas network operators, facing a structural decline in demand and high decommissioning costs, will be integrated into the new framework from 2028. Their infrastructure will be governed by specific rules to avoid the creation of unamortised stranded assets.
Market effects and industrial considerations
For industrial consumers, the reform alters tariff assumptions for long-term contracts. Energy-intensive manufacturers and data centres will need to prepare for potential variability in network charges linked to operator performance.
The measure could also restart investment in interconnection, digitalisation and grid connection projects. The Bundesnetzagentur is focusing on reducing congestion and strengthening European interconnections, which are viewed as key to energy security.
Differentiated impact across operator profiles
Listed companies such as E.ON, RWE and EnBW will benefit from increased cash flow visibility under regulation, easing long-term financing plans. Stadtwerke, municipal operators, may come under greater pressure due to their smaller scale and limited capacity to meet efficiency benchmarks.
The differentiated treatment of gas infrastructure aligns with European rules designed to avoid regulatory distortions. The German regulator will need to balance fair returns on remaining gas assets with a gradual phase-out, under a legally robust framework for operators.
