Speeding up network expansion: German government plans distribution network package

On 2 July 2026, the federal government presented a comprehensive 34-point reform package. Its aim is to modernise Germany, promote economic growth and strengthen the welfare state to meet future challenges. In point 16, the “Programme for Growth and Jobs” explicitly addresses speeding up planning for distribution networks. By the end of the year, the federal government wants to present a package for distribution networks that accelerates network expansion, drives forward the modernisation and digitalisation of the networks and improves financing options for the relevant investments.

A. Background

The growing share of renewable energy is intensifying existing problems in the electricity network. Supply and demand are drifting further apart, while an increasing number of decentralised renewable installations are feeding power into distribution networks. Many networks were not built for two-way power flows or frequent surges in supply and demand, so they now need to be upgraded to cope with these new conditions. Moreover, slow connection procedures and complex permitting rules are making the situation worse. Network optimisation, reinforcement and expansion remain essential, backed by greater flexibility through storage, smart metering and a stronger European network build-out that can help balance supply across larger areas.

The main regulatory responses are the European Networks Package and the Smart Meter Initiative. At the centre of the European Networks Package is a revision of the Regulation on trans-European energy infrastructure, known as TEN-E, alongside a draft directive designed to speed up permitting procedures. The planned measures include tighter time limits, single national digital portals, deemed approval rules and a presumption that key network infrastructure and renewable projects are in the overriding public interest. Under EU law, all Member States are required to deploy smart meters. Many countries are opting for a full nationwide rollout of the digital infrastructure, whereas Germany is taking a more targeted approach and primarily requiring groups that deliver the greatest benefit for the energy transition to install it. Smart meters are intended not only to measure electricity consumption, but also to enable network operators to control certain installations in a network-supportive way under section 14a of the German Energy Industry Act (Gesetz über die Elektrizitäts- und Gasversorgung). Under the current legal framework, the rollout of mandatory installations must reach at least 95 per cent by 2032.

B. Goals and measures in the network expansion reform package

The federal government recognises that expanding the network is vital to driving the energy transition forward and keeping it affordable. As demand grows for high-capacity connections for renewable energy installations, industry, data centres, charging infrastructure and heat pumps, the government is deliberately placing distribution networks at the centre of its plans. It therefore intends to put forward a distribution network package to address the shortfalls in network expansion and reinforcement.

I. Speeding up network expansion

The planned distribution network package is intended to cut the delivery time for network projects by half. To do so, existing networks are to be used to a greater extent and expansion is to be accelerated in line with the European Networks Package. The plans include faster permitting procedures, more flexible and streamlined plan approval procedures, improved environmental impact assessment processes and the option of introducing clear cut-off date rules.

II. Digitalising the network

The government also wants to speed up the digitalisation of the network. It is tightening smart meter rollout targets as part of this effort: by the end of 2030, rollout at all relevant metering points should be more than 90 per cent complete. For customers who are not covered by the mandatory rollout, a low-cost “smart meter light” is to be introduced. All key data on network expansion, network usage and connection capacity is also to be standardised and made available on a central data platform.

III. Cooperation between network operators and a connection guarantee

Finally, the government also intends to strengthen cooperation between network operators, for example by creating incentives to develop and roll out network-related software jointly across Germany. It has also announced a connection guarantee for industrial companies: companies are to be given a clear deadline by which they will be connected to the electricity network at the capacity they need.

C. Possible regulatory changes in the distribution network package

The exact shape of the distribution network package is still open. In any case, it is expected to include changes to planning law and energy law, some of which are likely to follow the European Networks Package.

As far as speeding up network expansion is concerned, the reform package does refer to the EU Networks Package, but its detail remains rather vague. In particular, the proposals in Article 2 of the draft Permitting Directive and the planned revision of the TEN-E Regulation are likely to be important. This could mean shorter permitting deadlines and deemed approval rules, under which an application is treated as approved if the authorities do not act within a deadline set by law. The European Networks Package already provides for such rules, for example in Article 10(4) of the draft new TEN-E Regulation. The EU Networks Package also calls for the creation of digital portals to simplify applications and generally classifies electricity infrastructure projects as projects of overriding public interest. The planned flexibilisation and acceleration of plan approval procedures could aim to ease the requirement for plan approval under section 43 of the German Energy Industry Act, by allowing optional rather than mandatory plan approval in certain cases.

The aim of “streamlining” EIA procedures is to limit unnecessary environmental impact assessments and enable leaner procedures. Article 2 of the new draft Permitting Directive would require only a limited environmental impact assessment for the conversion and modernisation of existing network infrastructure, focusing on potential effects. In certain cases, it would remove the need for an environmental impact assessment altogether. The government also wants to introduce the possibility of clear cut-off date rules. The decisive cut-off date for assessing the factual and legal position when a permit is granted could therefore be moved to the end of the period for consultation with the authorities. Any changes that arise only after that point would then generally be ignored so as to avoid delays caused by ongoing changes in the project environment.

On network digitalisation, the reform package is much more specific. By the end of 2030, the smart meter rollout for all relevant metering points should be more than 90 per cent complete, instead of the current target of at least 95 per cent by the end of 2032. The government also plans to introduce a “smart meter light”, i.e. a smart metering system with a cheaper communications unit and more limited functionality. These systems would not receive control commands, but only transmit metering data to network operators and electricity suppliers. The aim is to also give consumers outside the mandatory rollout the chance to make their consumption more transparent and benefit from dynamic tariffs and network charges without the full control functionality of a standard smart meter gateway.

The German government is also taking a clear position on the issue of network connection. Companies are to receive a clear deadline by which their operations will be connected to the electricity network at the capacity they need. Article 17 of the draft revised Renewable Energy Directive, which is Article 1 of the new Permitting Directive, already provides that network connection approval procedures must be completed within set deadlines and that a deemed approval applies if network operators do not respond to a network connection request in time. The exact design of a connection deadline is still open, but it could take the form of a deadline regime with statutory cooperation duties for connection applicants and clear legal consequences if network operators miss the deadline.

D. Outlook

Achieving climate neutrality goals will require a major expansion and overhaul of the electricity distribution networks. The planned distribution network package is therefore a necessary addition to the forthcoming reform of energy law, helping to align renewable deployment with network expansion and to further develop the network connection process. It also complements the amendment of the German Federal Requirements Plan Act (Bundesbedarfsplangesetz) for the expansion of transmission networks.

The planned measures to speed up progress and drive digitalisation are therefore to be welcomed. Consistent digitalisation of the distribution networks is a basic requirement for intelligent sector coupling because electric heating, storage, decentralised generation and e-mobility can only work efficiently together if network conditions, generation and consumption are measured and managed accurately. In the end, however, success will depend on the details of how the measures are designed. The need for reform remains substantial and should be tackled quickly.

The tighter smart meter targets and the introduction of a low-cost smart meter light fit into this approach. Specifically, smart meter lights could give households and businesses extra flexibility and help integrate more renewable electricity and new consumers independently of network expansion. At the same time, a parallel option risks slowing the rollout just as it gets under way by creating uncertainty for metering point operators, manufacturers and customers and by adding duplicate structures. The announced connection guarantee could also make large investments easier to plan, but it is likely to bring more formal duties to cooperate and document the process.

Above all, financing remains the key issue. Investment needs in the distribution networks are exceptionally high. This is due both to the rising demands created by the electrification of heating, charging infrastructure, storage and the massive build-out of renewable generation, and to a substantial backlog of modernisation and maintenance work that has accumulated over many years in numerous network areas. The improved financing options announced in the reform package are therefore a prerequisite for accelerated expansion and upgrade pathways to be implemented in practice. Otherwise, the distribution network risks becoming the bottleneck for further expansion of renewable energy.

At the same time, the EU legislative process on the European Networks Package is continuing. It remains to be seen how the national distribution network package will tie in with it. The key will be to bring acceleration, digitalisation and financing together coherently while ensuring clear deadlines and reliable investment conditions.