Will this 110 million euros help lower my electricity bill?
Yes, but only a portion of the €110 million will directly help lower your electricity bill, as the rules became much stricter during this period .
Here is how the money affects your bill:
Before March 3, 2011: Under older regulations, grid operators were permitted to use congestion revenues directly to reduce national network fees, which are a component of consumer electricity bills . Of the €110,098,585 total, grid operators used the €81,232,101 collected up to March 2, 2011, entirely for this purpose of reducing network fees .
On and After March 3, 2011: For the remaining €28,866,483, a new European regulation (Reg. 714/2009) went into effect that changed the priorities . This money must now first be used to guarantee the availability of grid capacity or to invest in maintaining and building grid infrastructure .
The Limit: Under these strict rules, the post-March 3rd funds can only be used to lower network tariffs if they cannot be efficiently used for grid maintenance or infrastructure investments, and any such tariff-reducing use requires explicit approval from the Bundesnetzagentur up to a maximum capped amount .
Why is grid congestion happening at Germany’s borders?
Grid congestion occurs at Germany’s borders because there are physical capacity constraints (limited grid capacity) on the power lines connecting Germany to its neighboring countries .
According to the report, these capacity limitations specifically affect the borders Germany shares with six nations: the Netherlands, France, Switzerland, the Czech Republic, Poland, and Denmark .
Because the transmission lines cannot handle all the electricity that market players want to send across these borders, transmission system operators (TSOs) must actively manage the grid . They do this by holding transparent, market-based auctions to allocate the limited capacity to the highest bidders .
Where is the auction money from grid congestion being spent?
The auction money generated from grid congestion is strictly regulated and must be spent on specific grid-related purposes . During the reporting year, the money was spent in two different ways depending on when it was collected :
Revenues Collected Until March 2, 2011 (€81,232,101): Under older regulations, operators were allowed to use this money to reduce consumer network tariffs . The German transmission system operators (TSOs) spent this entire portion directly as income to lower national network fees for consumers .
Revenues Collected On and After March 3, 2011 (€28,866,483): A newer European regulation restricted the use of this portion . This money had to be spent on two primary goals:
Guaranteeing grid capacity: Ensuring that the electricity capacity sold to market players is actually available .
Investing in the grid: Maintaining or expanding physical grid connections between countries, particularly by building new interconnectors .
The grid operators used these post-March 3rd revenues for physical grid investments . If any of this money cannot be efficiently used for these two goals, it can only be used to lower network tariffs if the operators receive explicit approval from the Bundesnetzagentur .
How did a new law change how grid revenues are spent?
The new law, Regulation (EC) No 714/2009, which took effect on March 3, 2011, significantly restricted how grid operators are allowed to spend congestion revenues compared to the previous law, Regulation (EC) No 1228/2003 .
Under the old law, grid operators could freely choose to spend the money on any of three equal options: guaranteeing the availability of allocated grid capacity, making network investments to maintain or increase grid capacity, or using the money as income to reduce consumer network tariffs .
The new law changed this by prioritizing physical grid maintenance and improvement . Guaranteeing capacity availability and investing in grid infrastructure (particularly new interconnectors) became the two primary requirements . Grid operators can now only use the revenues to help lower network tariffs if the funds cannot be efficiently used for those two primary grid-improvement options . Additionally, using the revenues for tariff reductions under the new law is no longer automatic; it requires explicit, formal approval from the Bundesnetzagentur and is capped at a maximum approved amount .
Why does bottlenecking electricity at national borders generate millions of euros?
Bottlenecking electricity generates millions of euros because transmission system operators sell the limited transport space on cross-border lines to the highest bidder through competitive auctions .
Here is exactly how this process creates revenue:
High Demand vs. Limited Space: There is more demand to transmit electricity across borders than the physical transmission lines can actually handle .
Auctions for Capacity: To manage this bottleneck fairly, operators are legally required to hold market-based, transparent auctions where energy traders must buy the right to use the lines .
Explicit and Implicit Auctions: In explicit auctions, the right to transport power is sold off beforehand, and the participant who bids the highest price wins the capacity . In implicit auctions, the electricity itself and the transport space are bundled and sold together .
Competition Drives Value: Because this transport space is scarce and highly valuable for international energy trading, market participants bid substantial sums to secure it . The winning bids set the price of the transport space, ultimately generating millions of euros in congestion revenues for the grid operators .
Can operators still use grid congestion income to lower customer tariffs?
Yes, but it is no longer an automatic or primary choice.
Under the regulation (Regulation EC No 714/2009) that took effect on March 3, 2011, grid operators can still use congestion income to lower customer tariffs, but only as a last resort.
To do so, they must meet strict conditions:
Priority First: Operators must first prioritize spending the money on either guaranteeing that sold capacity is actually available, or investing in the network to maintain or increase cross-border connection capacities.
The Efficiency Test: They can only use the money to lower customer network tariffs if the funds cannot be efficiently used for those two primary grid-improvement options.
Regulatory Approval and Capping: Any use of this money to lower tariffs is no longer automatic. It requires explicit, formal approval from the Bundesnetzagentur and is capped up to a maximum approved amount.
This is a major shift from the rules in place before March 3, 2011, when operators were permitted to automatically apply 100% of these revenues to directly reduce national network fees.
Source institutions：Bundesnetzagentur
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