Germany’s Paragraph 14a EnWG: A Model for the World to Unleash Flexibility and Ensure Distribution Network Security?

Delivering a Cost-Efficient Energy Transition with Flexibility

Europe’s commitment to net-zero emissions by 2050, coupled with the energy crisis and the Russian aggression towards Ukraine, has accelerated the push for electrification and renewable energy (e.g., Fit455, RED III, RePowerEU).

This transition requires significant investment in distribution grids, a point underscored by Eurelectric’s “Grids for Speed” study. This study, based on data from utilities across more than 20 European countries and covering more than 60% of EU connections, found that €67 billion annually is needed for grid upgrades through 2050 across the EU and Norway. However, this can be reduced by 18% (€55 billion) by strategically implementing anticipatory investments, optimizing asset performance, and leveraging grid-friendly flexibility.

For grid-friendly flexibility specifically, distribution utilities could save €4 billion annually net (with additional digitalization costs accounted for) by accessing 20% of the flexibility potential identified in Eurelectric’s “Decarbonization Speedways.” While the potential is clear, European utilities are still developing the tools and processes to effectively utilize flexibility. This is particularly important at the low-voltage level, where high load density and the integration of distributed generation (like rooftop solar) and demand (like electric vehicle chargers and heat pumps) create unique thermal and voltage management challenges. A typical European low-voltage network serves hundreds of homes and businesses from a single secondary (medium voltage/low-voltage) substation, requiring robust feeders and substations capable of handling concurrent loads and voltage fluctuations. For a US audience, Figure 1 illustrates a typical European low-voltage network.

 

The “Grids for Speed” study highlights the financial benefits of grid-friendly flexibility. By shifting demand away from peak congestion periods, utilities can reduce grid reinforcement needs without impacting customer service and therefore provide societal benefit. However, the EU’s unbundled electricity market presents a coordination challenge, as other actors like energy retailers and aggregators will want to use flexibility differently to deliver wholesale and ancillary outcomes. While vertically integrated utilities can manage these needs internally, the current market structure requires new mechanisms to align the interests of various actors, including distribution utilities, retailers, and aggregators. The EU Network Code “Demand Response” (NCDR), which is still under discussion, aims to address this by establishing rules for allocating flexibility, either through market mechanisms or administrative processes (i.e., “rules-based”).

New German Regulation on Flexibility

The discussion on how to harvest the flexibility potential especially in the low-voltage network has been especially vivid in Germany, where paragraph 14a of the Energy Industry Act (EnWG) ( §14a of the Energiewirtschaftsgesetz) came into force in 2024. In this provision of the energy law, the German regulator BNetzA set out to define more concretely how German distribution utilities should be making use of flexibility in low-voltage networks.

Since January 2024, EnWG 14a mandates that all residential demand appliances with a capacity exceeding 4.2 kW (e.g., electric vehicle chargers, heat pumps, electric heaters) must be wired and configured so that they can be throttled by the local distribution grid company to manage an imminent network risks (e.g., overload or voltage). Examples of last resort events could be:

• Cold-load pickup after outage restoration
• Synchronisation of demand and load pickup by an aggregator responding to a transmission or market event or by optimisation algorithms in response to static time-of-use electricity tariffs
• A special or unusual event: extreme weather warning, government-directed instructions

The regulation also stipulates that the controllable appliances must at any time receive a minimum electricity capacity and cannot be throttled further down. For homes with one controllable appliance, the minimum threshold is 4.2 kW. For more appliances per home, the value is increased while considering demand coincidence of the different appliances.

Grid operators have to document all necessary information about the grid congestion assessment and operational actions taken. They must keep records of the information for at least two years. Likewise, from 1st March 2025 at the latest, all distribution utilities must transparently publish the scope, type, and duration of control measures in grid areas on a joint internet platform.

German regulation also stipulates that from now on, the distribution utility is not allowed to deny or delay any request for new or upgraded customer connections in the low-voltage network even if the local network includes constrained areas. The rationale is that immediate connection of clean energy technologies is a societal priority and that low-voltage congestion can be managed by distribution utilities with the right to intervene defined under EnWG 14a. So, while legally EnWG 14a is a curative last-resort action, distribution utilities will de facto have to manage demand to accommodate new and upgraded customer connections in congested areas until a grid reinforcement project is completed and the constraint permanently resolved.

Delivering Customer Benefits

The immediate financial benefits for customers of the introduction of EnWG 14a consists of a reduction in distribution grid charges, which typically include a fixed and a volumetric component. Three different tariff modules are available for a customer to choose from (source: Bundesnetzagentur).

• Module 1: A flat-rate reduction, which varies across grid companies and amounts to roughly between €110 and €190 (gross) per year. This is equivalent to a reduction of 50% to 95% of the grid fee payable for the annual consumption of an electric car (approximately 2,500 kWh at ~8€ct/kWh).
• Module 2: A 60% reduction in the volumetric rate of the grid charges, provided that a separate metering point is used for the controllable appliance.
• Module 3: Customers that have chosen Module 1 can additionally benefit by voluntarily optimizing their energy use against grid time-of-use tariffs, which are being rolled out in parallel to EnWG 14a.

Beyond the immediate financial savings, EnWG14a delivers substantial non-monetary societal benefits. As mentioned previously, it unlocks additional capacity in the low-voltage grid, ensuring the rapid integration of low-carbon technologies like EV chargers and heat pumps—thus strengthening the electrification journey of citizens who are only now embarking into the new technologies. Furthermore, it adds resilience to the distribution grid to maintain security or supply during emergencies.\

Implementing Low-Voltage Visibility

A key challenge in implementing flexibility under EnWG 14a is achieving low-voltage visibility—identifying and forecasting network congestion to then trigger demand adjustments. Smart meter data, while forthcoming in Germany, are only available with a delay (i.e., the next hour or next day depending on utility’s IT and communication architecture). Retrofitting the low-voltage network to directly monitor every asset is also inefficient. The solution combines targeted sensor data with network modeling and simulation to determine the network state for all low-voltage assets. This forms the basis of a low-voltage congestion management system.

The German regulator assumes that German distribution utilities will be able to use load management when network state data are available every minute from at least 7% to 15% of all network connections in the network area, in combination with outgoing measurements at the low-voltage distribution transformer. Once a critical situation is recognized, distribution utilities must react with control signals within five minutes, demanding robust real-time measurement and computing capabilities. This necessitates a two-stage simulation approach:

1. A day-ahead forecast of the low-voltage network status for critical time periods (e.g., early evenings on weekdays) as one-time calculation in 15-minute interval for full day
2. A dynamic adjustment calculation with the latest data for real-time network state identification for operational decision

Low-voltage congestion management systems differ significantly from SCADA (supervisory control and data acquisition) systems. While SCADA systems rely on homogeneous data and communication, low-voltage management systems must integrate heterogeneous data from various sources (busbars, feeders, customer connections, etc.) with differing formats, protocols, and availability. Unlike SCADA’s direct device connections, low-voltage data often flow through head-end systems or manufacturer integration layers, often via REST APIs.

Combining Diverse Distribution Network Data Sources

Another important challenge for the EnWG 14a implementation is the need to process load data across various existing distribution utility systems before interfacing with the target low-voltage congestion management system. Apart from the interface to the smart metering infrastructure, the following interfaces with the target low-voltage congestion management system are critical:

1. Geographic information systems (GIS)/network information systems (NIS) and network planning systems for spatial information, network topology, and asset length
2. Asset and portfolio databases for asset type and characteristics (i.e., conductor diameter)
3. Customer records with information on distributed demand and generation assets
4. Control systems (SCADA, ADMS) for network switch status and real-time topology and head-end systems for additional low-voltage sensors
5. Billing and energy data management systems to reflect new tariffs and more dynamic pricing

Physical Setup at Customer Level

The German smart meter regulation is pivotal to the technical implementation of the EnWG14a. The roll-out of advanced meters has only just started to accelerate as a renewed law on energy sector digitalization has made smart meter installation mandatory as of 2025 and is setting a binding target of full penetration by 2032. The advanced metering solution in Germany is unique and has been designed not only for automated meter reading but also to cater to remote demand management capabilities required under EnWG14a. The design is modular and consists of up to three components to be installed in customer premises as required: (1) a digital meter, (2) a communication unit referred to as Smart Meter Gateway, and (3) a control box.

The Smart Meter Gateway has three defined communication interfaces: the Local Metrological Network (LMN), the Wide Area Network (WAN), and the Home Area Network (HAN). The LMN interface connects the gateway to digital meters (electricity, but also gas, water, and heat). The WAN interface, implemented as an IP interface, ensures secure, encrypted communication via external actors (retailer, distribution utility, metering operator) and via the controllable local system to the control box. The HAN interface, an ethernet interface, integrates the gateway into the customer’s home network, so that customers can access their data and the control box can communicate with the home energy management system that manages appliance consumption or directly controllable appliances like EV chargers, heat pumps, etc.

Target Model for Operating Low-Voltage Load Management

Once the low-voltage demand management systems are implemented, then the customer can choose between two options for load management. The distribution utility can either directly manage the load of a demand appliance or define a maximum threshold over a certain time at the connection point (i.e., aggregated household demand). The latter is analogous to sending dynamic operating envelopes and give customers the possibility of using a home energy management system, which optimizes between different behind-the-meter appliances.

Any load management interventions by distribution network utilities should only occur after evaluating the network condition and identifying actual bottlenecks based on the low-voltage congestion management system. In critical or emergency situations, the distribution network utility will use load management to avoid overloading critical assets and ensure network security. The control signal is sent through a defined API interface to the smart metering operator (which is not necessarily the distribution utility), and the final control action is then performed via the controllable local system channel.

Conclusion: Key Take-Aways from the German Experience

With the adoption of paragraph 14a, Germany is designing an end-to-end solution to ensure the rapid connection and integration of clean energy technologies, thereby increasing resilience and reliability for an electric future where electricity is the primary fuel of the economy.

From an international perspective, the German experience provides six key take-aways:

1. Flexibility value: Distribution network utilities recognize the value of flexibility, driven by infrastructure constraints and the need for electrification.
2. Regulatory enablement: Extending distribution utility responsibility to demand-side orchestration accelerates clean energy connections and improves grid resilience.
3. System thinking: Aligning connection policies, metering, regulation, smart appliances, and low-voltage management systems is crucial for future-proofing grid connections.
4. Low-voltage visibility and management: Creating low-voltage visibility requires new low-voltage congestion management systems that combine data with modeling and simulation.
5. Data quality: Distribution utilities must prioritize data quality, especially at the low-voltage level, requiring digitized network maps and complete asset information.
6. Trust and transparency: Data protection, security, and transparency in load control are vital for maintaining user trust.

 

Steve Heinen
General Manager of Asset Management, Vector Ltd, New Zealand

Oliver Franz
Head of European Regulation, EON, Germany

Jonas Danzeisen
CEO, Venios, Germany