Update on German customer installations: The Federal Court of Justice's reasons for its decision

On 13 May 2025, the Federal Court of Justice ruled that the previous understanding of customer installations (also known as “self-consumption facilities”) was not compatible with European law (EnVR 83/20). Rather, any distribution system used to distribute electricity intended for sale to wholesalers or end customers is a distribution network. As such, it must be subject to regulation (for more details, see here and the underlying ruling of the European Court of Justice here). The Federal Court of Justice has now published its reasons for the decision.

The main content of the decision

As already announced in the press release dated 13 May 2025, the Federal Court of Justice ruled that the provision on customer installations in Section 3 No. 24a of the Energy Industry Act (Energiewirtschaftsgesetz, EnWG) must be interpreted in accordance with the Directive to mean that an energy installation can only be a customer installation if it is not a distribution network. A distribution network is defined as a network that serves to transmit high, medium or low voltage electricity intended for sale to wholesalers and end customers. Distribution networks cannot be exempted from regulation and every operator of such a facility is a distribution network operator.

The Federal Court of Justice expressly abandoned previous case law on the criteria to be used for classification as a customer installation, in particular the key figures for determining irrelevance for competition. Further criteria on the basis of which a particular type of network is excluded from classification as a distribution network may not be used.

However, the Federal Court of Justice also states that there is still a sufficient scope of application for customer installations. All power cable systems used to distribute electricity that is not intended for sale are still covered. As an example, the Federal Court of Justice cites energy systems that are used for the operators' own supply. These include, for example, power cable systems connected to generation plants that are jointly operated and used by owners of a residential property complex or landowners.

In accordance with European law, only operators of closed distribution grids or citizen energy communities can continue to be partially exempt from regulation.

In accordance with this new interpretation of the term ‘customer installation,’ the Federal Court of Justice classifies the specific energy installations of the residential blocks in question not as customer installations but as (regulated) distribution networks.

As a result, the operator of the energy installations in question is not entitled to demand the provision of metering points from the upstream network operator in accordance with Section 20 (1d) EnWG.

What does this mean for customer installation operators?

Given the clear ruling of the European Court of Justice, the main content of the decision comes as no surprise. The Federal Court of Justice had no choice but to abandon its previous understanding and case law on customer installations and to subject all energy installations that meet the definition of a distribution network to regulation.

Due to the far-reaching consequences for the many customer installation operators in Germany, it is welcome that the Federal Court of Justice continues to see a scope of application for customer installations. At first glance, however, this remaining scope of application is likely to be of practical relevance for only a few of the cases currently under critical discussion. This is because only in a few cases is the distribution system unlikely to be used (at least in part) for the distribution of electricity intended for sale. This must now be assessed on a case-by-case basis. It will also depend on the consequences that the legislator draws from the decision, i.e. whether the provision in Section 3 No. 24a EnWG (and, accordingly, the customer installation for own use in Section 3 No. 24b EnWG) will remain in force, be amended or, under certain circumstances, be abolished.

Even though the reasons for the decision have now been published, questions remain open regarding the practical consequences for many customer installation operators. A swift response from the legislature or regulatory authorities would be desirable in order to create legal certainty for the operators affected. In the meantime, operators of customer installations should examine what they can already do to adapt to the new legal situation. For many, this is likely to mean setting themselves up as operators of a closed distribution network.