Energy Sharing in Germany: Status of Implementation under Section 42c EnWG (2026)

With the anchoring of Section 42c in the Energy Industry Act (EnWG) at the end of 2025, Germany has established the legal framework for Energy Sharing created. Since June 1, 2026, implementation has been legally binding for grid operators – in practice, however, the model is still in its infancy and is struggling with technical and economic hurdles. Important for context: Although Section 42c of the Energy Industry Act (EnWG) is intentionally designed so that both small rooftop systems owned by private individuals and large wind or solar parks can participate, economic and tax thresholds still exist in practice. For larger PV systems in industrial and commercial sectors, other models usually make more sense.  

Key facts at a glance:

• Legal basis: Section 42c EnWG, in force since the end of 2025
• Obligation for network operators to implement: since June 1, 2026
• Target audience: private households, associations, SMEs, and municipalities; industry and primarily commercially operated plants initially excluded
• Scope: currently only within the same distribution grid or balancing area
• Spatial expansion to adjacent network areas: from June 2028
• Central hurdle: full grid fees continue to apply – unlike tenant electricity (Mieterstrom) or collective building supply (GGV)

As a general rule: Energy Sharing (§ 42c EnWG) is intended for the distribution of solar power from smaller PV systems to households, associations, SMEs, and municipalities across property boundaries. If the electricity within the same building or areas to be shared (e.g., landlord to tenant), is the Communal building services or the tenant electricity model most economical, because no grid fees are incurred.

What does Section 42c of the Energy Industry Act (EnWG) regulate? The legal framework

Energy Sharing allows operators of renewable energy plants (PV, wind) to supply their electricity directly via the public power grid to neighbors, households, clubs, SMEs, or municipalities within the same distribution grid area—without having to act as a full-service energy supplier.

Consumers sign a service agreement for this with the producer for the regional green electricity share and keep their regular electricity provider for their remaining residual demand. The model is therefore considered a Partial supply designed, not as a complete supplier change.

Spatially, the application is limited for the time being: Sharing is only possible within the same distribution grid or balancing area. It is not until June 2028 that it will be possible to include adjacent grid areas – a time horizon that should be taken into account during project planning.

Admission requirement: non-commercial main purpose

A central condition for participation is that the operation of the renewable energy system does not primarily serve a commercial or independent business activity for either the system operator or the final consumer. The scope of application is therefore tailored from the outset to private households, associations, SMEs, and public institutions—industrial enterprises are essentially excluded from the model.

Within this framework, additional size-dependent reliefs regarding supplier obligations apply: For very small installations up to 30 kW as well as shared small systems in the apartment building up to 100 kW simplified regulations apply, for example, to billing, electricity labeling, and contract design. For all larger systems, the regular ones apply Supplier obligations in full accordance with §§ 5, 40 to 42 of the Energy Industry Act (EnWG).

Rollout in Practice: Three Hurdles Slow Down the Market

Although the statutory deadline of June 1, 2026 has passed, a nationwide market for energy sharing is only slowly emerging. Three factors are largely responsible for this:

1. Smart meter rollout mandateAll participants—producers and consumers alike—require an intelligent metering system (iMSys) with 15-minute interval measurement. The sluggish smart meter rollout is noticeably slowing down many projects.
2. Grid operator processesMany distribution system operators (DSOs) are only gradually making the communication and billing data flows suitable for mass business available for the balancing system.
3. Economic Efficiency & Grid FeesUnlike in some neighboring EU countries such as Austria, there is currently no reduction in grid fees for locally shared electricity in Germany. Grid fees and statutory surcharges apply in full.

Grid fees in energy sharing: locally shared electricity is not automatically cheaper

Regarding grid fees, there is a clear rule for energy sharing via the distribution system operator: There is currently no reduction. Although electricity physically often travels only short distances—for example, from a photovoltaic system to a neighbor on the same street—the full regular grid fees, surcharges, and levies are incurred for grid usage.

Full grid fee obligation despite short distances

As soon as the electricity leaves a customer's installation—meaning their own building—and uses the distribution system operator's public grid, the regular grid usage logic applies. The distribution system operator charges the full, distance-independent grid fees for the transmission process. The geographical proximity between the generator and the consumer plays no role in this.

Economic disadvantage compared to models exempt from grid fees

This is one of the main reasons why energy sharing is often financially less attractive than established models that operate without the public grid. At Tenant electricity model for example, the PV electricity is supplied directly to tenants within a customer installation - grid fees, levies and electricity tax are thus completely eliminated, and operators also benefit from the EEG tenant electricity surcharge. Also since the Solar package I possible in 2024 Communal building supply works without grid fees: It is designed as a leaner variant of the tenant electricity model, where the PV system operator does not have to act as a full-service supplier and tenants can freely choose their residual electricity supplier.

The decisive difference to energy sharing: Both tenant electricity and GGV take place within a customer system instead – that is, within a building or a connected area – and therefore never use the public distribution grid. Energy sharing pursuant to Section 42c of the German Energy Industry Act (EnWG), on the other hand, is explicitly intended for the supply cross-building intended for participants in the same grid area and therefore necessarily has to take place via the public grid – with the corresponding grid fees.

Are there any exceptions or discounts?

A targeted relief exists in the Electricity taxFor generating plants in the immediate spatial vicinity – within a radius of 4.5 km – under certain conditions, relief of around 2 ct/kWh may apply. However, a regional grid fee discount system, such as the one used in Austria or Italy for energy communities that do not burden the higher-level transmission grid, has not yet been anchored in the EnWG.

Who benefits from the current state?

Despite the economic constraints, there are actors within the eligible target group – private households, associations, SMEs, and municipalities – for whom energy sharing is already worthwhile:

• Citizen Energy Cooperatives (CECs): They often already have the necessary organizational structure and can generate higher revenues with solar parks or wind turbines than through the pure feed-in tariff.
• Prosumers with larger PV systems (e.g., from 10–30 kWp): You can sell your surplus electricity to neighbors or the immediate surrounding area instead of feeding it into the grid for low compensation.
• Tenants and households without their own roof: You now have the opportunity for the first time to directly participate in the local energy transition and purchase affordable green electricity from the region—even if investing in your own PV system is out of the question for you.

Large-scale plants & industry: Why Section 42c does not apply here

For operators of larger PV and battery storage systems, energy sharing pursuant to Section 42c of the German Energy Industry Act (EnWG) in its current design is not a relevant model: the non-commercial primary purpose excludes industrial businesses and primarily commercially operated systems from the scope of application. Companies that nevertheless want to supply electricity directly and without paying full grid fees to one or more off-takers must resort to other, established mechanisms.

direct line (§ 3 No. 12 EnWG)

A direct line connects a single generation site with a single customer – or a generator or energy supply company with its own facility, a subsidiary, or customers for the purpose of direct supply. Since such a line does not use the public distribution grid, it is not subject to regular grid regulation and is exempt from grid fees. In addition, the definition of customer installations was expanded to include direct lines with a maximum length of 5,000 meters and a nominal voltage of 10 to 40 kilovolts, provided that renewable energy systems are connected via them.

Legal uncertainty caused by the ECJ ruling on customer installations

Caution is advised here: In November 2024, the European Court of Justice classified the German exemption rule for the “general customer installation” as contrary to EU law. For existing and planned supply concepts based on customer installations or direct lines, this currently creates Legal uncertainty – Legislative clarification is still pending. Anyone planning a project on this basis should closely monitor the current status of the amendment while seeking legal advice. For more on this, see our article: Customer facilities & tenant electricity under pressure following ECJ and BGH rulings

Balance group management in bilateral delivery models

Apart from Section 42c of the Energy Industry Act (EnWG), there are already models in place today under which plant operators and large-scale consumers enter into bilateral supply contracts—such as an Onsite Power Purchase Agreement (PPA). In this case, a specialized service provider or direct marketer typically handles the balancing group management: It records the delivered electricity volumes in its own balancing group and manages the energy-related processes between generation, delivery, and the procurement of residual electricity. For large-scale plants, this combination of direct supply or customer-owned facilities and professional balancing group management is the practical approach to marketing electricity directly—not Energy Sharing, which is tailored to private households and SMEs.

Frequently Asked Questions About Energy Sharing

Conclusion: A model with a future, but an unresolved question of economic viability

For the first time, Energy Sharing legally opens the door to cross-building, direct marketing of local green electricity—an important building block of the decentralized energy transition. However, as long as full grid fee obligations remain in place, the model will be less economically attractive on a broad scale than established alternatives such as tenant electricity (Mieterstrom) or joint-generation consumption (GGV), both of which operate within a single customer installation. For operators of larger PV and battery storage systems, it remains relevant which marketing model actually enables the highest value creation in the respective application case—full supply, partial supply, or energy sharing.