Breaking German BESS Connection Bottleneck: Flexible Boundaries Unlock 14% IRR for Standalone Storages

Grid operators face a historic bottleneck

Critical Network State Rate: 20 GW newly-built BESS will push the grid to its limits in up to 16% of the time

Percentage of quarter-hours in which market-oriented BESS operation exceeds grid extremes (%)

Note: Municipalities mapped to dominant DSO if at least one DSO has >1% of capacity. Multi-DSO areas (≥2 DSOs>35%) shown in grey. Analysis based on 2024 data. BESS capacity is calculated as a 30% * maximal difference between 'Hard Limits' and 'Safe-to-Operate' envelope.

German DSOs 350 GW BESS queue is “unconnectable”

Germany's grid operators face a historic bottleneck. Across TSOs and DSOs, total connection requests are projected to approach 700 GW by the first half of 2025. Based on estimations from Handelsblatt and Regelleistung-Online, DSOs alone face a queue exceeding 350 GW. The majority of this volume is concentrated among just three operators: E.DIS, Westnetz, and Mitnetz.

This creates a dual crisis:

• For DSOs: The system is at its limit. Adding 20 GW market-oriented BESS capacity would push selected critical networks past their absolute limits in up to 16% of all quarter-hours. The "first-come, first-served" queue is no longer operationally viable.
• For Project Developers: The queue implies multi-year delays and profound uncertainty. Current "market-only" Internal Rate of Return (IRR) is meaningless if the project remains stuck in a queue for years.

There are two paths to connect BESS: standalone and co-located

As of late 2025, developers have two primary strategies to connect a BESS project:

• Co-Located (§8a EEG): Often used for new RES+BESS projects via "cable-pooling." The primary benefit is avoiding massive Grid Connection Charges (Baukostenzuschüsse/BKZ).
• Standalone (§17 EnWG): These projects face high hurdles: the multi-year queue and the requirement to pay full BKZ (subject to location-based reductions).

Our analysis focuses on the standalone path, solving the primary bottleneck: getting projects connected faster.

Flexible Connection Agreements (FCAs): The Regulatory Tool to increase BESS capacity

To break the gridlock, regulators have introduced Flexible Connection Agreements (FCAs). Asset owners can bypass the queue by agreeing to usage constraints - limitations on charge/discharge/ramp rates - stated in §17 (2b) EnWG for standalone storage and §8a EEG for renewables/co-located storage.

The market highlights methodology gap

While the regulator defined FCA types (static, dynamic, fully dynamic), a standardized, data-driven methodology is missing.

Research institutions like Forschungsstelle für Energiewirtschaft (Ffe) show how grid-supportive/grid-neutral operations can look like, but DSOs and developers lack a shared tool to calculate and value the financial impact of these constraints.

Our Solution: Qmesa "Flexible QBoundaries" designed for §17(2b) EnWG

At Qmesa, we bridge this gap with Flexible QBoundaries, a methodology designed to implement §17(2b) EnWG agreements consistently.

Qmesa Business Intelligence Platform aligns project developers and DSOs, facilitating negotiations that guarantee win-win outcome: grid safety while securing a profitable IRR.

How "Flexible QBoundaries" are calculated

Our framework is a data-driven model for defining grid limits based on profitability and historical grid capacity extremes. The analysis uses 2024 TSO load and PV and wind generation data, allocated to the DSO level according to MaStR capacity data and Destatis population data.

1. Hard Limits: We define the "unbreakable" boundaries of the grid based on absolute net load extremes.
2. Safe-to-Operate Envelope: We generate a probabilistic model (e.g. P1-P99) across 6 key scenarios (e.g. Summer-Weekday) to visualize typical grid behavior.

How the Flexible Boundaries are structured: net load statistical profile

Net Load = (Allocated Solar + Wind) - Allocated Load per DSO in given scenario (MW)

Note: data per DSO are allocated from TSO level (ENTSO-E) based on capacity installed (MaStR) and number of inhabitants (Destatis).

This two-level approach provides the foundation for BESS constraints. The available capacity for BESS operations is the space between the "Hard Limits" and the "selected benchmark profile".

"Connect-and-Control": What the Model Looks Like

Qmesa Business Intelligence Platform delivers a tangible operational tool that visualizes the precise charging (dark blue) and discharging (green) capacity available to a BESS for every quarter-hour.

How the Flexible QBoundaries do look like: DSO's constraints for BESS charging/discharging

Quarter-hourly constraints that ensure BESS operation does not push grid beyond historical capacity limits with selected probability (MW)

• Midday Constraints: The model shows a high discharging limit (high green bars) during midday (13:00-17:00). This is a grid constraint, not a market opportunity. High solar output is already pushing the net load up; allowing BESS to discharge freely would push the grid beyond its "Hard Limit." The boundary is therefore restrictive.
• Morning/Evening Peaks Constraints: The model shows high charging limits (high dark blue bars) during evening peaks (e.g., 8:00-9:00, 22:00). At this time, high load and low RES generation push the grid near its capacity. Allowing BESS to charge freely would add to this load and cause an excursion. The boundary restricts charging.

With grid-neutral flexible boundaries IRR decreases, yet still offers up to 14%

Grid-neutral constraints inevitably impact "market-only" revenue streams, potentially reducing optimized revenues by 20–45%. However, this trade-off is the price of connection.

While a theoretical unconstrained project might model higher returns, it is currently unbuildable. With Flexible QBoundaries, we see achievable IRRs of 8–12% across the majority of German DSOs, rising to 14% primarily in West Germany.

Our framework unlocks the real, connectable business case. It identifies the most valuable DSOs with even 14% IRR projects that are connectable today. Qmesa Business Intelligence Platform's result is the new, realistic revenue baseline that developers can then use to model the impact of their project-specific costs.

IRR: Grid-neutral BESS investments provide up to 14% IRR

Internal Rate of Return (IRR) per DSO based on grid-neutral flexible boundaries (%)

Note: Municipalities mapped to dominant DSO if at least one DSO has >1% of capacity. Multi-DSO areas (≥2 DSOs>35%) shown in grey. Analysis based on 2024 data. BESS capacity is calculated as a 30% * maximal difference between 'Hard Limits' and 'Safe-to-Operate' envelope.

We strongly advise calibrating our model in every grid connection negotiation based on more accurate data from the grid operator and the BESS owner.

Methodology and assumptions

• BESS Sizing: Capacity is calculated per DSO as 30% of the maximum difference between full-time-horizon net load extremes and scenario-selected probability extremes.
• Valuation: Based on a conservative annual revenue benchmark of €175k/MW (2-hour/2-cycle system). Qmesa Business Intelligence Platform includes daily Day-Ahead market optimization – revenue reduction based on additional constraints is distributed on the total valuation, which includes capacity and energy markets.
• IRR Assumptions: CAPEX €600k/MW, OPEX €35k/MW/a, 15-year horizon, Degradation 2%/a. Cost data sourced from Destatis (land with BESS investment multiplier) and Netztransparenz (grid fees).

Disclaimer: Analysis based on publicly available data; specific calibration to grid area required.

To book a call on designing flexible boundaries based on actual data, contact us at: markus@qmesa.eu‍