Benefits for investments in energy networks are provided Germanyas the country’s regulator seeks to raise capital to fund infrastructure expansion. It promises higher returns for investors in electrical and gas networks Germany in a decision that is likely to further increase costs for consumers, writes Bloomberg. The Bundesnetzagentur (BNetzA) has pledged to increase investor returns by 40% as it seeks to raise capital to fund a massive expansion of the infrastructure needed for the energy transition. Grid improvements are vital to responding to ever-increasing flows of renewable energy, but the costs will be passed on to households and businesses already struggling with Europe’s highest electricity prices.

The regulated return on equity for network operators, which also determines the return they can offer investors, will be set at 7.09% for new investments from next year, according to BNetzA.

“We want to give strong incentives,” said agency president Klaus Müller. The regulator also said it wants to give operators more assurance by reviewing rates annually, but insists that the additional burden on consumers “should be limited to what is absolutely necessary.”

Energy costs across Europe are much lower than last summer. In Germany, however, electricity prices remain twice as high as in the pre-crisis period. To ease pressure on industry and prevent companies from fleeing abroad, the government said last month it was planning a €30 billion subsidy program for energy-intensive businesses.

The relevant body promises a 40% increase in returns to those who invest.

Germany has set a goal of producing 80% of its energy from renewable sources by the end of the decade, which incurs huge costs for the energy grid. Networks are usually a desirable investment because price controls provide predictable returns, but German operators have long complained that payback has not kept pace with profits.

The proposed new rate of return could be “just a first step,” the country’s four high-voltage line operators, Amprion, TenneT, 50Hertz and TransnetBW, said in a joint statement.

“Huge investments are needed to successfully expand the power grid,” and operators “are entering into fierce international competition for investment capital,” they added.

The Association of Municipal Enterprises, which represents distribution network operators, called the proposal “disappointing” and “unsatisfactory”, saying the rate was below what was required.

Companies can now participate in public consultations with BNetzA. The final decision on the amount of the refund still depends on the implementation of the law giving the regulator greater powers, which will come into force this year. The legislation is a response to a 2021 European Court of Justice ruling that Germany must change the way it regulates energy taxes.