​Germany's grid operators face over 720 GW of pending battery storage connection requests. That's nine times the transmission network's annual peak load.

To manage this backlog, flexible connection agreements (FCA) are becoming standard. FCAs limit grid access by capping power flows, slowing ramp rates, and restricting ancillary service participation.

A worst-case FCA combining all three restrictions erodes project IRR by 5 percentage points (pp) and cuts lifetime revenues by 20%. At that level any project with a base case IRR of 10% or lower becomes uninvestible.

The base case IRR is 11%. A 50% ancillary restriction has minimal impact, as ancillaries saturate and batteries shift to wholesale markets. Import-export caps and ramp limits hit harder, cutting IRR 3 and 2.5 pp respectively. An FCA combining all three restrictions cuts IRR by 5pp to 6%.

For any further information on this topic, reach out to the author - cosima@modoenergy.com

Key Findings

• Import-export caps account for over 3 pp of the 5 pp total IRR loss, making them the most damaging restriction.
• Restrictions interact sub-additively. A 15-minute ramp limit stacked on a static import-export cap reduces IRR by less than the sum of each restriction modelled independently.
• A 50% ancillary service restriction has minimal standalone impact on lifetime revenues as these markets are expected to saturate in the next 2-3 years regardless.

What are the three types of FCA restrictions?

Three types of restrictions appear in FCAs.

An import-export cap limits power injection or withdrawal. These caps can be static or dynamic, varying by season, time of day, or grid conditions.

A ramp rate limit constrains how quickly output can change. Transmission system operator (TSO) guidance suggests 6-20%/min, but some distribution system operator (DSO) proposals go as low as 1%/min.

An ancillary service restriction caps capacity eligible for frequency response, ranging from 10–90% of installed capacity.

A DSO can impose one restriction or a combination. The revenue impact depends on the exact design.

This analysis tests four scenarios against a base case with no grid restrictions:

1. Import-export cap: modelled on a curtailment profile published by a Southern German DSO
2. 15-minute ramp rate limit
3. 50% ancillary service restriction
4. Combined FCA: all three restrictions applied together

Lifetime revenues fall 20% under full FCA restrictions

In the base case, a German BESS project earns €233k/MW/year in 2026. When all three restrictions are applied, revenue drops to €180k/MW/year.