As part of the district heating supply, contractors require rights of way for the construction and expansion of distribution lines in public roads, which are concluded as part of licence agreements with the municipalities.
According to a recent judgement, the Bundesgerichtshof allows local authorities to conduct a selection procedure on the basis of which only one company is granted permission, leading to uncertainty among suppliers who were previously able to conclude contracts „by private treaty“ (without a tendering procedure). A legal opinion commissioned by the Energy Efficiency Association AGFW from the antitrust and energy lawyer Dr Max Baumgart analyses the BGH ruling and its consequences.
BGH judgement calls common practice into question
„Until now, suppliers have approached local authorities in order to obtain rights of way for certain sub-areas or for the entire area“, explains Dr. Norman Fricke, Head of Legal and Europe at AGFW. As licence agreements do not allow exclusive rights for reasons of antitrust law, it is legally possible and common practice for several district heating suppliers to operate in the same locality and obtain corresponding rights of way.
In many German municipalities, several district heating suppliers and energy service providers with more or less extensive heating networks offer their heat. Where local authorities refuse to grant easement rights, district heating supply companies had a claim under antitrust law to conclude an easement agreement on reasonable terms, according to the widespread opinion also held by the AGFW.
However, the ruling by the BGH on 5 December 2023 calls this practice into question. According to the BGH, rights of way only exist if the technical and economic circumstances allow the construction of parallel network infrastructures.
Uncertainty among municipalities and utilities: legal opinion should provide clarity
Since the latter - as the BGH assumes - is generally not the case, the municipality is allowed to carry out a selection procedure on the basis of which a single company is granted authorisation. Suppliers and local authorities are unsettled and are wondering whether they will only be allowed to grant easement contracts after a prior selection procedure in future.
Against this background, the AGFW commissioned a legal opinion from the antitrust and energy lawyer Dr. Max Baumgart on the existing legal situation and came to the conclusion that the judgement has not clarified the legal situation, but raises more questions than it answers.
„The BGH has left open the question of whether municipalities are obliged to carry out a selection procedure. Insofar as it suggests such a tendering obligation, the legal basis is questionable and disregards established principles of antitrust law“, says Dr. Max Baumgart.
Delays in the context of the heating transition are not expedient
Against the background of the report, the AGFW continues to hold the legal opinion that easement agreements with interested municipalities may be concluded on the open market and without a tendering procedure.
Such an approach is essential in the course of the heating transition. The expansion of heating networks desired by federal policy and flanked by the WPG would be massively delayed by lengthy selection procedures, the AGFW continued.
„If the legal opinion that licensing rights for existing district heating systems can be awarded to third parties via selection procedures were to prevail, this would paralyse the district heating industry's willingness to invest“, warns Dr. Fricke.
If Germany is to be supplied with 50 % climate-neutral heat by 2030, as prescribed, it is essential to convert and expand the networks now. While the BGH may not be able to clarify the legal situation for a few years, time is running out for suppliers.
The AGFW points out that the expert opinion can be accessed on its homepage with a member account.