Since June 2025, two comprehensive analyses on the future of German distribution networks have been available. In June 2025, AXXCON surveyed 104 network operators, providing a current snapshot directly from the control centres of distribution network operators (DNOs) – from digitalisation to the shortage of skilled workers. The dena Distribution Network Study II, on the other hand, focuses on the economic perspective and supplements this with model-based scenarios up to 2045. Despite different approaches and methodologies, both studies paint the same picture: without a decisive push towards digitalisation, new financing methods and more flexible framework conditions, the transformation of the networks threatens to become a bottleneck for the energy transition.
Digitalisation as the linchpin
The AXXCON survey reveals the harsh reality: only three percent of distribution network operators have fully integrated smart grid technologies. The majority are still in pilot projects or early implementation phases. The dena study confirms the value of these technologies and shows that consistent digitalisation and grid-friendly flexibility could save up to 30 percent of grid expansion costs – provided that legislators allow for permanent control. This makes it clear that the path to a ‘copper plate approach’, in which every load peak is covered by physical lines, is economically obsolete.
Billions needed meet regulation
The financial costs of comprehensively modernising, digitising and expanding the capacity of distribution networks are so high that they significantly exceed the usual investment budgets and pose a considerable economic challenge for network operators.
- Participants in the AXXCON study estimate the average capital requirement for the complete conversion of their network at €107 million – only a third of which can be financed internally. At the same time, 87 percent cite unclear and frequently changing framework conditions as the biggest hurdle to financial decisions.
- The Dena study refers to a ‘historically unprecedented financing requirement’ and calls for innovative financing models – such as AssetCo structures or hybrid capital – as well as a reliable regulatory corridor to reduce capital costs. Without these adjustments, the BET warns that grid fees could double in the long term.
Flexible planning requires stable rules
Despite the funding gap, most network operators are already working strategically: 91 percent have at least parts of a five-year network target plan. Dena is calling for such plans to be expanded more strongly across sectors – electricity, heat, hydrogen – in future and for flexibility instruments such as the 14a regulation, battery storage or variable grid fees to be taken into account from the outset. Only in this way can expansion be prioritised and adapted to actual bottlenecks.
Network operators plan in rolling five-year cycles, but some important regulatory parameters are repeatedly adjusted after just one or two years. This asynchronous rhythm means that each new directive renders entire planning cycles obsolete and renders measures invalid even before they are implemented. This underscores the need to create a reliable and predictable regulatory framework that secures long-term investment decisions.
People as a critical success factor
In addition to capital and regulation, the available human resources determine the pace and quality of the transformation. In the AXXCON survey, only 32 percent of companies feel well equipped in terms of personnel for the transformation. The dena therefore recommends establishing cooperation models specifically for construction and IT projects in order to mitigate skills shortages and material bottlenecks.
Five common areas of action
Five priority tasks can be derived from both studies:
What does this mean for municipal utilities and distribution network operators?
The encouraging agreement between the two studies provides a clear agenda for politics and industry. Anyone investing in distribution networks today should no longer view digitalisation as a project, but as a prerequisite. At the same time, it is crucial to tap into new sources of financing and strengthen networking in terms of personnel and expertise. Only if Germany acts decisively now can the climate and grid expansion targets for the coming decades be achieved. AXXCON supports grid operators from financing and roadmaps to cloud architectures and change management – so that studies become reality and the energy transition reaches the distribution grid.
