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Glossary · Energy industry & energy transition

Direct consumption

Direct Consumption Self-Consumption photovoltaics prosumer electricity consumption grid connection

Direct consumption refers to electricity that is consumed in immediate spatial proximity to where it is generated, without first being routed through a public grid. This usually happens in the same building, on the same property or behind the same grid connection point. It therefore does not mean that electricity is merely allocated on paper to a plant somewhere in the country. Generation and consumption must be closely linked technically, in terms of metering and contractually. Typical examples: a photovoltaic system on a single-family home whose electricity is used in the household at the same time; a PV system on an apartment building that supplies individual apartments; a commercial business that uses electricity from its own roof directly in production.

Important: in Germany, direct consumption is not a statutory term in its own right. It is used in practice, in statistics and in technical language. The law links to related features. The EEG 2023 (German Renewable Energy Sources Act), for example, uses the formula of consumption in immediate spatial proximity to the plant without transmission through a grid. It serves, among other things, to distinguish such supplies from direct marketing. Anyone using the term should therefore always state which system boundary is meant.

Energy quantity, power and simultaneity

Like any electricity consumption, direct consumption is measured in kilowatt hours (kWh), i.e. as a quantity of energy, not as instantaneous power in kilowatts (kW). This difference is crucial here. A PV system can generate a lot of electricity over the year. How much of it is used directly, however, depends on whether generation and consumption coincide in time. A system with a peak output of 30 kilowatts can deliver a lot of electricity at sunny midday, but at night it delivers nothing. Direct consumption therefore arises only in the periods in which local generation and local consumption occur at the same time, or when a storage unit shifts generation in time.

An illustrative picture: every quarter of an hour, one asks how much the system generates and how much the building needs. The smaller of the two values is the direct consumption of that quarter of an hour. A surplus flows into the grid, a shortfall comes from the grid. The communal building supply is regulated according to exactly this logic. There, the distributable quantity of solar electricity per 15-minute interval is limited to the generation or the total consumption of the participants, whichever value is smaller.

Distinction from self-consumption, feed-in and self-sufficiency

Direct consumption is close to self-consumption, but is not the same thing. Self-consumption generally means that the operator of a plant also uses the electricity it has generated itself. For a single-family home with a PV system, this is the normal case. Direct consumption can additionally include cases in which electricity goes on site to other final consumers, such as tenants or commercial units. The electricity is then indeed consumed directly on site, but not by the operator itself. Until the end of 2022, the EEG had its own definition of self-supply. It required that the plant operator and the consumer be the same person, and it fell away with the abolition of the rules on the EEG surcharge for self-supply in the EEG 2023.

Direct consumption differs from feed-in in that the electricity is not delivered into the public grid. Surplus PV electricity that is not needed in the building flows into the grid and counts as fed in. If consumption is higher than simultaneous generation, electricity is drawn from the grid. Many systems switch several times a day between direct consumption, feed-in and grid supply. Annual figures alone are therefore not sufficient to describe the role of direct consumption.

Two key indicators are often confused. The direct consumption or self-consumption rate indicates what share of the electricity generated is used on site. The degree of self-sufficiency indicates what share of consumption is covered by local generation. An example: a household consumes 4,000 kWh per year, the PV system generates 5,000 kWh, of which 1,500 kWh are used directly. The self-consumption rate is then 30 percent and the degree of self-sufficiency 37.5 percent. A small system can have a high rate but little self-sufficiency. With a large system, it is often the other way round.

Measurement and physical limits

Direct consumption is not a purely physical concept. In an alternating current grid, it is not possible to trace which electricity arrives at which device. Whether electricity counts as directly consumed results from the grid connection, the metering concept, balancing and legal classification. Behind a single grid connection, direct consumption results from the difference between the generation meter and the feed-in meter. If there are several consumers, sub-meters or smart metering systems are needed so that generation, direct consumption, feed-in and residual electricity supply can be correctly allocated and billed. For the communal building supply, the law expressly requires that the participants' consumption quantities be measured every quarter of an hour.

Legal classification in Germany (as of November 2026)

The classification has economic consequences. Electricity that is consumed without transmission through a public supply grid does not trigger grid charges. Most levies and charges that are tied to withdrawal from the grid also do not apply to it. The EEG surcharge has in any case no longer existed since 2023, including for self-supply. Tax questions such as electricity tax and value added tax follow their own rules. They depend, among other things, on plant size, supply relationship and operator, and must be examined on a case-by-case basis.

Depending on the supply relationship, the same physical process is treated differently in legal terms:

  • Self-supply: operator and consumer are identical, for example an owner-occupied home or a business with its own plant. This is the simplest case.

  • Tenant electricity: the operator supplies electricity to third parties in the building or neighbourhood and, as a rule, ensures full supply including residual electricity. Tenant electricity funded under the EEG requires, among other things, that the electricity be consumed in spatial proximity without transmission through a grid.

  • Communal building supply under section 42b EnWG (since 16 May 2024): solar electricity from a building electricity installation is distributed according to an allocation key among the participants in the same building. The operator does not have to assume full supply. The participants freely choose their residual electricity supplier.

An important limit results from the case law on the customer installation. On 28 November 2024 (C-293/23), the Court of Justice of the European Union ruled that the German exemption is not compatible with the EU Internal Electricity Market Directive. The Federal Court of Justice followed this with its decision of 13 May 2025 (EnVR 83/20): only an energy installation that is not a distribution system within the meaning of the Directive can be a customer installation. If electricity is sold to third parties via private lines, the line system can therefore be regarded as a regulated distribution system. For self-supply behind a single meter, this remains unproblematic. For neighbourhood and site networks with supplies to third parties, however, the legal situation has become considerably narrower.

The legislator has responded with a transitional rule: customer installations that were connected to an energy supply network by 23 December 2025 fall under the corresponding network regulation requirements only from 1 January 2029. This rule does not apply to installations connected later. According to the sources reviewed, a permanent new regulation in conformity with EU law was still pending at the time of editing. For new projects involving electricity supply to third parties, a case-by-case review is therefore advisable.

Why direct consumption matters in the electricity system

Direct consumption changes how much electricity is drawn from or fed into the public grid. For households, businesses and the housing industry, this is often economically attractive. With photovoltaics, costs arise mainly from investment and financing. Every kilowatt hour used on site replaces grid electricity including grid charges, levies and taxes. A kilowatt hour fed in, by contrast, yields only the feed-in tariff or a market value. For many new small systems, this value is well below the household electricity price. This difference creates the incentive to use as much solar electricity as possible on site.

For grid operation, the effect is more nuanced. Direct consumption can relieve grids if local generation and load match in time. A commercial business with high daytime consumption can absorb PV electricity directly and thus limit feed-in peaks. In residential buildings with low daytime load, on the other hand, a lot of electricity often still flows into the grid at midday, and in the evening electricity comes from the grid. What matters is therefore not the annual balance but the load profile: when is electricity generated, when is it consumed, and what peak power occurs at the grid connection point?

Battery storage can increase direct consumption by shifting midday electricity into the evening. However, it does not generate electricity itself and does not eliminate every grid burden. A storage unit can reduce feed-in peaks and lower grid supply in certain hours. At the same time, charging and discharging consume energy, the investment is considerable, and control and metering become more demanding. Whether a storage unit has an economic or grid-supportive effect depends on tariff, plant size, consumption profile, grid situation and control. A storage unit that is already full in the morning, for example, can no longer absorb the midday peak.

Typical misunderstandings

  • Direct consumption does not mean independence from the grid. Most systems remain connected: the grid supplies when one's own generation is not sufficient and takes up surpluses. Grid connection, grid capacity and security of supply remain necessary.

  • Not every kilowatt hour consumed on site relieves the grid. A heat pump does increase direct consumption, but creates additional load in cold, dark hours. Electric cars can absorb solar electricity if they charge during the day. But they can also cause new evening peaks.

  • What pays off for individuals is not automatically good for the overall system. If the fixed costs of the grid are financed predominantly via kilowatt hours drawn, high direct consumption shifts parts of the grid costs onto other consumers. This does not argue against direct consumption. It argues for charge structures that separate capacity, availability and energy supply more cleanly.

  • Local electricity is not always direct consumption. As soon as electricity flows through the public grid, the allocation is only by balancing and by contract, for example with regional electricity tariffs or with energy sharing under section 42c EnWG. This is not direct consumption in the narrow sense.

Prosumers, flexibility and control

Direct consumption is a core concept for prosumers, that is, actors who both generate and consume electricity. Households, businesses and building operators combine generation, storage and controllable devices. Planning thus shifts from annual quantities to decisions over the course of the day: when does the heat pump run, when does the electric car charge, when is the storage unit charged, when is electricity fed in? So that this does not serve only private optimisation, suitable signals are needed, such as dynamic tariffs, smart metering systems, time-variable grid charges and rules for controllable consumption devices. Without such signals, often only the own share is maximised, even if a different mode of operation would make more sense for the grid and the market.

Direct consumption is thus more than simply self-used solar electricity. The term combines energy quantity, timing, metering, grid connection, supply relationship and cost distribution. Used precisely, it shows when local generation actually covers local consumption, what grid use is thereby avoided and which tasks the public electricity system must continue to perform.

Sources

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Edited by eCMS on 11.11.2026 19:16

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