Infrastructure Projects and PPPs

Infrastructure projects in Germany today

Infrastructure projects in Germany are entering a period of unusually high investment. In 2025, the Basic Law was amended to allow a federal special fund of up to EUR 500 billion for additional investment in infrastructure and climate neutrality by 2045 (Article 143h of the Basic Law), and procurement law was reformed in 2026 to speed up awards. Transport networks, bridges, rail, hospitals, schools, energy and heat networks, broadband and data centres all compete for the same funds, contractors and permits. For public authorities, municipal enterprises, contractors, operators and investors, the legal questions are how a project is structured, procured, permitted, financed and operated over decades.

This page explains the delivery models used in Germany, from conventional procurement to public-private partnerships (PPPs) and concessions, the role of municipal enterprises, how the special fund works, the specific issues of data centres and broadband, and the financing structures used by lenders and investors. It complements our pages on public procurement, construction law and energy grids.

The special infrastructure fund and public funding

The Special Fund for Infrastructure and Climate Neutrality (Sondervermögen Infrastruktur und Klimaneutralität) was set up under Article 143h of the Basic Law and its implementing act of 30 September 2025 (SVIKG). The Federal Ministry of Finance may borrow up to EUR 500 billion for it. Up to EUR 100 billion are available to the federal states for investment in their infrastructure (§ 3 SVIKG), EUR 100 billion are transferred to the Climate and Transformation Fund, and federal investment covers civil protection, transport, hospitals, energy, education and childcare, research, digitalisation, construction and housing and sport (§ 4 SVIKG). Investments may only be financed if approved by 31 December 2036.

The fund requires additionality: the Basic Law ties it to an appropriate investment ratio in the federal budget. For contractors and investors, the fund matters less as a direct counterparty than as a source of demand: it underpins the pipeline of federal, state and municipal projects for more than a decade. Funding conditions, reporting duties and claw-back rules flow down to recipients and must be reflected in grant agreements and construction contracts.

Other funding sources

EU programmes such as the Connecting Europe Facility, the European Regional Development Fund, the Recovery and Resilience Facility and European Investment Bank loans co-finance many projects. Grants are subject to EU state aid rules where they benefit undertakings, and public funding of infrastructure that is commercially exploited, such as ports, broadband networks or energy infrastructure, often requires an aid assessment. See our page on state aid and the FSR.

PPP and concession models for infrastructure projects

Germany has used PPPs selectively, mainly for motorways, public buildings such as schools and administrative buildings, and some social infrastructure. In an availability model, the private partner designs, builds, finances, operates and maintains the asset for a long period, usually 20 to 30 years, and receives availability payments reduced by deductions for poor performance. Federal motorway PPPs are now managed by the federal motorway company. Budget law requires an efficiency analysis comparing a PPP with conventional procurement before a public authority may choose it, and court of audit reports have shaped the political debate.

A concession differs from a public contract because the operating risk passes to the concessionaire, who is paid wholly or mainly by the right to exploit the works or services (§ 105 GWB). Concessions are used for parking facilities, leisure and sports facilities, certain transport services and some energy and water infrastructure. They are awarded under the Concession Award Ordinance (KonzVgV) above the EU threshold, with more flexibility in procedure than ordinary public contracts. Whether a project is a public contract or a concession is often contentious, because it determines the procedure and the remedies available to bidders.

Key PPP contract terms

The project agreement allocates risks over the whole lifecycle: design and construction, ground conditions, planning permission, change in law, inflation, performance and availability, refinancing gains, termination and compensation on termination. Lenders require direct agreements with the public authority giving them step-in rights. Because the public sector cannot easily accept open-ended price indexation, inflation and energy price risk need careful drafting. Long-term operation also requires mechanisms for changes in standards and technology, from accessibility and energy efficiency requirements to digital equipment.

Transport infrastructure

Federal motorways are planned, built and operated by the federal motorway company, while federal railway infrastructure is managed by the infrastructure company within the federal rail group, financed largely through performance and financing agreements with the federal government. States and municipalities are responsible for their own roads, local public transport and many bridges, a large number of which need replacement.

For contractors, this means a fragmented market of contracting authorities with different procurement practices and contract standards. Rail and road projects are increasingly tendered as framework agreements or partnership models with early contractor involvement, in which the contractor contributes to design before a target price is agreed. Such models require clear rules on how the target price is set, how savings and overruns are shared and what happens if the parties cannot agree on the price for the construction phase.

Procurement of infrastructure projects

Most infrastructure projects are public contracts that must be tendered under the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) above the EU thresholds and under budget law below them. The Act to Accelerate the Award of Public Contracts, in force since 1 July 2026, allows lots to be combined for time reasons in large infrastructure projects funded by the special fund and in federal transport infrastructure (§ 97a(3) GWB), and limits the suspensive effect of appeals by unsuccessful bidders. Contracting authorities must still observe the general principles of competition, transparency and equal treatment.

Municipalities can award contracts to their own enterprises without a tender where the in-house conditions are met: control similar to that over their own departments, more than 80% of the activities carried out for the controlling authority, and no direct private capital participation (§ 108 GWB). Mixed companies with private shareholders cannot rely on the in-house exemption, so the private partner must usually be selected in a competitive procedure. Our insights on the procurement acceleration reform and in-house awards to municipal companies go further.

Municipal enterprises as project vehicles

Municipal utilities, transport companies, housing companies and hospital operators deliver a large share of German infrastructure. They are organised as companies under private law, usually as a GmbH, or as institutions under public law, and are subject to municipal law restrictions on economic activity, which typically require a public purpose and a reasonable relationship to the municipality's capacity. When a municipal enterprise takes on a large project, the municipal council and the supervisory authority may have to approve guarantees, loans or changes to the articles of association.

Private partners entering a mixed company should expect public-law constraints on governance, including information rights of the municipality and audit rights of the state audit office, and should negotiate exit and deadlock provisions that remain workable under these constraints. Tax issues, such as the cross-subsidisation of loss-making public transport by profitable utility businesses within a municipal holding, also influence how projects are placed in a group.

Competitive dialogue and innovation partnerships

For complex infrastructure projects, contracting authorities can use the competitive dialogue or the negotiated procedure with prior publication, in which solutions are developed together with bidders before final offers are submitted. These procedures take longer to prepare but allow risk allocation and technical solutions to be optimised. Bidders should use the dialogue phase to clarify risk allocation, payment mechanisms and interfaces, because changes after award are restricted by the rules on contract modifications in § 132 GWB.

Data centres, broadband and digital infrastructure

Digital infrastructure projects have their own legal framework. The laying and modification of telecommunications lines for public networks is in the overriding public interest until 31 December 2030 (§ 1(1) TKG), which strengthens fibre and mobile roll-out in permitting decisions. Broadband roll-out in areas without commercial coverage is supported by federal and state funding programmes that must comply with EU state aid guidelines, and municipalities often build passive infrastructure and lease it to operators. Rights of way, co-use of existing infrastructure and coordination of civil works are regulated in the Telecommunications Act.

Data centres have become a separate infrastructure asset class. The Energy Efficiency Act (EnEfG) sets requirements on power usage effectiveness, waste heat reuse and renewable electricity, which tighten over time; see our insight on data centres under the Energy Efficiency Act. Grid connection capacity is often the decisive constraint, and planning law questions arise where large data centres are built outside designated industrial areas. Operators should negotiate connection reservations, power purchase agreements and heat supply agreements in parallel with land acquisition.

Infrastructure projects at the interface of sectors

Many projects combine sectors: electric vehicle charging links transport and electricity, rail electrification and port expansion serve energy and logistics, and data centres supply waste heat to district heating networks. Interface contracts must align technical specifications, availability obligations and liability across operators who are regulated by different regimes.

Social infrastructure

Hospitals, schools, childcare facilities and public administration buildings form the social infrastructure in which much of the special fund will be invested. Hospital investment is shaped by the hospital reform and its transformation fund, which supports restructuring of hospital capacity, while school construction programmes are often delivered by municipal companies or through design-and-build and lifecycle contracts. For these assets, operation and maintenance standards, user requirements and the interaction with the public operator's own staff are the main contractual issues.

Financing infrastructure projects

Infrastructure projects are financed through public budgets, corporate finance of municipal enterprises, project finance and, increasingly, institutional capital from infrastructure funds, insurers and pension funds. In a project finance structure, a special-purpose company borrows on the strength of the project's cash flows; lenders take security over shares, accounts, receivables and key contracts and require direct agreements with the public authority and major subcontractors. Payments from public authorities can be secured by forfaiting models, in which the authority waives defences against the assigned receivable after acceptance of the works, reducing financing costs.

Investors acquiring stakes in operating infrastructure should consider merger control, foreign investment screening where they come from outside the EU and the asset is critical infrastructure, and the consent rights of public shareholders and grantors. Public-sector lenders and promotional banks such as KfW and the European Investment Bank play a large role, and green bond and sustainability-linked structures are common. See our pages on lending and acquisition finance and foreign investment control.

Permitting, construction and delivery risks

Large infrastructure projects require planning approval (Planfeststellung) or other permits, environmental impact assessments and, often, compulsory purchase of land. Recent acceleration legislation has shortened procedures, limited the suspensive effect of challenges and moved first-instance jurisdiction for certain projects to Higher Administrative Courts or the Federal Administrative Court. Construction contracts usually follow the VOB/B for public projects, and disputes over variations, delays and acceleration costs are the most common source of conflict. Early dispute boards and adjudication-type mechanisms are increasingly used to avoid stalled projects. See our page on planning, environmental and administrative law.

Operational risks matter just as much in long-term infrastructure projects. Lifecycle maintenance obligations, handback conditions at the end of the term, and the treatment of latent defects need clear definitions, and performance regimes should be measurable and proportionate. Where public authorities are counterparties, budget availability, approval by supervisory bodies and the binding nature of municipal resolutions must be checked to avoid contracts that are void or unenforceable.

How TRW & Co helps

We advise public authorities, municipal enterprises, contractors, operators, investors and lenders on infrastructure projects in Germany. We help structure delivery models, from conventional procurement to PPPs, concessions and mixed companies, prepare and challenge procurement procedures, and draft and negotiate project agreements, construction contracts, operation and maintenance agreements and financing documents. We advise on funding conditions under the special fund and EU programmes, state aid, permitting and planning approval, and on acquisitions of and investments in infrastructure assets, including merger control and investment screening. To discuss your project, please contact us. This page provides general information, not legal advice.