The new German government and the Federal Network Agency should pave the way for large-scale batteries instead of erecting new hurdles and making private sector initiatives more difficult.
From GESI CEO Walter Raizner
+++ This article was first published in the FAZ +++
The year got off to a promising start in terms of the energy transition: strong winds boosted electricity production. As a result, the price of electricity on the exchange temporarily tipped into negative territory on January 1 – less than three weeks after it had reached the previous record level of EUR 936 per megawatt hour during a dark doldrums.
The price fluctuations highlight a central challenge of the energy transition: The higher the proportion of renewable energies, the more electricity generation depends on the time of day or night and weather conditions.
Progress in the expansion of renewables is therefore only half the battle: It is also important to ensure that enough affordable electricity is available at all times. The outgoing German government therefore wanted to use the Power Plant Security Act to ensure that energy companies build reserve gas-fired power plants on a large scale to step in during dark doldrums.
Fortunately, due to the failure of the traffic light, nothing will come of this for the time being. This gives those responsible in the parliamentary groups, the Federal Ministry of Economics and the Federal Network Agency time to rethink their plans. There are three reasons for relying much more heavily on large-scale battery storage systems.
Battery storage systems reduce electricity prices
Firstly: efficiency – large-scale batteries store surplus green electricity and make it available flexibly – exactly when it is needed. They do not have to be ramped up first and, with an efficiency of around 90 percent, are by far the most efficient technology for balancing out fluctuations in generation throughout the day.
Secondly: competitiveness– according to the Fraunhofer Institute for Solar Energy Systems, battery storage systems reduce electricity prices by up to seven percent: by consistently expanding capacities, electricity costs in Germany could be reduced by up to six billion euros per year in the long term. They are therefore a powerful lever for increasing the competitiveness of Germany as a business location.
Thirdly, climate protection – at the same time, large batteries reduce the need for fossil fuels and can therefore significantly reduce CO2 emissions.
So that there are no misunderstandings: We need reserve power plants, but the extent of demand must be reviewed very critically in order to avoid wasting taxpayers’ money. This is particularly true in light of the fact that not all available power plants were connected to the grid during the dark doldrums in December – despite record electricity prices.
In addition, the latest price fluctuations confirm that large-scale battery storage systems are economically viable without subsidies and are therefore interesting for private investors.
It is therefore surprising that some politicians continue to unilaterally discuss highly subsidized gas-fired power plants and that the Federal Network Agency is placing new obstacles in the way of battery operators: According to a current position paper, high construction cost subsidies are on the table, with which they are to contribute to grid connection costs.
Do not unilaterally burden battery operators with grid expansion costs
De facto, this means that private sector initiatives that do not require state subsidies are to be used more to finance grid expansion, while energy suppliers receive generous subsidies for new gas-fired power plants. This slows down investment in energy infrastructure and delays a stable, cost-effective power supply.
Grid connection procedures for battery storage systems are already challenging. We often have to wait weeks for grid operators to respond to applications. And when things go faster, they sometimes announce processing times of months. There is also a lack of transparency as to where storage systems are particularly useful for the grid.
In view of these hurdles, the supposed “tsunami” of applications for large-scale batteries that has recently been talked about could shrink significantly. We therefore call for
- a binding framework with clear deadlines for grid connection procedures,
- transparent criteria for preferred locations for large batteries and
- realistic assumptions for grid connection tests so that transmission system operators no longer have to classify storage systems as a 24-hour continuous load for the grid, as currently prescribed by the Federal Network Agency.
Our proposal: “Round table on large-scale battery storage”
In order to develop sensible solutions, we are proposing a “round table on large-scale battery storage”. It is high time that the Grid Agency, Ministry of Economic Affairs, transmission system operators and storage system operators took coordinated action to promote investment in this key technology.
In addition, the next federal government should review the Power Plant Safety Act – particularly with regard to the question of whether we really need additional gas-fired power plants financed by the taxpayer on a large scale.
One thing is clear: around 70 percent of the reserve requirement is for short-term storage periods. Here, large batteries are far more efficient than gas-fired power plants, which we mainly need for dark doldrums lasting several days.