Germany is making great progress in the energy transition: 142 gigawatts of renewable energy plants are already connected to the grid, and several hundred gigawatts are being planned. As good as this news is for achieving climate goals, the expansion of renewables is a stress test for the power grid. Since their production fluctuates depending on the weather, time of day and season, electricity is overproduced or underproduced. The grid is becoming more volatile; load currents, frequency and voltage must be regulated more closely. With every additional gigawatt of renewable energy, integration into the grid becomes more complex.
For the electricity system to continue to function in the future, the market and grid must become significantly more flexible. Low-cost short-term storage solutions such as grid-connected large battery storage systems are essential for this. They are already making a major contribution to the stability of power grids and making it possible to integrate more renewable energy sources. However, the current regulatory framework still makes network-serving deployment difficult and some technical potential remains untapped.
The grid connection in particular is a decisive criterion so that storage systems can properly exploit this potential. However, there are currently fundamental regulatory gaps for the integration of storage projects, which need to be closed:
1. Storage network connections are only processed with a delay or even have to be denied, as network capacities represent a scarce resource. As a result, storage sites that make sense for the energy revolution cannot be further developed.
2. Missing, clear regulations for integrating storage systems into network operators' processes can aggravate operational problems faced by network operators.
In principle, storage systems could play a supporting role in the integration of renewable energies at regional level. Decentralized storage systems in particular have the potential to make a valuable contribution to the cost-effective and secure implementation of the energy revolution. But network capacities are becoming increasingly scarce. As a result of immediate and priority connection requests in accordance with the Renewable Energy Sources Act (EEG), particularly in the area of photovoltaic systems, the German distribution networks are currently operating at very high capacity.
From this point of view, it is therefore urgently necessary either to increase the capacity to connect storage systems to the grid by expanding the network or to position and operate storage systems in such a way that they can operate more effectively to the grid. This would help to make more efficient use of existing networks and thus create additional capacity for the integration of renewable energies.
Although network expansion is already being intensively promoted in many places, the resulting capacities are often already reserved for specific generation projects. At the same time, storage systems are also competing for network capacity on the consumer side due to increasing demand for electricity in households, businesses and industry.
Many network operators already see the added value of storage systems, but there are still many regulatory and operational hurdles to overcome when using them.
1. Storage facilities could provide for additional redispatch measures subject to compensation if they would aggravate existing bottlenecks in accordance with market-defined timetables.
2. In the current regulatory environment, remuneration for network-serving services is only possible for the network operator with negative economic consequences. These costs are assigned to the network operator's operating costs and are not subject to any adjustment within a regulatory period due to regulatory requirements.
3. It is difficult to predict the network load from storage systems, as the deployment can hardly be predicted by network operators due to combined balancing power and spot marketing. As a result, network planning requires storage systems to have both full positive and negative feed-in at all times. Appropriate reserves must be kept in the network.
4. Even pragmatic IT solutions are considered critical due to the challenges of implementing Redispatch 2.0 processes and require considerable effort.
According to §8 EEG, renewable generation plants are subject to grid connection requirements. However, this obligation does not apply to storage systems. The grid connection for storage systems is therefore currently only granted if it is possible and reasonable for operational reasons. In addition, many network operators lack experience in handling storage systems, particularly against the backdrop of increasing bottlenecks in distribution networks. There is uncertainty as to whether and under which conditions it is possible and reasonable to connect storage systems for operational reasons.
Highlighting the risks in the network operators' decision-making process means that grid connection requests are currently answered rather negatively. The availability of the grid connection over time and excessive grid connection costs are the main reasons for the failure of battery storage projects.
There is an urgent need for action so that the regional benefits of storage systems can be used in highly renewable networks.
In order to make advantageous use of storage in the distribution network, the basic framework conditions must be adapted. Some measures are presented below which should help to make it easier to connect storage systems and thus maximize their positive impact.
Just like renewable energy plants, storage systems that operate in a system-friendly manner should receive an accelerated and preferred grid connection (similar to Section 8 EEG 2023) in order to be able to utilize their potential as quickly as possible and maximize their contribution to the energy revolution. For this, it is necessary to establish clear criteria and procedures. This could include storage capacity, the speed of response to requirements from the network operator, the specification of performance change gradients when marketing on the spot market, the stability of the network connection and other technical features.
In order to quickly implement transparent and clear regulations for grid connection and the market and grid-serving use of storage systems, Kyon Energy is proposing an Energy Storage System Grid Connection Ordinance (SpeicherNAV). Just as the Power Plant Network Connection Ordinance (KraftNAV) regulates the minimum technical requirements for connecting power plants to the high-voltage grid and operating them on the grid, a storage NAV could regulate the special features of storage systems when connected to the grid and remove the above-mentioned hurdles. In addition to accelerating grid connection and defining network-friendly operating concepts, economic aspects such as fair cost delivery should also be included.
Storage systems can make a positive contribution to avoiding bottlenecks. On the one hand, by helping to alleviate bottleneck situations preventively and thus reduce the amount of redispatch, on the other hand by also being used to remedy a bottleneck and at comparatively lower costs than renewable energy systems (prerequisite: selection of systems based on the network operator's joint merit order).
The integration of storage systems into the redispatch process can therefore lead to a reduction in congestion management costs and, in the long term, also have positive effects on the balance sheets of distribution system operators by changing the regulatory framework.
Redispatch approaches currently being discussed (e.g. complementary market-based redispatch), which include storage, are based on a joint merit order of buyers, stores and generation plants (including renewable energy systems). Memories are only included in redispatch if activating them in Redispach is more cost-effective than using other options, such as the — unfortunately — frequently practiced regulation of renewable energy systems.
Just as with renewable energy systems, market-led large storage systems do not place any increased demands on security of supply. This makes it possible to operationally resolve the n-1 criterion on the reference side and thus streamline and simplify existing structures.
The n-1 criterion describes the principle that, in the event of a failure of a component in the power grid, the supply is still guaranteed. Normally, this requires redundant systems and equipment to ensure uninterrupted operation. However, this criterion is not necessarily necessary for market-led large storage systems. Because of their flexible response and ability to adapt to energy requirements, these storage systems are not considered a potential source of supply interruptions. Even today, switching systems or lines are often not designed redundantly when connecting storage systems in order to use existing equipment more efficiently. However, the network operator plans and operates its networks on the basis of default calculations (n-1), which often takes into account the entire storage or removal of storage systems.
It is technically possible to resolve the n-1 criterion in the operation of market-leading large storage systems. This applies not only to the generation side, but also to the demand side of the memory. The operational resolution of the n-1 criterion for market-led large storage systems facilitates their integration into the power grid and promotes the use of this storage technology to support the energy revolution. However, it is important that safety aspects continue to be considered to ensure a reliable power supply. Additional applied research, for example in the form of pilot projects, is useful for this purpose.
A few weeks ago, legislators paved the way for the continuation of the network fee exemption for storage systems for a further three years. Storage systems that connect to the grid by 2029 can then expect a network fee exemption of over 20 years, which allows economic operation. Without adjustment, grid-connected storage systems would have become fully charged to the grid after 2026, which would have brought the development of new projects to a standstill today.
The year 2029 still seems a long way off, but in fact “only” three years of discussion have been won, which are urgently needed for a sustainable solution. It is also clear that the Federal Network Agency will play a key role in finding a lasting solution. However, it is precisely the advantages described here, not only for the national economy as a whole, but also for the networks in particular, that give rise to a permanent exemption from network charges. This will need to be discussed with the Federal Network Agency over the next few years.
The current scarcity of grid connection options for grid-connected battery storage systems and the lack of regulations for their procedural integration represent a significant obstacle to effective and efficient use of these storage systems as a whole. In order to make optimal use of the regional benefits of storage, urgent measures must therefore be taken. In addition to accelerating grid expansion in the distribution network, there is a need for clear regulations and stable framework conditions for the network-friendly use of storage systems in order to both make investments more attractive and ensure efficient integration into the grid. This is the only way to successfully overcome the challenges of the energy revolution.
The information on which the blog entry is based was created in collaboration between E-Bridge Consulting GmbH, WEMAG Netz GmbH and Kyon Energy:
Deuchert, B.; Kertscher, P.; Krämer, C.: Challenges and solutions for connecting storage systems to the grid in distribution networks, Energiewirtschaftliche Tagesfragen vol. 73, no. 11, 2023, pp. 23-26
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