Technical Article

Guest article by Hans Urban: Large-scale next-generation battery storage systems for the energy transition

4 mins

The energy revolution in Germany is in full swing!

Such a statement may sound somewhat provocative due to the many current problems. Yet it is factually correct. Of course, the system conversion will ultimately be a long and rocky road and work will have to be done in many areas so that it continues quickly and consistently. But on the other hand, let's imagine the current situation if we didn't already have more than 50 percent renewable energy in the power grid. What disproportionately bigger problems would we be facing right now.

On the other hand, you could certainly imagine how much better our situation would be at the moment if politicians had not completely slowed down the expansion of renewables in 2012, but had continued at the same pace. Even in this case, a war in Ukraine with all its consequences would of course be tragic. But with regard to our dependence on fossil energy imports and, in particular, with regard to current electricity prices, the situation would be significantly different.

How did this success of renewables come about in Germany, which is certainly the envy of many countries in Europe and beyond? The EEG, in its original form, by the way, consisted of a full five pages of legislative text, set the political framework at that time. However, investments in renewable energy were not made from government funds; almost 100 percent of the investments were made from private capital. Of course, German electricity customers were certainly burdened with levies, an effect that is now completely reversed in the current price situation. As a result, we can now see more clearly than ever how successful the EEG was at that time. The huge price reductions for renewable energy generation have now led to people even thinking about capping excess profits from operators of renewable energy plants these days. Another option would be to change the electricity market design (keyword: Merit Order) and thus send the comparatively low electricity prices from renewable energy sources directly to consumers.

In any case, the fact is that consumers are now benefiting significantly from cheap renewable energy sources, the sole success of the now 20-year-old EEG.

With all this success of renewable energies, however, it must not be concealed that the increasing expansion of these volatile forms of energy requires large storage capacities. In order to achieve an ultimately optimized overall system, there will be various storage technologies in the long term. These include hydrogen technology or methanation for long-term storage, but also home battery storage or storage in electric vehicle fleets, which could be connected in the future, and much more.

In addition to these technologies, however, you will definitely need relevant capacities of large battery storage systems. This is because these storage systems are best suited to stabilize and relieve the load on networks and to distribute energy sensibly both locally and over time. Various studies on future energy and electricity market design come to the unanimous conclusion that a three-digit order of gigawatt hours in the form of large battery storage systems must be built in important network nodes.

The storage revolution in Germany — it too is already in full swing!

Interestingly enough, the current momentum of this storage expansion is much greater than politicians and the public are currently realizing.

In general perception and reporting, many projects do not currently appear at all. There are reports on storage systems as part of funded projects, there are press releases about storage in the EEG innovation tenders and, of course, about the increasing number of storage systems among private and commercial customers.

However, there is very little coverage of “next-generation large battery storage systems.” In Germany, for example, several large battery storage systems of the order of 100 megawatt hours and more are currently being planned, under construction or already being completed.

While public projects such as the planned network boosters must be made transparent in general, these are self-economic and market-driven projects. These projects involve, first and foremost, identifying suitable grid connection nodes, acquiring land and permits, and agreeing on operator models with investors. Because that is the special feature of this new generation of large battery storage systems: They generally finance themselves purely from market revenues!

The high fluctuation, which has become more and more apparent in the power grids in recent years, offers storage companies business models that lead to sufficient economic profitability and, in turn, also counteract this fluctuation themselves. This market mechanism thus solves two problems: Financing storage facilities for the energy transition does not burden network operators, taxpayers, and electricity customers. Time-consuming regulated tenders are also unnecessary, as there are only private investors.

There is currently a relevant number of such fully planned projects in Germany, including the associated grid connection nodes and suitable plots of land; to put it bluntly, it can be built tomorrow. Because the advantage of storage projects is the short implementation time! It usually takes around two years from groundbreaking to commissioning and is therefore orders of magnitude lower than the usual project duration of other infrastructure projects.

Large-scale battery storage systems are compact, virtually invisible and barely distinguishable from normal commercial buildings. They are always in the background of a commercial and industrial area, so there are no restrictions on residential areas, infrastructure, agriculture or tourism. But the special thing is the high storage density. For example, a storage system of the order of 200 — 250 megawatt hours can be stored on one hectare.

Political barriers must now be removed

This is where the circle comes full circle. The expansion of these new-generation and new scale storage capacities is currently developing great momentum, similar to the expansion of renewable energies that began a good 20 years ago, and is thus taking the energy revolution to the next stage. The main reason for this is that storage companies can refinance themselves on the market and that as a result, a great deal of private investment capital is available for these projects.

Government and politics therefore do not have to finance these projects from budgets and tax revenue, and that would not be possible at all on this scale.

But: Similar to the EEG 20 years ago, the political framework must be set in an appropriate manner!

In general, it is necessary to recognize and define storage systems as the fourth pillar of energy supply. Many guidelines need to be revised in detail for this purpose. Since storage systems always reduce the load on the grid and stabilize the grid in almost all cases, they must not be treated in the same way as grid-loading consumers. This is the only way to create a suitable investment climate for these projects.

A first important step in this context is the abolition of so-called construction subsidies for storage projects. Real demands for this subsidy amount to up to 20 percent of the total investment costs for storage facilities and thus call into question many major projects currently being planned.

The construction subsidy is intended as a cost share for the removal of large guaranteed consumer services from the networks; for network-related storage systems, which are also to be built at central network nodes, it is neither technically nor legally justified.

With regard to the necessary dynamic expansion of storage facilities, a quick political decision is therefore required here, more precisely a general abolition of the construction subsidy for storage facilities.

Author: Dipl. Ing. Hans Urban is an expert in photovoltaics, e-mobility and storage technology. As part of the management team, he set up the solar division at Schletter. He now works as a consultant and gives lectures throughout Germany on topics related to renewable energy and electric mobility.

The commentary is a guest contribution by Hans Urban. The article was also published in pv magazine: https://www.pv-magazine.de/2022/12/14/grosse-batteriespeicher-der-naechsten-generation-fuer-die-energiewende/

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