On 8 December 2023, the Federal Ministry for Economic Affairs and Climate Action (BMWK) presented its energy storage strategy. The strategy paper provides an overview of the measures and challenges involved in establishing energy storage systems. The energy storage strategy aims to promote the expansion and integration of energy storage systems and thus support the energy transition.
By 2035, the energy sector in Germany should be largely free of greenhouse gas emissions. This requires the further expansion of renewable energy. Even if electricity generation from wind and photovoltaics (PV) complement each other well over the course of the year, their rapidly growing share of production will require more flexibility in the energy system in the future. While around 254 terawatt-hours (TWh) of electricity were generated from renewable energy in Germany in 2022, 600 TWh of electricity are expected to come from renewable sources by 2030. Germany is particularly dependent on a market ramp-up of energy storage systems, especially battery storage systems.
What role do energy storage systems play?
Energy storage systems can play a key role in the electricity system if they are used at various levels to promote flexibility and stability. Pumped storage power plants and battery storage (large batteries and decentralised home storage), which only temporarily store energy and then feed it back into the grid, still dominate here.
Energy consumption: Energy storage systems allow the energy supply to be shifted in time and thus adapted to the respective requirements.
Power storage for energy transmission: It is also possible to use power storage systems for frequency stabilisation. As power storage units, they can absorb or release short-term power peaks to support the stability of the power supply.
“Grid boosters”: Large-scale batteries are also to be used as “grid boosters” to optimise energy management at large industrial sites and grid operation management. To this end, the large batteries are integrated into the (local) grid near large PV systems and wind farms.
Energy distribution: The storage systems can also reduce surplus scenarios.
How are energy storage systems promoted under the existing legal framework?
The BMWK currently sees a high demand for energy storage systems and no foreseeable (new) obstacles to their economic viability. With several improvements to the national legal framework for energy storage systems in recent years, the legislator has contributed to a favourable market environment, especially for large-scale storage systems, particularly through exemptions from grid fees, levies, and electricity tax, which are granted under certain conditions.
The BMWK therefore already considers it economical to set up and operate energy storage systems. In the future, according to a new ruling by the Federal Network Agency (BNetzA), small storage systems will also be treated as controllable consumption equipment — and can therefore benefit from reduced grid charges (see BNetzA, BK6-22-300, decision of 27 November 2023).
What obstacles are there to the establishment of energy storage systems?
According to the BMWK, it is already possible to operate energy storage systems economically today due to the privileges for energy storage systems. The framework conditions for a market-driven ramp-up are also basically right. Nevertheless, there are still numerous factors that can limit the ramp-up of energy storage systems:
Different responsibilities: Individual aspects relating to the (expansion) construction of energy storage systems concern different specialist and legal areas and, therefore, also different authorities. It delays adjustments to the regulatory framework and planning for private individuals.
Construction cost subsidies to the grid operators: The grid operators can levy construction cost subsidies for the grid connection of energy storage systems, which can amount to considerable sums in some cases. In addition, the various grid operators’ practice differs considerably in terms of the amount charged. In a recent decision, the Higher Regional Court of Düsseldorf (“OLG Düsseldorf“) declared that calculating the amount of construction cost subsidies according to the performance price model for so-called “grey energy” storage systems is unlawful (OLG Düsseldorf, decision of 20 December 2023 — 3 Kart 183/23). An appeal against this decision has been lodged with the German Federal Court of Justice (BGH). It therefore remains to be seen how the BGH will rule on the matter and how the BNetzA and the grid operators will charge construction cost subsidies in the future until the decision is made.
Grid charges: § Section 118 (6) of the Energy Industry Act (EnWG) and § Section 19 (2) and (4) of the Regulation on charges for access to electricity supply networks (StromNEV) currently contain special provisions that largely or completely eliminate the grid fees for large-scale storage facilities. However, grid fees continue to be charged for other storage facilities. The deadline for this “transitional solution” was extended in November 2023 until 2029. Due to the long planning and amortisation periods, this is accompanied by legal uncertainties regarding subsequent treatment.
What strategies does the BMWK have?
Differentiation between green and grey energy
The BMWK has set itself the goal of examining the framework conditions for a combined feed-in and feed-out of green and grey energy. In this way, the BMWK wants to prevent the loss of funding under the German Renewable Energy Act for the green energy that is temporarily stored. This is still the case under the current legal framework. In the future, it should be possible to use storage systems flexibly for different purposes.
Integration of renewable energy systems through storage
The BMWK also sees potential for economic efficiency in the expansion of battery storage systems in the vicinity of solar parks. The BMWK is striving for further development in this area, which can also have grid-relieving effects. The power plant strategy for hydrogen-capable power plants recently presented by the German government also emphasises that storage systems should be included.
Exemption from grid charges
The BMWK’s comments express sympathy for the continuation of the current grid fee exemptions for energy storage systems. However, the decision on this is the BNetzA’s sole responsibility due to the requirements of the European Court of Justice regarding the national regulatory authority’s independence.
Construction cost subsidies
The BNetzA has already begun the review process for standardised regulations and binding requirements for construction cost subsidies. The aim is to accelerate the ramp-up of large-scale battery storage systems. Further developments with regard to OLG Düsseldorf’s aforementioned decision must also be considered here.
Acceleration of grid connections
It is planned to implement the acceleration of grid connections as quickly as possible. Particularly relevant are the “standardisation of technical connection conditions”, the “simplification of the grid connection procedure”, the “utilisation of grid capacities” and the point of “cost transparency”. In addition, hybrid grid connection points should reduce grid expansion costs and contribute to greater system stability.
BMWK’s further strategies
System stability
Energy storage systems should make a greater contribution to system stability in the future. To ensure this, the BNetzA is to develop a market-based procurement system within the framework of Section 12h EnWG.
Promoting acceptance on-site
The BMWK is also planning to strengthen local communities. One idea is to allocate the trade tax to local communities. However, the Federal Ministry of Finance and not the BMWK is responsible for this. The BMWK is also aiming to enable local authorities to participate financially in energy storage projects.
Reduction of obstacles under licensing law
The BMWK cites the removal of licensing barriers. Yet, the explanations are rather vague. This component regularly appears in various strategy papers without being implemented, e.g., in the national hydrogen strategy (see also our Compass blog post on the national hydrogen strategy).
Next steps
The BMWK gave the industry associations the opportunity to comment on the energy storage strategy until 16 January 2024. Among others, the German Association of Energy and Water Industries, the German Renewable Energy Federation, and the German Association of the New Energy Economy recently commented on the energy storage strategy.
The industry associations agree that the energy storage strategy is a crucial step in the right direction towards better framework conditions. Nevertheless, they make it clear that this is not enough. Instead, they are calling for specific targets and timetables.
We agree with this: The energy storage strategy presented is a positive step, as it emphasises the importance of energy storage in the context of the energy transition. Nevertheless, doubts remain as to how this strategy will be implemented in practice — not only because of the partly vague specifications but also because the implementation is not solely in the hands of the BMWK and the federal government.
