As part of the public consultation process on the transmission system operators' first draft network development plan 2037/2024, Kyon Energy submitted the following statement.
Kyon Energy welcomes the first draft of the 2037/2045 Network Development Plan prepared by the four transmission system operators and the opportunity to comment on this as part of the consultation process. We would like to take this opportunity to participate in this process and the public discussion on the network development plan in order to contribute to the transformation towards a climate-neutral network.
As project developers and installers of grid-connected large battery storage systems, we are pleased to see the first-time integration of storage solutions in the initial draft of the 2037/2045 network development plan as a “network buffer concept” (virtual lines) for preventive network operation and as a curative network booster. We expressly welcome the fact that the NEP provides for the use of battery storage systems to provide system services for grid stability, such as black start capacity, grid reconstruction, reactive power, instantaneous reserve and control power. However, it remains unclear to what extent network buffer concepts should be integrated for preventive network operation management and we recommend that they be specified in the NEP.
Expanding the power grid is one of the key challenges and an inevitable task in the context of the energy transition and the associated conversion to a climate-neutral grid by 2045. Network expansion is absolutely necessary to compensate for the spatial difference between energy generation and consumption, which will continue to increase as renewable energies expand onshore and offshore.
A central planning principle for restructuring the energy network is adapting the network according to the NOVA principle. By introducing grid optimization measures in advance, this principle guarantees an economically and economically cost-effective adjustment of the networks while maintaining system stability and a sustainable energy supply. The current network development plan describes that network optimization measures include measures for power flow management. According to the principles of the NOVA principle, these are preferable to strengthening measures, such as the construction of new parallel lines and expansion measures such as the construction of new routes. At Kyon Energy, we would like to underline that large battery storage systems play a central role in restructuring the energy network as measures for power flow control and thus network optimization. Large-scale battery storage systems can make an important and cost-effective contribution to grid stabilization, particularly in the main phase of grid conversion up to the mid-2030s. In addition, a key advantage of large battery storage systems is the short implementation period, which makes them particularly suitable for bridging and expanding the networks. Kyon Energy has reference projects in which it took less than twelve months between the initial project idea for a large battery storage system and we assume that projects can also be completed within a similar period of time in the future, subject to suitable other conditions. As a result, the implementation of large battery storage systems is in any case faster than the implementation of network strengthening and expansion measures.
As part of this, we recommend checking whether the assumed quantities of installed capacities for large battery storage systems have already been fully integrated into the scenarios in accordance with the NOVA principle. The current NEP includes large battery storage systems with an installed capacity of between 23.7 (A & B 2037) and 54.5 GW (C 2045), depending on the respective scenario and year. In comparison, a study by the Fraunhofer Institute for Solar Energy Systems shows a short-term storage requirement of 104 GWhEl in 2030 and around 178 GWhEl in 2045 to meet the need for flexibilities1. The basic premise of this study is that by 2050, energy-related CO2emissions should be reduced by at least 95%. In addition, it is important to state in the network development plan with which capacity (C-rate) the assumed large battery storage systems are operated in order to be able to better classify the assumptions regarding the installed capacity, to make them comparable with other studies and to be able to test, based on this, whether the assumed installed power is sufficient.
We agree with the NEP and the TSOs that the current regulatory framework does not provide sufficient incentives to implement cost-effective, sustainable and digital technologies to a sufficient extent and therefore requires urgent development. The regulatory framework should ensure adequate refinancing of operation-intensive and innovative technologies. This applies in particular to innovative technologies that guarantee system security as part of the conversion to a climate-neutral power grid. Kyon Energy welcomes the fact that NEP uses maximum cost-efficient market modelling, assuming non-discriminatory and open market access. At the same time, the sole focus on OPEX (Operational Expenditures) means that innovative technologies with low CAPEX (Capital Expenditures) and tending to higher OPEX, which guarantee system security in the medium to long term and can accelerate the restructuring of the energy network through short construction times, are at a structural disadvantage. Innovative technologies such as large-scale battery storage can be a solution to reduce redispatch costs and integrate larger quantities of renewable energy into the existing energy network, in particular during the transition phase to a completely climate-neutral and demand-oriented network. With regard to the regulatory system, we would welcome a reference in the NEP to the fact that the current regulatory framework includes active barriers to investment and that these should be dismantled as a first step. For example, the current collection of construction subsidies has a negative effect on the economic efficiency of large battery storage systems and creates senseless incentives to focus on constructing plants in network areas with low construction subsidies. A complete abolition of the construction subsidy for innovative, network-friendly technologies promotes the willingness to invest and the conversion of the energy network towards climate neutrality and creates legal certainty. We therefore draw attention to the need to adjust the regulatory system2 and consider that a corresponding reference to this in the NEP, for example in the section on innovative technologies, is appropriate. We also recommend that the systemic relevance of innovative technologies be given greater consideration as part of NEP 2037/2045.
As discussed in the NEP, there will be a significant increase in electricity demand in Germany as a result of the strongly increasing coupling of the electricity sector with other sectors in the coming years. In order to be able to cover this sustainably, i.e. if possible with renewable energies, and cost-effectively, it is crucial to implement energy-efficient and quickly available technologies, especially during the transition period. In contrast to electrolyzers and the combustion of hydrogen in gas turbines, large battery storage systems have an overall efficiency (from extraction to resupply) of over 90%3. In contrast, the combustion of hydrogen in gas turbines only has an overall efficiency of 30-40%4. Battery storage systems can therefore transfer a significantly higher proportion of the stored energy to the grid for final use at different times. On the electricity market, this means significantly lower reconversion costs compared to hydrogen technologies. This means that an economically viable reconversion of hydrogen into electricity is only possible if the market prices of the stored electricity are very low and the market prices of the stored electricity are very high. A highly volatile market is therefore assumed. This also significantly reduces the number of hours during which hydrogen electricity can be stored in an economically viable way compared to battery storage systems. Kyon Energy sees hydrogen and battery technologies as partners in the energy transition, both of which make a significant contribution to security of supply. However, due to the different efficiency levels and storage volumes, both technologies offer advantages for different applications. For example, battery storage systems are suitable as short-term buffer storage systems for grid stabilization, while the reconversion of hydrogen into electricity is better suited for long-term storage and thus for bridging long-term downturns in renewable energy sources, among other things. In addition, battery (large) memories, as described above, have a very short implementation time and are particularly suitable for rapid implementation in the network. We therefore recommend checking whether both technologies have been considered in the NEP with regard to their optimal technological application.
Accordingly, we are also pleased that the instrument of peak capping is no longer being used in the current draft network development plan. In particular in view of the massive expansion of renewables combined with an increase in flexible consumers and storage options, this instrument is no longer up to date. In contrast, expanding the energy network hand in hand with expanding flexible storage options offers the advantage of cushioning the generation peaks that occur and thus reducing the costs of regulating renewables. These additional integrated amounts of renewable energy are then available to the market and consumers for use at a later date, so that the contribution of renewables to the decarbonization of electricity generation is maximized.
In summary, we at Kyon Energy welcome and support the initial draft of the network development plan. We are pleased that the grid development plan includes large-scale battery storage as a system-relevant component to ensure energy supply when there is an increased supply of renewable energy in the planning. The conversion to a climate-neutral network can only be achieved through simultaneous efforts to expand and strengthen the various hydrogen and battery storage technologies.
In order to achieve the ambitious expansion goals on the market side, it is also necessary to adapt the regulatory framework to create a “level playing field” for innovative technologies and simplifications in planning law and to integrate storage technologies efficiently and quickly into the energy grid. Even though the discussion of explicit regulatory adjustments is foreseen in the network development plan, the discussion of the network development plan at political level should not go unnoticed that regulatory changes will be inevitable in order to comply with the adopted storage expansion path.
In order to enable a more efficient expansion of the energy network, we recommend that the TSOs check whether, in accordance with the NOVA principle, more large battery storage can be included in grid optimization measures in order to support grid strengthening and network expansion. We also recommend that you reconsider to what extent the respective advantages of the long-term storage system “hydrogen” and the short-term storage “battery” are reflected in the network development plan in a cost and technology efficient way, and suggest an adjustment in favour of batteries.
We would like to thank the transmission system operators for preparing the initial draft of the 2037/2045 Network Development Plan. Should you have any questions or comments, please feel free to contact us at any time.
[1] Sterchelet. al (2021): Paths to a climate-neutral energy system. The German energy revolution in the context of social behavior.Fraunhofer Institute for Solar Energy Systems ISE. Freiburg.
[2] In the case of large battery storage systems, we consider the collection of construction subsidies to be illegal within the current regulatory framework (see procedure BK6-22-242), but believe that regulatory clarification is necessary in this regard.
[3] Stenzel (2016): Provision of primary control power through stationary large battery storage systems. Forschungszentrum Jülich, Institute for Energy and Climate Research — Systems Research and Technological Development (IEK-STE).
[4] Öberg, Odenberger, Johnsson (2022): The value of flexible fuel mixing in hydrogen-fueled gas turbines — ATechno-economic study. In: International Journal of Hydrogen Energy. Volume 47, issue 47. SEE 31684-31702.
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