- The storage capacity of large battery storage systems in Germany will grow by a factor of 40 to 57 GWh with a total output of 15 GW by 2030
- Large-scale battery storage systems generate 12 billion euros in economic added value and reduce electricity costs for end customers
- Expansion of large battery storage systems lowers pressure on construction of new gas power plants in Germany and reduces CO2 Emissions of up to 6.2 million t in 2030 will require 9 GW less of new gas-fired power plants
January 08, Munich. A study by Frontier Economics — commissioned by BayWa r. e., ECO STOR, enspired, Fluence and Kyon Energy — provides important insights for shaping the energy transition in Germany. It demonstrates the need for the recently presented storage strategy by the Federal Ministry of Economics. This must now be drafted and implemented quickly.
The importance of large battery storage systems for the power system will increase significantly in the future. The analyses show that the volume of large battery storage systems in Germany will rise to 15 GW or 57 GWh by 2030 if the political framework is in place. This represents a forty-fold increase in the storage capacity of large storage systems compared to today. By 2050, the stock of large battery storage systems in Germany may even rise to 60 GW or 271 GWh. The expansion is driven by growing demand for flexibility in the power system and falling costs for large battery storage systems.
Dr. Christoph Gatzen, Director at Frontier Economics, sees the study as confirmation of the future role of large battery storage systems in Germany. “The results clearly show that large battery storage systems play a central role in the energy revolution in Germany. Abandoning this flexible technology leads to higher gas imports and more regulation of renewable energies in Germany and thus to higher economic costs.”
Both in terms of cost reduction and expansion rate, battery storage systems promise a dynamic development similar to that of photovoltaic systems in recent years — with the difference that large battery storage systems can be built up and operated economically without government funding and purely market-driven.
Large-scale battery storage systems can generate significant economic added value. This is done by shifting the availability of electricity from periods of surplus to times of power shortage. Frontier Economics estimates the added value from savings on the wholesale market alone at around 12 billion euros by 2050 — even without taking into account the additional benefits for system services, intraday market marketing or other economic consequences. A major driver of these savings is saved fuel and CO2-Expenses. This is how large battery storage systems will help around 6.2 million tons of CO in 20302 and around 7.9 million tons of CO in 20402 to avoid. This is shown by the comparative calculation with an electricity system in which mainly gas-fired power plants are used in Germany instead of large battery storage systems.
The study also shows that large battery storage systems have a price-reducing effect on wholesale prices and reduce the wholesale price by around 1 €/MWh on average between 2030 and 2050. If it is not possible to replace stationary battery storage systems with additional gas-fired power plants, an average wholesale price of 4 €/MWh would be expected to increase by 4 €/MWh.
The expansion of large battery storage systems can also make a significant contribution to reducing investment pressure in gas-fired power plants. In a scenario without storage expansion, the planned approximately 26 GW of new gas-fired power plants by 2030 will not be sufficient and a further 9 GW will have to be built and operated. The modelling of the study shows that although large storage systems cannot completely replace the expansion of gas-fired power plants, they make a significant contribution to reducing investment pressure in new gas-fired power plants by 2030.
Against the backdrop of the current budget crisis and the funding gap for the expansion of hydrogen-compatible gas power plants, Dr. Christoph Gatzen points out that “Large-scale battery storage systems are currently being built without government funding and can reduce the need to set up or use of fuel in new hydrogen-compatible gas power plants. Creating investment security for large battery storage systems and other generation and storage options through clear and reliable framework conditions should therefore be a clear goal of politics. It is foreseeable that electricity demand and also peak demand in Germany will increase significantly, and that we will therefore urgently need new large battery storage systems and power plants to complement the expansion of renewable energy sources for our supply.”
Benedikt Deuchert, Head of Business Development & Regulatory Affairs at Kyon Energy, adds, “The results of Frontier Economics show that large battery storage systems are not in conflict with grid expansion or expansion of the hydrogen economy, but rather complement both and are urgently needed for a successful energy transition. Politicians must now recognize the signs of the times: Large-scale battery storage systems don't need a cent of subsidies, but they need reliable framework conditions so that investments actually take place and thus achieve the enormous economic added value that the study has clearly quantified.”
The clients of the study see a concrete need for politicians to ensure investment security in the construction of large battery storage systems. Bureaucratic obstacles and regulatory barriers, for example in approval processes, must be reduced. All markets for energy, capacity and system services in Germany should be technology-open and market-based. The Federal Government must implement the requirements of the current reform of the European electricity market to set indicative storage targets as quickly as possible. Based on this, the Federal Government should present an expansion strategy for large battery storage systems in Germany. With the recent publication of the Energy Storage Strategy, the Federal Government is taking a first step, which must now be translated into concrete legislative projects in a timely manner.
The study on the value of large battery storage systems in Germany was carried out by Frontier Economics Ltd. on behalf of BayWa r.e. AG, ECO STOR GmbH, enspired GmbH, Fluence Energy GmbH and Kyon Energy Solutions GmbH. The study is based on modelling the European electricity market with Frontier's Combined investment and dispatch model in three different variants: A reference modelling in which the endogenous expansion of batteries and power plant capacities is carried out solely by the model, and two variants in which the expansion of batteries in Germany is not possible and the lack of capacity is permitted or prohibited due to the endogenous expansion of other power plant capacities.
Frontier Economics (Frontier) is a microeconomic consulting firm that provides economic advice to clients from the public and private sectors on competition policy, public policy, regulation, business strategy, behavioral economics, and energy and climate change. The Frontier Economics network consists of separate companies based in Europe (Berlin, Brussels, Cologne, Dublin, London, Madrid and Paris) as well as Australia (Melbourne, Sydney and Brisbane) and Singapore.
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