In the course of the public consultation process of the first draft of the Transmission System Operators' Network Development Plan 2037/2024, Kyon Energy submitted the following comments.
Statement on the NDP 2037/2045 1st draft
Kyon Energy welcomes the first draft of the 2037/2045 grid development plan prepared by the four transmission system operators and the opportunity to comment on it 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.
First mention of large-scale battery storage systems
As a project developer and installer of grid-connected large-scale battery storage systems, we are pleased to see the first-time integration of storage solutions in the first draft of the 2037/2045 grid development plan as a "grid buffer concept" (virtual lines) for preventive grid operation management and as a curative grid booster. We expressly welcome the fact that the NDP envisages the use of battery storage to provide system services for grid stability such as black start capability, grid reconstruction, reactive power, instantaneous reserve and control power. However, it remains unclear to what extent grid buffer concepts for preventive grid operation management are to be integrated, and we recommend specifying this in the NEP.
The expansion of the power grid represents one of the central challenges and an unavoidable task in the context of the energy transition and the associated conversion to a climate-neutral grid by 2045. Grid expansion is imperative in order to compensate for the spatial difference between energy generation and consumption, which will continue to increase with the growing expansion of renewable energies onshore and offshore.
A central planning principle for the conversion of the energy network is the adaptation of the network according to the NOVA principle. By advancing grid optimization measures, this principle guarantees an economically and operationally cost-effective adjustment of the grids while maintaining system stability and a sustainable energy supply. The current network development plan describes that network optimization measures include power flow control measures. According to the NOVA principle, these are to be preferred to reinforcement measures, such as the construction of new parallel lines, as well as expansion measures, such as the construction of new lines. We at Kyon Energy would like to emphasize that large-scale battery storage as measures for power flow control and thus grid optimization play a central role in the conversion of the energy grid. Especially in the main phase of the grid transformation until the mid-2030s, large-scale battery storage can make an important and cost-efficient contribution to grid stabilization. In addition, a key advantage of large-scale battery storage is its short implementation time, making it particularly suitable for bridging the gap until grid expansion. Kyon Energy has reference projects in which less than twelve months elapsed between the initial project idea for a large-scale battery storage system and the commissioning of the system, and we assume that projects can also be implemented in a similar period of time in the future if other conditions are suitable. Thus, the implementation of large-scale battery storage is in any case faster in terms of scale than the implementation of grid reinforcement and expansion measures.
In the course of this, we recommend checking whether the assumed quantities of installed capacities for large-scale battery storage have already been fully integrated into the scenarios according to the NOVA principle. Within the framework of the current NDP, large-scale battery storage facilities with an installed capacity of between 23.7 (A & B 2037) and 54.5 GW (C 2045) are taken into account, depending on the respective scenario and year. In comparison, a study by the Fraunhofer Institute for Solar Energy Systems shows a short-term storage demand of 104 GWhel in 2030 and around 178 GWhel in 2045 to cover the demand for flexibilities1. The basic premise of this study is to reduce energy-relatedCO2 emissions by at least 95% by 2050. In addition, it is important to state in the network development plan with which capacity (C-rate) the assumed large-scale battery storages are operated in order to better classify the assumptions regarding the installed capacity, to make them comparable with other studies and, based on this, to be able to check whether the assumed installed capacity is sufficient.
Adaptation of the regulatory framework for innovative solutions
We agree with the NEP and the TSOs that the current regulatory framework does not provide sufficient incentives to implement cost-efficient, sustainable and digital technologies to a sufficient extent and therefore requires urgent further development. Sufficient refinancing of operating-cost-intensive and innovative technologies should be ensured by the regulatory framework. This is especially true for innovative technologies that guarantee system security in the course of the transformation to a climate-neutral power grid. Kyon Energy welcomes that the NDP adopts maximum cost-efficient market modeling, 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 can guarantee system security in the medium to long term and accelerate the transformation of the power grid through short construction times, are structurally at a disadvantage. Especially in the transition phase towards a fully climate-neutral and demand-responsive grid, innovative technologies such as large-scale battery storage can be a solution to reduce redispatch costs and integrate larger amounts of renewable energy into the existing energy grid. In terms of the regulatory system, we would welcome a reference in the NEP to the fact that the current regulatory framework contains active barriers to investment and that these should be removed as a first step. For example, the current practice of charging the construction cost subsidy has a negative impact on the economic viability of large-scale battery storage systems and creates inappropriate incentives to focus on installing the systems in grid areas with low construction cost subsidies. A complete abolition of the construction cost subsidy for innovative, grid-serving technologies promotes the willingness to invest and the conversion of the energy grid towards climate neutrality and creates legal certainty. In this respect, we point out the need for adjustment of the regulatory system2 and consider a corresponding reference to this in the NDP, for example in the section on innovative technologies, to be appropriate. We also recommend that the system relevance of innovative technologies be given greater consideration in the NDP 2037/2045.
Optimal complementary use of hydrogen and battery storage systems
Due to the strongly increasing coupling of the electricity sector with other sectors in the coming years, there will be a significantly increasing demand for electricity in Germany, as discussed in the NEP. In order to be able to meet this demand sustainably, i.e. with renewable energies if possible, and cost-efficiently, it is central to implement energy-efficient and rapidly available technologies, especially in the transition period. In contrast to electrolysers and the combustion of hydrogen in gas turbines, large-scale battery storage systems have an overall efficiency (from withdrawal to return to the grid) of over 90 %3. In contrast, the combustion of hydrogen in gas turbines has an overall efficiency of only 30-40 %4. Battery storage systems can therefore release a significantly higher proportion of the stored energy into the grid for final use with a time lag. On the electricity market, this goes hand in hand with significantly lower reconversion costs compared to hydrogen technologies. This means that economically viable reconversion of hydrogen to electricity is only possible if the market prices of the electricity stored are very low and the market prices of the electricity stored are very high. Thus, a very volatile market is assumed. This also significantly reduces the number of hours during which electricity from hydrogen can be stored in an economically viable way compared to battery storage. Kyon Energy sees hydrogen and battery technologies as partners in the energy transition, both making a significant contribution to security of supply. However, due to the different levels of efficiency and storage volumes, both technologies offer advantages for different use cases. For example, battery storage is suitable as short-term buffer storage for grid stabilization, while hydrogen reconversion is better suited for long-term storage and thus for bridging long-term lulls in renewable energies, among other things due to its higher costs. In addition, as described above, battery (large-scale) storage systems have a very short implementation time and are particularly suitable for rapid implementation in the grid. 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 current draft of the network development plan no longer uses the peak capping instrument. Particularly in view of the massive expansion of renewables in conjunction with an increase in flexible consumers and storage options, this instrument is no longer appropriate. In contrast, an expansion of the energy grid hand in hand with the expansion of flexible storage options offers the advantage of cushioning the generation peaks that occur and thus reducing the costs of curtailing renewables. These additional integrated renewable energy volumes are then available to the market and consumers for use at a later date, maximizing renewables' contribution to decarbonizing power generation.
In summary, we at Kyon Energy welcome and support the first draft of the network development plan. We are pleased that the grid development plan includes large-scale battery storage as a system-relevant component for securing the energy supply in the event of increased feed-in of renewable energies. Only through simultaneous efforts in grid expansion and reinforcement as well as in the expansion of the various storage technologies hydrogen and battery storage can the conversion to a climate-neutral grid succeed.
In order to achieve the ambitious expansion targets on the market side, the regulatory framework also needs to be adapted 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, it should not go unmentioned when discussing the network development plan at the political level that regulatory changes will be unavoidable to comply with the assumed storage expansion path.
In order to enable a more efficient expansion of the energy grid, we recommend that the TSOs examine whether more large-scale battery storage can be included in grid optimization measures according to the NOVA principle in order to flank grid reinforcement and expansion. Furthermore, we recommend to check again to what extent the respective advantages of the long-term storage 'hydrogen' and the short-term storage 'battery' are reflected in the grid development plan in a cost- and technology-efficient way, and suggest an adjustment in favor of batteries.
We would like to thank the transmission system operators for preparing the first draft of the 2037/2045 network development plan. If you have any questions or comments, please feel free to contact us at any time.