Kyon Energy signs open letter to European decision-makers and media on REPowerEU plan

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Munich, Bavaria. Together with Fluence, Fraunhofer ISE, Vattenfall and a total of 24 of the leading companies and organizations in the energy and battery storage market in Europe, Kyon Energy is committed to the recognition of flexible energy storage technologies as a pillar of the European energy transition. As supporters of the REPowerEU plan, they welcome the ambitious goals to increase the security of energy supply by expanding and connecting more renewable energy sources to the grid. At the same time, they are calling for the urgently needed political framework conditions for the use of energy storage systems that are required for the successful implementation of the European plans. Kyon Energy looks forward to working with regulators and other market players to realize the goals outlined in the REPowerEU plan.

Open letter to European decision-makers and media on the REPowerEU plan

The current geopolitical situation across the European continent, combined with high dependence on imported natural gas, growing demand for electricity and consequently higher bills for households and businesses, make it urgent to rethink the structure of European energy systems.

The REPowerEU plan* published by the European Commission in May aims to increase the security of energy supply by expanding and connecting more renewable energy sources to the grid. However, for this plan to be successful, it must be accompanied by appropriate targets and policy frameworks for the deployment of energy storage and other flexibility-enhancing technologies. These are necessary to enable the safe and efficient integration of renewables into the power grid. Therefore, it is now time to recognize them as the pillars of the European energy transition.

The signatories of this letter, organizations with decades of experience in creating and supporting global and European energy markets, welcome the REPowerEU plan, its ambitious renewable energy targets, and its recognition of the role of energy storage in providing a sustainable and reliable energy supply.

At the same time, we believe that if accelerated near-term deployment of renewables is to be successful, Europe needs rapid deployment of proven and scalable technologies to increase grid flexibility and enable the secure and efficient integration of renewable energy sources. To this end, battery-based energy storage is a rapidly deployable, low-cost, low-emission solution with the potential to become a backbone of modern, resilient, and decarbonized energy systems. Other technologies such as "demand side response", the improved use of existing storage potential of pumped storage power plants and other energy storage technologies, and the interconnection of national electricity markets are all crucial to enable the European energy transition.

Thanks to their unique characteristics - responsiveness, flexibility and reliability - battery-based energy storage and other fast-acting technologies are perfectly positioned to reduce the total cost of electricity for businesses and residential energy users in a variety of ways. Battery-based energy storage can improve grid stability and reduce congestion on transmission lines, reducing renewable energy curtailment and the significant costs associated with it. It can provide capacity and ancillary services that balance supply and demand, often more efficiently and cheaply than other technologies. This can also limit price volatility and thus overall electricity costs in wholesale energy markets through energy arbitrage.

In markets around the world, energy storage technologies have proven their ability to replace thermal power plants as a more economical and low-carbon method of providing a secure energy supply during periods of peak demand and low renewable generation. But while we have access to this ready-to-use and cost-effective technology, we continue to rely on high-emission natural gas-based power generation, while Europe-wide targets for the strategic expansion of energy storage projects have yet to be developed and legislated. In 2021, capacity market auctions across Europe awarded about 2.4 GW of energy storage contracts. However, various studies predict that we will need up to 200 GW of energy storage by 2030 to increase the security and reliability of the continent's energy systems. Further changes to the structure and design of the energy market are also needed to achieve REPowerEU's goals.

In addition, the energy market should be designed so that generators and customers receive clear price signals at all times according to system demand. Energy prices should be low during periods of high renewable generation and higher during periods of low generation. Similarly, the cost of using the grid should be higher when it is congested by providing price signals for local generation and consumption that help reduce congestion on the grid.

We look forward to working with regulators and other market actors to realize the goals outlined in the RePowerEU plan by providing technologies, solutions, and policy frameworks that ensure affordable, reliable, and sustainable energy systems for European consumers.

*The European Commission's REPowerEU plan was first communicated in March and published on May 18. It includes raising the target for energy generated from renewable sources to 45% by 2030, up from 40% compared to last year's targets. This would bring renewable energy generation in Europe to 1,236 GW by 2030, including the installation of 320 GW of solar energy by 2025.

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