Global efforts to reduce CO₂ emissions and transition to an energy system based entirely on renewable energy are in full swing. In doing so, Germany has established itself as the most attractive and dynamic market for stationary battery energy storage systems in Europe. This development is not a coincidence, but the result of a combination of technological progress, favourable political framework, market depth and strong market dynamics. The announced expansion rates and investment announcements amounting to billions of euros are remarkable.
The energy transition and the transition to renewable energies have significantly increased the need for efficient and reliable flexibilities. Stationary large battery storage systems play a central role here, as they contribute both to security of supply and to the stability of networks and energy systems. They increase supply security by being able to store excess energy from renewable sources and feed it back into the grid when needed. In addition, they help to stabilize the power grid by providing various services, such as the provision of balancing power.
Large-scale battery storage systems are essential to achieve the ambitious climate goals, as they support the integration of renewable energies and increase the resilience of the energy system.
So what makes the German battery storage market so attractive and distinguishes it from neighboring European markets?
Germany is the largest electricity market in Europe and therefore offers significant potential for expanding the energy storage infrastructure. In 2023, the nationwide gross electricity consumption was 517 terawatt hours (TWh), which is significantly higher than the consumption of other EU countries. By way of comparison, gross electricity consumption was 438 TWh in France, 253 TWh in Spain and 286 TWh in England. Net electricity generation was equally high at 448.5 billion kilowatt hours. Fortunately, a total of 56% of this generation came from renewable energy sources last year.
In addition, the expansion of renewable energy in Germany is also progressing rapidly. And that with ambitious goals: By 2030, 80% of electricity generation should be covered by renewable energy sources. The expansion plans are correspondingly ambitious: those for offshore wind energy alone plan to increase capacity to 30 gigawatts (GW) by 2030 and to at least 70 GW by 2045. In the area of onshore wind energy, the installed capacity is expected to rise to 115 GW by 2030. It is also planned to increase solar energy capacity to 215 GW by 2030, with an annual increase of around 22 GW of new installations.
This development, whose effects are already being felt today, will further increase the volatilities on the electricity market and continue to create an environment with great potential for the use of battery storage systems. The strength of battery storage systems lies in their ability to compensate for volatilities in the electricity market and thus ensure greater price stability for all consumers. They are particularly effective in markets with high shares of renewable energy. Battery storage systems can store excess energy and thus help to compensate for fluctuations in energy production and increase supply security.
The expansion of storage facilities in Germany is driven purely by the described phenomena on the electricity markets. Like other technologies, it is not controlled by government subsidies. Nevertheless, the German storage sector is one of the fastest growing in Europe. According to the scenario framework of the Network Development Plan 2025, the Federal Network Agency (BNetzA) forecasts an expansion of 32 GW of large storage systems by 2037 and between 36 GW and 44 GW by 2045. These assumptions are supported by a new study by Frontier Economics, which predicts growth to 15 GW by the end of the decade — a forty-fold increase of current capacities — and up to 61 GW by 2050. Further studies, such as by Fraunhofer ISE, TenneT or the Ten-Year Network Development Plan (TYNDP), also confirm a sharp increase in the expansion of large battery storage systems in Germany. Depending on the study, growth rates of between 27 and 48% are expected by the middle of the next decade.
Current forecasts and observed growth in the sector are already clearly showing the transition to a new stage of maturity. Initially, large storage systems were mainly used for smaller market segments such as primary control power or industrial applications. Today, however, we see that various players are driving forward the expansion of storage systems and using them for a wide range of use cases. Examples include revenue stacking at private-sector operators and the construction and use of storage systems by network operators to reduce the load on the network infrastructure.
In addition to the rapidly increasing greenfield development and announcements of new major projects in Germany, the focus is currently in particular on the actual implementation of the storage systems and the delivery of the components. Thanks to continuous technological advancements, energy storage solutions are becoming ever more efficient, cost-effective and scalable. Project sizes in Germany are also increasing: storage systems range from 10 to 20 MW projects to 100 MW and more.
While in many European markets attention is focused on upcoming tenders and auctions for energy storage systems, market participants in Germany are focusing on trade gains in a wide variety of markets and the expected volatility of electricity prices due to the high share of renewable energies. The variety of approaches available for using large battery storage systems offers both opportunities and challenges in finding the most economical solution. The operation of storage facilities in Germany is particularly attractive due to access to various energy markets. Because this opens up numerous application scenarios and business models for operating the plants
In Germany, service markets, such as the standard services market, are largely freely accessible. Here, storage systems can participate not only in the intraday market, but also in the primary markets for frequency control reserves (FCR). This flexibility enables operators to diversify their operating modes and tap into various sources of revenue. Access to these markets creates economic incentives and improves the profitability of storage facilities.
In contrast, energy markets in countries such as Italy, France and Greece are much more heavily regulated. Here, operators must meet specific regulatory requirements in order to participate in tenders and markets. These restrictions may limit the flexibility and economic opportunities of large battery storage systems.
Participation in various markets offers large battery storage systems the opportunity not only to store and sell energy based on demand, but also to provide important grid services. This helps to stabilize the power grid and enables operators to tap into further sources of income.
The described attractive market environment in Germany is supported by comparatively stable regulatory frameworks that promote the market-based operation of battery storage systems. The high level of legal certainty also makes the German market generally attractive for infrastructure investments. After systematically underestimating the importance of large storage systems for the energy transition in political space for a long time, they too are becoming increasingly relevant on the political agenda, and thus also in regulatory terms, in the recent past. With the publication of the energy storage strategy at the end of 2023, the Federal Government is taking a first important step towards also politically defining the role of large battery storage systems in the context of the energy transition. It aims to support the expansion dynamics of energy storage systems. A declaration of intent that must now be backed up by concrete policy measures in order to develop actual clout and further strengthen the energy storage market. This is because although large battery storage systems have a stable legal and regulatory environment, there are still some hurdles to overcome here. For example, long-term and comprehensive solutions must still be adopted on the topics of network charges, construction subsidies, grid connection conditions or reduction of bureaucracy in development. And the network-serving and market use of storage systems, for example in redispatch, should also be urgently improved, in particular with regard to reducing network bottlenecks and cost reduction potential. There is now a need for active political governance as quickly as possible in order to strengthen investment security in the long term. In this way, the dynamic expansion of large battery storage systems can drive the energy transition, reduce costs and strengthen energy security in Germany.
The importance of stationary large battery storage systems for the energy system and the energy transition has increased significantly throughout Europe in recent years. A variety of new major projects underpin this development. As Europe's largest electricity market with a strong expansion of renewable energies and enormous growth potential, Germany offers an ideal environment for investments in large battery storage systems. The market is in a new stage of maturity characterized by diverse application scenarios and dynamic market conditions. Operators of large battery storage systems benefit from a stable legal and regulatory environment that enables long-term planning and investments. The combination of political support, such as the recently published energy storage strategy, and the increasing relevance of large storage systems on the political agenda, creates additional incentives and strengthens Germany's position as an attractive location for energy storage. Developments that are also of great interest among national and international investors. Despite some remaining challenges, Germany is emerging as a leading market for storage solutions, making a significant contribution to the energy transition.
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