Study: Significance of large-scale battery storage systems for the success of the energy transition is massively underestimated - savings of 12 billion euros possible in Germany

- Storage capacity of large-scale battery storage systems in Germany will grow by a factor of 40 to 57 GWh by 2030 with a total capacity of 15 GW
- Large-scale battery storage systems generate €12 billion in economic added value and reduce electricity costs for end customers
- Expansion of large-scale battery storage systems reduces pressure on the construction of new gas-fired power plants in Germany and reducesCO2 emissions by up to 6.2 million tons in 2030. 9 GW fewer new gas-fired power plants required by 2030

January 08, Munich. A study by Frontier Economics - commissioned by BayWa r. e., ECO STOR, enspired, Fluence and Kyon Energy - provides important insights for the design of the energy transition in Germany. It confirms the necessity of the storage strategy recently presented by the Federal Ministry of Economics. This must now be designed and implemented quickly.

Large-scale battery storage as an opportunity technology for the energy transition

The importance of large-scale battery storage systems for the electricity system will increase significantly in the future. The analyses show that the volume of large-scale battery storage systems in Germany will increase to 15 GW or 57 GWh by 2030 if the political framework conditions are in place. This corresponds to a forty-fold increase in the storage capacity of large-scale storage systems compared to today. By 2050, the stock of large-scale battery storage systems in Germany could even increase to 60 GW or 271 GWh. The expansion will be driven by the growing demand for flexibility in the electricity system and falling costs for large-scale battery storage systems.

Dr. Christoph Gatzen, Director at Frontier Economics, sees the study as confirmation of the future role of large-scale battery storage in Germany: "The results clearly show that large-scale battery storage plays a central role in the energy transition in Germany. If this flexible technology is not used, it will lead to higher gas imports and more curtailment of renewable energies in Germany, and thus to higher economic costs."  

In terms of both cost degression and the rate of installation, battery storage systems promise a similarly dynamic development as photovoltaic systems in recent years - with the difference that large-scale battery storage systems can be installed and operated economically without state subsidies and purely market-driven.  

Large-scale battery storage with economic added value of at least 12 billion euros

Large-scale battery storage systems can generate considerable economic added value. This is achieved by shifting the availability of electricity from times of electricity surplus to times of electricity shortage. Frontier Economics puts 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 ancillary services, marketing on the intraday market or other economic knock-on effects. A key driver of these savings is the reduction in fuel andCO2 costs. For example, large-scale battery storage systems will help to avoid around 6.2 million tons ofCO2 in 2030 and around 7.9 million tons ofCO2 in 2040. This is shown by the comparative calculation with an electricity system in which gas-fired power plants are predominantly used in Germany instead of large-scale battery storage systems.  

The study also shows that large-scale battery storage systems have a price-reducing effect on wholesale prices and reduce the wholesale price by an average of around €1/MWh between 2030 and 2050. If there is no possibility of replacing stationary battery storage with additional gas-fired power plants, the wholesale price could even be expected to be €4/MWh higher on average between 2030 and 2050.

Large-scale battery storage systems reduce investment pressure on gas-fired power plants  

The expansion of large-scale battery storage can also make a significant contribution to reducing the pressure to invest in gas-fired power plants. In a scenario without storage expansion, the planned approx. 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 study's modeling shows that although large-scale storage facilities cannot completely replace the expansion of gas-fired power plants, they can make a significant contribution to reducing the pressure to invest 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-capable gas-fired power plants, Dr. Christoph Gatzen points out: "Large-scale battery storage facilities are currently being built without state funding and can reduce the need for construction and the required fuel input in new hydrogen-capable gas-fired power plants. The creation of investment security for large-scale battery storage systems and other generation and storage options through clear and reliable framework conditions should therefore be a clear political objective. It is foreseeable that the demand for electricity and also the peak load in Germany will increase significantly and that we therefore urgently need new large-scale battery storage facilities and power plants to supplement the expansion of renewable energies for our supply."  

Benedikt Deuchert, Head of Business Development & Regulatory Affairs at Kyon Energy, adds: "The results of Frontier Economics show that large-scale battery storage systems are not in conflict with either grid expansion or the 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 do not need a cent in subsidies, but they do need reliable framework conditions so that the investments actually take place and thus the enormous economic added value can be achieved, which the study has clearly quantified."

Derivation of the demands on politics

The clients of the study believe that politicians are specifically called upon to ensure investment security in the construction of large-scale battery storage systems. Bureaucratic obstacles and regulatory barriers, for example in the approval process, must be removed. All markets for energy, capacity and system services in Germany should be open to technology and market-based. The German government must implement the requirements from the current reform of the European electricity market to define indicative storage targets as quickly as possible. Building on this, the federal government should present an expansion strategy for large-scale battery storage in Germany. With the recent publication of the electricity storage strategy, the German government is taking a first step that now needs to be translated into concrete legislative plans in the near future.  

About the study  

The study on the value of large-scale battery storage in the electricity system in Germany was commissioned by BayWa r.e. AG, ECO STOR GmbH, enspired GmbH, Fluence Energy GmbH and Kyon Energy Solutions GmbH and prepared by Frontier Economics Ltd. The study is based on the modeling of the European electricity market with Frontier's Combined Investment and Dispatch model in three different variants: A reference modeling, in which the endogenous expansion of batteries and power plant capacities is done solely by the model, as well as two variants in which the addition of batteries in Germany is not possible and the missing capacity is allowed, or not allowed, by the endogenous addition of other power plant capacities.  

Frontier Economics (Frontier) is a microeconomic consulting firm that provides economic advice to public and private sector clients on competition policy, public policy, regulation, business strategy, behavioral economics, and energy and climate change. The Frontier Economics network consists of separate firms based in Europe (Berlin, Brussels, Cologne, Dublin, London, Madrid and Paris), Australia (Melbourne, Sydney and Brisbane) and Singapore.

Marta Bitti
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