01/10/2024
Source: Energy & Management Powernews
A study points to the importance of large-scale battery storage for the success of the energy transition. It sees a savings volume of 12 billion euros in Germany as a result.
A study by the consultancy Frontier Economics - commissioned by Baywa Re, Eco Stor, Enspired, Fluence and Kyon Energy - confirms the storage strategy recently presented by the Federal Ministry of Economics. According to the report, this strategy must now be swiftly developed and implemented.
The importance of large-scale battery storage 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 15,000 MW or 57 million kWh by 2030 if the political framework conditions are right. This corresponds to a forty-fold increase in the storage capacity of large-scale storage systems compared to today. By 2050, the number of large-scale battery storage systems in Germany could even rise to 60,000 MW or 271 million kWh. The expansion will be driven by the growing demand for flexibility in the electricity system and falling costs for large-scale battery storage systems.
Less gas imports required
Dr. Christoph Gatzen, Director at Frontier Economics, sees the study as confirmation of the future role of large-scale battery storage systems in Germany: "The results clearly show that large-scale battery storage systems play a key 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 therefore to higher economic costs."
Both in terms of cost degression and the rate of expansion, battery storage systems promise a similarly dynamic development as photovoltaic systems in recent years - with the difference that large-scale battery storage systems could be installed and operated economically without state subsidies and purely market-driven.
According to the calculations of the study authors, 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. The added value from such savings on the wholesale market alone will increase to around 12 billion euros by 2050 - even without taking into account the additional benefits for system services, marketing on the intraday market or other economic knock-on effects.
A key driver of these savings is the reduction in fuel and CO2 costs. Large-scale battery storage systems will help to avoid around 6.2 million tons of CO2 in 2030 and around 7.9 million tons of CO2 in 2040. This is the result of a comparative calculation with an electricity system in which gas-fired power plants are predominantly used in Germany instead of large-scale battery storage systems.
Dropping wholesale prices
The study also shows that large-scale battery storage systems have a price-reducing effect on prices and reduce the wholesale price by around 1 euro/MWh on average between 2030 and 2050. If there is no possibility of replacing stationary battery storage with additional gas-fired power plants, however, the wholesale price would be expected to be 4 euros/MWh higher.
The expansion of large-scale battery storage can also make a significant contribution to reducing the pressure to invest in gas-fired power plants, as the study also states. In a scenario without storage expansion, the planned 26,000 MW of new gas-fired power plants by 2030 will not be sufficient and a further 9,000 MW will have to be built and operated. The modelling shows that although large-scale storage systems 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.
Thomas König, Regulations Expert at Enspired, comments: "Large-scale battery storage systems are the necessary piece of the puzzle for realizing the energy transition. The cost savings and growing gas independence resulting from the integration of large-scale storage systems will also increase public acceptance of the energy transition."
Requests to policymakers
The clients of the study believe that policymakers 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.
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 carried out 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 is a consulting firm that deals with the economic consequences of energy and climate change, among other things.
Author: Günter Drewnitzky
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