Fraunhofer Sees Billions in Potential Savings Through Energy Storage

July 1, 2026

Source: E & M powernews

According to a study by the Fraunhofer IEE, a faster expansion of battery storage could significantly reduce electricity system costs in Germany and better integrate renewables.

The accelerated expansion of battery storage and greater flexibility in the power system could save consumers and the federal budget billions of euros annually. This is the conclusion of a brief study by the Fraunhofer Institute for Energy Economics and Energy System Technology (Fraunhofer IEE) in Kassel.

The institute conducted the analysis on behalf of the German Renewable Energy Federation (BEE), the German Solar Industry Association (BSW), and the German Wind Energy Association (BWE). The associations presented the results on July 1 in Berlin.

Potential Savings in the Billions of Euros

According to the study, an additional short-term storage capacity of 20 GW with a storage duration of four hours during the period from January 2025 to the end of May 2026 would have enabled economic savings of 5.6 billion euros. On an annualized basis, this corresponds to approximately 3.9 billion euros. The savings would result from higher market values for renewable electricity, lower subsidy costs, lower prices on the spot market, and more favorable electricity trade with other countries.

According to the Fraunhofer IEE, as the share of wind and solar power plants increases, so does the need for flexibility in the power system. “Hellbrisen”—periods of simultaneous high wind and solar power generation—are occurring more frequently. During these periods, electricity prices on the exchange often drop sharply or even turn negative. This reduces revenues from renewable energy, increases the need for subsidies, and leads to plants being temporarily curtailed or electricity being exported at low prices.

The researchers conclude that additional battery storage could significantly mitigate these effects at a lower cost than the backup gas-fired power plants currently planned. According to their calculations, negative electricity market prices would decrease by nearly 70 percent. The volume of market-driven curtailments could be reduced by approximately 3.3 TWh, or about 55 percent.

Benefits for Renewable Energy Expansion

Furthermore, according to the study, the financing risks for new plants arising from Section 51 of the Renewable Energy Sources Act (EEG) would be reduced. For photovoltaic systems, the authors estimate the reduction at around 75 percent; for onshore wind energy, at nearly 55 percent; and for offshore wind energy, at nearly 60 percent.

The study also shows that the expansion of renewable energy to date has already lowered electricity costs. Even without additional storage, the expansion of wind and solar power plants resulted in net savings of around 0.3 billion euros during the period examined. According to the study’s authors, the price-suppressing effect of additional renewable electricity generation outweighed the resulting subsidy costs.

Calls for Policy Action

In light of the federal government’s expansion targets, the BEE sees a need for further action. According to the association, 20,000 MW of photovoltaic capacity and 15,000 MW of wind energy capacity are to be newly installed each year. To better integrate these capacities into the power system, the association states that further expansion of storage capacity is necessary. A simplified extrapolation of the Fraunhofer analysis indicates an annual need for approximately 8,000 MW of additional storage capacity, or 32 billion kWh of storage capacity.

The BEE is therefore calling for the removal of regulatory barriers. From the association’s perspective, these include accelerated and standardized grid connection procedures, the ability to reuse battery storage systems multiple times, greater use of storage in redispatch measures and during grid congestion, as well as simplified connection rules for existing grid connections.

BEE President Ursula Heinen-Esser explained that the analysis shows that storage could provide relief for both electricity customers and the federal budget. In her assessment, the number of grid connection requests from the industry demonstrates that the market is ready. “Now it is up to policymakers to ensure that these requests turn into projects,” she urged.

The complete IEE study on electricity flexibility is available online.

Author: Susanne Harmsen