Grid determines the economic viability of battery storage systems

21.04.2026

Source: E & M powernews

Large battery storage systems are both consumers and producers. Whether they function economically is therefore largely determined by connection conditions, metering concepts and charges.

Large battery storage systems are regarded as end consumers when charging and as feed-in systems when discharging. This identifies the fundamental dilemma that has so far stood in the way of greater significance in the electricity market - even though the European Internal Electricity Market Directive now explicitly defines energy storage as an independent category. In national implementation, however, the practical treatment remains function-related.

The levy and fee regime is designed for this separation - but not for shifting energy over time. Although the abolition of the EEG levy in 2022 has eased the burden on the charging side, the structural problem of double charging remains unresolved. The question of whether a kilowatt hour that is stored and fed back into the grid is only recorded once in the grid charges therefore remains decisive for market enforcement.

Japan shows the way

A look at the Far East shows what large-scale battery storage systems can do for the grid if they are sensibly integrated into the regulatory framework. In Japan, battery storage systems are used for grid stabilization in a much more technologically diverse way than in Germany. In particular, redox flow batteries, including vanadium redox flow batteries (VRFB), play an important role in applications where high cycle stability, safety and energy shifting over several hours are more important than maximum energy density.

A reference example is the island of Hokkaido. Hepco Network has been operating a large-scale VRFB system with an output of 17 MW and a capacity of 51 MWh at the Minami-Hayakita substation since April 2022. It was specifically designed to stabilize a grid with highly fluctuating feed-in from renewable energies. A large-scale VRFB system with 15 MW and 60 MWh was previously installed in the same region as part of a state-funded demonstration project - in response to volatility and bottlenecks in a regional grid with high wind and PV dynamics.

New storage projects are also being developed outside of Hokkaido. For example, VRFB technology was selected for an energy project in Kumamoto (Kyushu) for a system with 2 MW output and 8 MWh capacity, which is to be operated expressly to stabilize the grid. In addition, Japan has been relying on other "non-lithium" technologies for years, in particular sodium-sulphur (NAS) batteries. These are characterized by high operating temperatures, robust long-term applications and large energy blocks. One early commercial application was a wind hybrid system with NAS storage and a capacity of 224 MWh.

Current projects also show that this technology continues to be marketed in Japan as a grid-supportive storage option. At the same time, the proportion of lithium-ion storage systems is also growing, as it is worldwide. They are primarily used for fast system services such as frequency control or short-term bottleneck relief.

Germany relies on lithium

In Germany, on the other hand, lithium-ion batteries dominate - both in home storage systems and in large-scale battery projects. As a result, the systematic limitations of this technology are becoming increasingly apparent. Lithium-ion systems are ideal for fast reactions and short-term storage. However, the costs and material requirements increase significantly for energy shifts lasting several hours or longer.

In addition, there are ageing effects due to calendar and cyclical degradation. With a high number of cycles and intensive arbitrage, this can affect the usable capacity and therefore the return on investment. In addition, potential thermal events require complex safety management.

Nevertheless, lithium-ion batteries remain indispensable in the short term. A study by Neon Neue Energieökonomik and Consentec on the system utility of large-scale batteries shows that storage systems reduce system costs, smooth out price peaks and improve the integration of renewable energies. At the same time, grid-supporting potential has so far remained largely untapped. In the single German price zone, storage systems hardly react to regional bottlenecks. Blanket operating requirements would further restrict this flexibility. Instead, the authors advocate time- and location-variable price signals, uniform connection rules and transparent remuneration systems.

Grid-serving storage in practice

Various projects in Germany - across different power classes - show that grid-serving operation is already possible today.
A joint project by Voltfang and Icecreek Energy in Alsdorf near Aachen (North Rhine-Westphalia) combines market and grid functions. The storage system with 9.5 MW and 20 MWh is connected directly to the medium-voltage grid and is responsible for trade optimization, balancing energy and local congestion management. This example shows that system efficiency is not only achieved in the transmission grid.

In Ahlerstedt near Stade (Lower Saxony), Terra One operates a storage facility with an output of 15 MW and a capacity of 30 MWh. It absorbs regional wind and PV peaks and feeds into the grid as required. Operation is managed via an AI platform. Planning, construction and financing were organized based on a division of labour. The project illustrates how standardization and digitalization can also make smaller stand-alone systems economical.

Aquila Capital's storage facility in Wetzen in the district of Hildesheim (Lower Saxony) with 56 MW and 112 MWh is designed for fast cycles. It is aimed at balancing energy and intraday trading. Here, every additional price component of the charging energy has a direct impact on margins. It is therefore crucial to precisely allocate the quantities of electricity fed back into the grid.
On an industrial scale, the energy group RWE operates plants in Hamm and Neurath (both in North Rhine-Westphalia) with a total capacity of 220 MW. They are primarily marketed via balancing energy markets. The company's own high-voltage connections and professional balancing systems ensure process quality. As the company grows in size, the importance of administrative precision also increases. System-relevant flexibility must not be treated like normal end consumption.

A 137.5 MW storage facility from Kyon Energy in Alfeld, Lower Saxony, is designed as an independent market player. Revenues are generated from primary control power, the spot market and avoided grid charges. Connection, metering and balancing are complex. Charges are generally incurred when charging, but grid fee exemptions only apply to electricity volumes that are demonstrably fed back into the grid.

Transnet BW's grid booster in Kupferzell (Baden-Württemberg), on the other hand, is purely an infrastructure project in the transmission grid. With a capacity of 250 MW, it is used for congestion management and to reduce redispatch measures. The business model is not based on market prices, but on systemic requirements. The connection, protection concept and availability are based on the requirements of critical infrastructures. Whether grid charges are incurred also depends on the metering and balancing concept.

In Förderstedt (Saxony-Anhalt), Eco Stor is planning a 300 MW storage facility with a capacity of 716 MWh to shift wind and PV surpluses over time. Verifiable documentation of the feed-back is becoming increasingly important as the intensity of operation increases.

At the Philippsburg power plant site in the district of Karlsruhe (Baden-Württemberg), EnBW is focusing on a project with 400 MW and 800 MWh. The site offers grid connection expertise and approval experience. The project is being marketed without subsidies. However, scaling remains limited as long as intermediate storage is not recognized as an independent system function for regulatory purposes.

Conclusion

The current large-scale battery storage systems do not fail because of the technology. Grid bottlenecks, volatile generation and the need for frequency maintenance provide sufficient fields of application. Business models for balancing energy, intraday and arbitrage are established. The economic risk lies primarily in connection, metering and charges. Investment security will only arise when privileges for intermediate storage function practically, can be reliably tested and actually avoid double charges during operation.

Author: Frank Urbansky