As Europe's largest economy, Germany is often the focus of fast-growing industries and international companies. But when it comes to large-scale grid-side battery storage projects, its deployment in 2021 lags far behind the UK, Ireland and France.
In contrast, the growth of the German residential energy storage market has been very strong, as residential users have increasingly sought to support their residential PV systems with energy storage. But Germany installed only 32MW (above 1MW) of energy storage projects last year. However, this situation is now starting to change.
Jan Figgener, head of grid integration and energy storage system analysis at RWTH Aachen University in Germany, said, “The large-scale energy storage market is gaining more traction, driven by different drivers than in previous years. For example, there is a large number of innovations in co-location projects. Tenders, there are many industrial sites where large-scale energy storage systems are installed, which will provide a huge boost to the development of the energy storage market.”
Florian Mayr, a partner at clean energy finance and strategy consultancy Apricum, added that many players now see the German energy storage market starting to accelerate and want to enter it sooner rather than later.
British investor Gore Street Capital and renewable energy developer Anesco have entered the German market in the first quarter of 2022. In June, Swiss Life Asset Management, which has a $290 billion investment, joined the ranks, acquiring a platform in Germany with a planned portfolio of 220MW of battery storage systems.
But this optimism is not necessarily widely shared. Claus Urbanke, head of German wind and solar at Norwegian hydropower developer Statkraft, said the company does not currently see a business case for deploying battery storage independently, although it is participating in the site selection of German grid operator Bundesnetzagentur. tender.
Jorg Blaurock, a partner at 3 Energie Consulting, which compiles the annual report on the energy storage industry for the German Energy Storage Association (BVES), agrees. He said that Germany does not currently need more energy storage systems to maintain stable operation of the grid, because existing generation assets and grid interconnections with other countries already meet Germany's electricity demand well, and its main driver is energy. Wholesale markets take advantage of increased volatility.
An important reason why the German battery energy storage market has yet to emerge is the relatively small size of the grid frequency service market, which is usually the first driver for the deployment of battery energy storage systems because of the stable income guarantee. This has to do with Germany's greater options for grid flexibility, including extensive interconnections with other national grids.
Value stacking is also more difficult due to unfavorable regulatory conditions. This stems from the insufficient existing regulatory definition of energy storage assets by the German Association for Energy Storage (BVES), although some changes should occur following the introduction of its new definition into German law in May 2022.
The energy storage project developer ECO STOR said that the frequency containment reserve (FCR) is the main auxiliary service provided by the battery energy storage system, but the frequency containment reserve (FCR) market with a capacity of only 550-600MW is close to saturation, and Germany has already About 600MW of battery energy storage systems are deployed.
Statkraft's Urbanke pointed out that the Frequency Containment Reserve (FCR) service will soon be replaced by the Automatic Frequency Recovery Reserve (aFRR), which will help to internationalize this service in grid-connected electricity markets across Europe, Although it will not increase the market size by itself.
He said, “These short-duration energy storage projects were commercially viable in the frequency containment reserve (FCR) market for a short period of time, but since this is a small part of the market and was developed very quickly, this no longer exists. Chance."
Germany installed nearly 200MW of utility-scale battery storage in 2018, a record-breaking year for the country's energy storage industry, according to figures released by Delta-EE. But its market growth has slowed significantly in 2020 and 2021 as Frequency Containment Reserve (FCR) services become increasingly saturated.
The largest battery storage system currently in operation in Germany is the 60MW/52MWh Lausitz battery storage system, connected to a coal-fired power plant operated by the power plant operator and utility LEAG. Lars Fallant, chief operating officer of energy storage project developer Tricera Energy, said LEAG, RWE and other large utilities have so far been the main players in installing large-scale battery storage systems.
These are market-driven projects that can take advantage of grid frequency services and trading opportunities, he added. These innovative tenders that serve and incentivize co-location storage projects, as well as a few large-scale energy storage tenders, are the main future drivers of the German energy storage market.