Energy storage can mitigate Germany’s negative electricity prices

One number is currently electrifying Germany’s photovoltaic industry: Some 161 GW of storage projects have been registered for grid connection with the country’s four major electricity transmission system operators, and that figure does not include grid requests to the distribution system operators (DSOs), who transfer electricity from substations to homes and businesses.

Whether all those energy storage projects, in numbers compiled by Norwegian energy data company Montel Group, actually take shape is another matter, as Stefan Müller, COO of German solar company Enerparc, told pv magazine.

“It is difficult to predict what will really happen in the storage sector,” said Müller “Fifty to 100 GW have been announced for [2025] but I cannot estimate whether they will really come.”

For one thing, there may not be enough engineering, procurement, and construction services businesses to handle such a volume of work, said the executive. “People with battery experience are currently desperately sought everywhere,” he added, explaining energy storage sites are more complex projects than solar parks.

Figures from RWTH Aachen University, in Germany, indicate only 1.8 GWh of large-scale energy storage capacity has been grid connected in the country to date. That means 50 GW-plus would require a paradigm shift and Müller believes the country’s politicians have underestimated the potential storage boom and the effect it could have on energy prices.

“If more than 20 GW of this storage comes quickly, then that will have a visible impact on the negative price hours on the stock exchange,” he said.

Mitigation

Germany had experienced an annual record 438 hours of negative electricity prices by the end of October 2024. Analyst Aurora Energy Research has estimated energy storage could bring that figure down to around 300 hours in 2025. Aurora has said the number of negative-price hours could be halved by 2030 and could fall below 100, from 2031, if energy storage capacity expands sufficiently.

As Müller, and clean energy associations have pointed out, the existing energy storage capacity that has been commissioned under Germany’s “innovation tenders” should be permitted to charge from grid power. At present, such sites are only permitted to charge from associated PV sites, with the batteries then feeding that solar power into the grid as needed.

Energy regulator the Federal Network Agency could change that and ensure Germany’s existing energy storage fleet could be used to maximum effect in reducing the number of negative electricity-price hours.

“The Federal Network Agency can say how the battery storage systems are connected,” said Müller. “It can also regulate the issues of pooling or superstructure,” he added, referring to the joint use of grid connections by storage, wind, and solar sites. Federal Minister of Economics Robert Habeck, of the Green Party, is receptive to that idea but pooling of grid connections is being thwarted by resistance from DSOs.

The recent defection of the liberal Free Democratic Party from Germany’s “traffic light coalition” government, and consequent loss of a parliamentary majority for the remaining Socialists and Greens, has cast doubt on the ability of the remaining members of government to pass legislation before the planned election, on Feb. 23, 2025.

Enerparc’s Müller is skeptical about whether a planned amendment to the Energy Industry Act will survive in its present form but said parts of it may still be passed.

Renewed hope

The center-right Christian Democratic Union (CDU) appears likely to make big electoral gains in February and has stated enthusiasm for renewables in its position paper, a belief which appears to be held by many CDU representatives.

An potential change of government in February, Müller said, would leave more time to implement the European Union requirement that the capacity mechanisms of its member states – which exist to ensure there is always enough electricity to meet demand – should promote renewables from 2027 onwards. In Germany, that would require changes to energy law the Erneuerbare-Energien-Gesetz (EEG). The country’s Federal Ministry for Economic Affairs has proposed four options for new electricity market design to include such mechanisms.

Müller has backed the ministry’s suggestion of testing each of the proposed new capacity mechanisms before implementation of an EEG 2027. “One or two test tenders for the various mechanisms, or the application of a contract-for-difference (CfD), as used in Great Britain, would be useful,” said the COO. CfDs stipulate a strike price for renewable electricity. Clean energy generators sell power into the market and if the wholesale price they receive is lower than the strike price, the government will make good the difference. In the event of higher-than-strike-price wholesale returns, generators refund the difference to the government.

Referring to the crucial question of finance for energy storage sites, Müller said, “The most important thing is that the banks have to understand what is being regulated.”

Event notice

The topics discussed above will certainly be the focus of the Forum Solar Plus event in Berlin on Nov. 26 and 27, 2024. Enerparc’s Müller will be present at the opening session, entitled The EU as a door opener for the electricity market design of the future: High time for a 24/7 secure, efficient, and sustainable energy supply,” on Nov 26.

From pv magazine Deutschland.