Analysis recommends dynamic energy pricing for network charges on battery storage in Germany
In May, the Federal Network Agency (BNetzA) launched a consultation on the redesign of grid fees with a 57-page discussion paper. The stated aim of the new framework, known as the “General Grid Fee System” (AgNes), is to align grid charges with the requirements of the energy transition. Among the many open questions addressed, the paper places particular focus on grid fees for battery storage systems. It is widely expected that the current exemption for electricity storage facilities from grid usage fees – set to remain in place until August 2029 – will be discontinued thereafter.
As part of the consultation process, battery storage developer and operator Eco Stor commissioned the consulting firm Neon Neue Energieökonomie, led by Lion Hirth, to analyze and evaluate various grid fee design options. Eco Stor plans to submit a formal statement to the AgNes consultation incorporating the study’s findings. Using a battery deployment planning model, Neon assessed the behavior of a representative large-scale storage system under different grid fee scenarios, both static and dynamic. The analysis quantified not only redispatch costs but also overall grid utility and economic welfare impacts.
Neon’s study demonstrates that even large-scale battery storage systems operated purely on market terms already provide measurable benefits to the grid. “The frequently cited claim that market-driven storage operations are harmful to the grid has been disproven,” says Eco Stor. In its analysis, Neon compared battery dispatch in the day-ahead market with historical redispatch activity over the course of a year. The results show that battery storage slightly reduces overall redispatch costs. However, the study notes that this positive impact is largely coincidental, as the current German electricity market does not reflect grid congestion in its pricing. “With targeted incentives, battery storage could deliver significantly greater value to the grid,” the analysis states.
So what would be the most effective incentive? According to the study, static grid fees are often counterproductive. “Traditional energy and capacity-based charges may generate revenue for grid operators, but they do not promote grid-friendly behavior from storage systems. From a macroeconomic standpoint, they are inefficient and reduce overall welfare,” the study concludes. In contrast, dynamic energy price presents a promising alternative. Neon’s analysis suggests that time- and location-specific grid fees for battery storage could reduce redispatch costs by up to 500% more than static fees. With such dynamic energy prices for netwrok charges, storage systems could actively help relieve grid congestion and enhance overall system efficiency.
For operators of market-driven storage facilities, the introduction of dynamic energy prices for netwrok charges would have only a “minor” impact on their economic performance, the analysis finds. What is more, the combination of grid and market benefits leads to an overall economic welfare gain of around 40% compared to the status quo, the results show.
Like many industry stakeholders, Eco Stor has long called for the recognition of grid-friendly behavior by large-scale battery storage systems. There is broad consensus that a rapid and substantial expansion of such storage capacity is essential to provide the flexibility needed for integrating increasing volumes of solar and wind energy into the power system. “This study by Neon makes it clear: dynamic grid charges create a true win-win for both the electricity grid and the market,” says Georg Gallmetzer, Managing Director of Eco Stor. “We urgently need a reform that incentivizes grid-friendly behavior rather than penalizing it.”
However, Neon Neue Energieökonomie has identified an alternative scenario that would deliver even greater benefits for all stakeholders. “From our perspective, the conclusion is clear: a price zone split would be the most effective measure to ensure that large-scale battery storage systems support the grid,” writes Lion Hirth. “Since this option is politically unpopular and not favored by the Federal Network Agency, the next-best solution is the introduction of dynamic energy pricing.”
From pv magazine Germany
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