Study: Battery storage will not be able to fully replace gas power plants in Germany by 2035

Germany will continue to need gas-fired power plants for the foreseeable future. Battery storage alone will not be enough to guarantee a secure electricity supply throughout the year. That is the conclusion of a new study by analysts at Thema Consulting Group, titled The Interplay Between Batteries and Gas in Dunkelflaute Events.

The study also examined how different installed capacities of gas-fired power plants and battery storage would affect electricity prices and CO2 emissions in 2035 during periods of Dunkelflaute — extended spells of low wind and solar generation.

In their baseline scenario among a number of scenarios, the Thema analysts assumed that no new investments in battery storage or gas-fired power plants would be made after 2027. Under that scenario, around 400 hours of price spikes of EUR 1,000/MWh would appear on the power exchange in 2035. The calculation was based on weather data from 1985. These price spikes would occur between January and early March, and again from late October to December.

The analysts then modelled additional scenarios to calculate the impact on electricity price trends. In one set of scenarios, they assumed the addition of up to 30 GW of gas-fired power plant capacity by 2035, in 5 GW increments. They also simulated the addition of up to 90 GW of battery storage, using 10 GW steps. For the battery mix, they assumed 50% two-hour storage, and 25% each of four-hour and six-hour storage.

Their calculations show that dispatchable capacity in the form of gas or other fossil-fuel power plants is needed to significantly reduce the number of price spikes in the electricity market.

“Battery storage can help reduce the number of price spikes, but batteries alone are not enough. Beyond a level of 70 GW, additional batteries have no further effect on security of supply,” the analysts said.

According to the study, adding 20 GW of gas-fired generation would reduce the number of price spikes from nearly 400 to around 100. By contrast, investing in an additional 90 GW of battery storage would only reduce the figure to around 200. The effect of battery storage is therefore clearly limited, even though the analysis assumes storage durations of up to six hours. To achieve a greater effect on price spikes, storage duration would need to increase significantly.

According to Thema’s calculations, adding 30 GW of gas-fired power plants together with at least 50 GW of storage could reduce price spikes to zero in 2035. However, the analysts also note that these gas-fired plants would be needed only at limited times, since they would operate mainly during periods of scarcity. Their utilization rate would be around 8% to 14%, according to Thema. An additional 30 GW of gas-fired capacity would provide roughly 22 TWh of generation. If 90 GW of battery storage were also installed by 2035, gas consumption would fall by 14 TWh by absorbing some of those price spikes.

Additional gas-fired generation would also affect electricity prices. An increase of EUR 1/MWh in gas prices would push power prices up by significantly more than EUR 1/MWh. However, the calculations also show seasonal differences. During periods of high renewable generation, the effect would be more limited. In those conditions, additional battery storage would also reduce the number of hours in which gas-fired plants set the market price.

As for European CO2 emissions, the analysts expect the addition of new gas-fired plants to have only limited impact. One reason is that new gas-fired generation in Germany could displace output from less efficient and more carbon-intensive plants in neighbouring countries. In the study’s assessment, battery storage could cut CO2 emissions by around 10 million tonnes, equivalent to 140 to 200 tonnes of CO2 per installed megawatt of battery storage. Here too, the analysts observed diminishing marginal returns from adding more storage.

Ultimately, the analysts conclude that gas-fired plants would in part be used to charge battery storage during Dunkelflaute periods. For that reason alone, they argue that a balanced mix of new capacity additions will be necessary.

From pv magazine Germany.