Germany’s Renewable Energy Revolution: How 50GW Battery Storage by 2037 Could Save €3 Billion in Subsidies

The potential of energy storage in Germany is increasingly recognized as a significant factor in the country's renewable energy landscape. According to a recent report by Global Experts Energy Consulting (GEEC) for the German developer and system integrator Eco Stor, energy storage could provide substantial economic benefits, potentially saving German taxpayers up to €3 billion (US$3.3 billion) in subsidies for renewable energy assets by 2037. This saving is primarily due to the increased demand in the wholesale electricity market that these storage systems are expected to generate.

By 2037, it's projected that nearly 50GW of battery storage will be operational, enhancing the wholesale market revenues for wind and solar assets. This increase will, in turn, diminish the subsidies required from general taxation under the EEG (Erneuerbare-Energien-Gesetz/Renewable Energy Sources Act) scheme, a policy mechanism similar to the UK’s contracts for difference (CfD).

The EEG scheme sets a minimum price for power from renewable sources, currently between 6-8 euro cents per kWh. When the wholesale market price falls below this threshold, the difference is covered by general taxation. As per the estimates of Germany’s transmission system operators (TSOs), this amount is set to surpass €10 billion in 2024.

Eco Stor’s managing director, Georg Gallmetzer, explained how increased demand during settlement periods in the wholesale electricity market can elevate the prices received by renewable energy assets, thereby narrowing the gap between market prices and the EEG guaranteed price.

This change is underpinned by the ‘merit order’ principle, where power demand and supply are aggregated and ordered by price. The introduction of 50GW of battery storage by 2037 is expected to influence these market prices favorably, resulting in a more efficiently funded EEG account.

The insights from the GEEC report, titled ‘Influence of battery expansion on the funding needs for renewable energies’ (Einfluss von Batterieausbaupfaden auf den Förderbedarf Erneuerbarer Energien) and currently available only in German, are crucial in understanding the evolving energy market dynamics.

Moreover, Germany's residential and commercial energy storage market leads in Europe, driven by subsidies for small-scale solar installations that bolster the demand for energy storage to increase self-consumption. The country's grid-scale market is also gaining momentum, fueled by various factors, including legislative support and technological advancements.

Recently, German lawmakers have extended an exemption from grid fees for battery storage systems until 2029, further encouraging growth in this sector.

The upcoming 9th annual Energy Storage Summit EU, hosted by Solar Media in London on 21-22 February 2024, will provide an ideal platform for stakeholders. This event, to be held at a larger venue, aims to bring together Europe's leading investors, policymakers, developers, utilities, energy buyers, and service providers to discuss and shape the future of energy storage in the region.