Germany could curb power price swings, reduce renewable subsidies with batteries – report
Clean Energy Wire
Doubling Germany’s battery storage capacity could significantly reduce the number of hours with extremely high or low power prices on wholesale markets and decrease renewables subsidies, according to a simulation by solar research institute Fraunhofer ISE. To achieve the price-dampening effect, storage systems needed to react to market signals, which currently is not the case for many home batteries.
“The findings demonstrate clearly how energy storage makes a volatile electricity supply more flexible,” said Urban Windelen, head of storage association BVES, which commissioned the report together with energy sector association bne.
Battery storage is growing rapidly in Germany. Germany currently boasts power output of over 21 gigawatts (GW) in battery storage, largely from home batteries, according to Fraunhofer ISE data. Many large-scale storage projects are currently in planning – though not all will be realised.
Fraunhofer ISE researchers analysed buy and sell bids on the day-ahead electricity market for the year 2025, and simulated the effects of adding batteries that buy electricity when prices are low, and sell it back when they are high. They found that an additional 20 gigawatts (GW) of power output with a two-hour storage duration would have reduced the number of hours when electricity prices exceeded 200 euros per megawatt-hour (MWh) by around 88 percent, and cut the number of hours when electricity prices were negative by around 53 percent.
As a result of fewer hours with negative prices, the market value of solar would have increased by around 35 percent, according to the simulation. This, in turn, would have reduced the need for solar subsidies by about 1.2 billion euros per year, Fraunhofer ISE said.
The government is currently debating new laws aimed at synchronising the growth of renewables with the capacity of the grid in a bid to cut costs. Economy minister Katherina Reiche has said that renewable energies should “shoulder part of the responsibility” of the energy transition. The reforms would reduce incentives for new solar and wind energy projects in areas where grid congestion is common, as well as cut support for small-scale rooftop solar.
The renewables industry has heavily criticised the proposals, saying the new rules would stall investments and slow down the energy transition. Researchers agree that Germany can increase the efficiency of its energy transition, but question the government’s current approach.
The association bne called for regulation that speeds up grid connections for large-scale batteries, for example clear prioritisation criteria where grid capacity is limited, and a faster rollout of smart meters to enable home storage systems to participate in the electricity market, too. Currently, most home batteries begin charging in the morning, meaning they are already full by midday, when solar power generation peaks – and thus cannot help to balance the grid.
More batteries are a prerequisite for making the energy transition more reliable and cost-efficient while reducing the need for costly grid interventions, the renewables industry has said.