The expansion of battery storage systems in Germany is increasing rapidly. Systems with a combined storage capacity of more than 1.9 gigawatt hours (as of November 2024) are now in use nationwide. In the first nine months of 2024 alone, storage capacity was increased by almost a third — a dynamic increase that underlines the immense importance and urgent need to further expand the infrastructure for energy storage.
Battery storage systems are an indispensable key to sustainable energy supply. In particular, large battery storage systems create the basis for efficiently integrating the fluctuating supply of renewable energy into the grid, compensating for peak loads and ensuring grid stability.
This article provides a review of the most important developments in 2024 and highlights the trends and opportunities 2025 has in store for the battery storage industry.
The year 2024 was a year of strong expansion and implementation for the battery storage industry in Germany. Germany has finally established itself as the leading market for stationary large battery storage systems in Europe — a result of technological progress, political commitment and the steadily increasing demand due to the continued expansion of renewable energy sources. With investment commitments amounting to billions of euros and a growing number of ready-to-build and announced projects, the industry showed unprecedented momentum.
The beginning of the year has already set the framework for this: The French multi-energy group TotalEnergies took over Kyon Energy and announces that it will invest several billion euros in expanding storage solutions in Germany. This step not only marks the entry of another global player into the German market, but also shows that the industry has grown up and is regarded as a stable and fast-growing technology of the future.
Kyon Energy itself was able to significantly expand its project pipeline, secure important permits for new sites and announce investments on a gigawatt scale. This drive to expand was by no means limited to individual companies. Numerous new battery storage projects have been announced across the industry and construction has started for the first storage systems in the three-digit megawatt range. By October 2024, more than 160 gigawatts of connected power had been requested through grid connection requests for battery storage systems (BESS) at the transmission system level alone — a figure that illustrates the enormous growth in the industry. Even if only a fraction of these projects are completed, this could change the energy system in the long term. At the distribution network level, despite lower connection rates, the number of inquiries is likely to be many times higher.
Used correctly, the ramp-up of large battery storage systems has the potential to reduce the necessary grid expansion, stabilize electricity prices and improve our grid stability. According to recent studies, large battery storage systems could generate economic added value of twelve billion euros by 2030 and reduce the need for new gas-fired power plants by up to nine gigawatts. They could also save around 6.2 million tons of CO₂ emissions in 2030.
The importance of large storage systems for the energy transition has been significantly underestimated in political space over many years. Although legislators have made selective progress in recent years, there is still a lack of a comprehensive strategy that clearly defines the role of storage as an essential component and a separate pillar of the energy system.
Partial successes in the context of regulatory frameworks and sharply falling investment costs for storage technologies are shaping the ramp-up of large storage systems in Germany. These developments are now bearing tangible fruit: The rapidly increasing, purely market-driven expansion rates impressively show how indispensable the technology has become for the energy transition. As a result, large storage systems are becoming increasingly important on the political agenda and are perceived as a key technology for the energy future.
Regulatory developments in 2024 illustrated both progress and ongoing challenges. Measures such as the extension of the grid fee exemption, adjustments to the network development plan and the introduction of the electricity storage strategy to promote battery storage systems sent positive signals. Solar package 1 also brought about an improvement: In future, storage grid connection requests will no longer be treated as secondary to renewable energy sources. With the passing of the Annual Tax Act in November 2024, another important signal was sent for storage: Storage systems are now required, just like renewable energies, to pay 90% of the business tax at the storage location. This significantly contributes to social acceptance of storage ramp-up.
At the same time, the year was marked by intensive discussions on the adjustment of market mechanisms in the wholesale market, in particular by announcements about the introduction of a capacity market and mechanism. However, their planned design continues to raise many questions and creates uncertainty in the industry.
Not all political assurances were implemented. Concrete steps are urgently needed to create long-term investment security and reduce administrative hurdles. Declarations of intent must be translated into clear measures with binding timelines so that the regulatory framework can sustainably support the dynamic expansion of battery storage systems.
In addition to project-related and regulatory progress, the energy storage industry experienced significant technological development and professionalization in 2024. Industry standards and memory-specific standards are being developed by network operators, which make the construction and use of storage systems more uniform and therefore easier to implement. For example, battery storage systems are now widely used in standardized 5 MWh containers. As a result, projects can be built much more compactly. Increasing standardization makes it easier to scale and plan projects.
The entry of new manufacturers into the market has slowed down, while established companies have significantly expanded their production capacities to meet increasing demand. At the same time, a noticeable fall in battery cell prices — due to overcapacity in production — led to more favourable market conditions. Advances in battery energy density also point to more powerful and efficient systems in the near future.
Despite this positive dynamic, access to critical high-voltage components such as transformers remains a key challenge. These bottlenecks could delay the implementation of some projects and make innovative approaches to efficiently use existing components and optimize supply chains urgently needed.
The year 2025 promises to be groundbreaking for the battery storage industry, offering both technological and regulatory challenges and opportunities. The sector will focus on expanding its role as an independent pillar of the energy transition, increasing efficiency in project planning and implementation, and closing outstanding regulatory issues, such as construction subsidies or the use of storage systems in redispatch, in order to further expand its contribution to the energy transition.
One of the biggest advances will be the commissioning of the first major projects with three-digit megawatt outputs, which represent an important milestone for scaling storage technology. These projects are an important signal of market stability and willingness to invest in this area.
Another important aspect is the expected low point in lithium prices in 2025, which offers the industry an opportunity to secure future projects on attractive terms. Despite the competitive market for high-voltage technology, these attractive conditions also make it possible to secure projects and ensure their early start-up.
In order to meet growing demand, ensuring sufficient capacity for so-called long-lead items such as transformers and grid connections will also be a high priority. These components are crucial for the successful implementation of new storage projects, but represent a challenge due to supply bottlenecks.
On a regulatory level, clear and stable framework conditions will be essential in 2025 to maintain the dynamism of the industry. As the industry continues to grow and gain in importance, clear, fair and long-term regulations are needed to create investment security and make the integration of storage systems into the energy system efficient. The focus is on the following priorities:
A key regulatory focus is on ensuring undistorted market price signals on the wholesale market. In particular, a hasty departure from the energy-only market (see blog post) risks distorting market mechanisms and jeopardizing the economic attractiveness of battery storage systems. It is therefore essential to design regulatory measures with care in order to avoid false incentives (such as excessive expansion of subsidized production capacities) and to maintain market integrity.
Construction subsidies still represent a significant obstacle for large battery storage systems. These fees can make many construction projects financially unprofitable and thus completely prevent them. The BKZ survey based on the so-called service pricing model, which was developed for consumers, is not justified for grid-connected storage systems such as those that Kyon Energy also develops and operates. The behavior of stand-alone storage is structurally different from that of an end user. By participating in system services, they contribute to connecting more renewable energy sources and can contribute to relieving the load on the grids instead of placing additional burdens on them. There is an urgent need for legal clarification from the Federal Court of Justice, which clarifies that storage facilities are not to be treated equally with consumers.
As early as 2024, the Federal Network Agency could have initiated an orderly procedure relating to storage, which would have provided clarity for everyone. Instead, it continues to appeal against the judgment of the Düsseldorf Higher Regional Court and indiscriminately classifies it as the final consumer in its position paper on the collection of construction subsidies. This practice prevents an efficient amount of storage expansion and thus leads to inefficiency in the overall system.
The exemption from network charges for battery storage systems is another key issue that urgently needs to be regulated. The regulation is currently valid until August 4, 2029, but the course must be set for an extension as early as 2025. Without early clarity, there is a risk of a significant slowdown in project development, as only a few projects that start after 2025 could be completed in time before 2029 in order to benefit from the exemption. If this uncertainty persists, the industry could be forced to focus exclusively on existing projects from 2025, which would severely affect market dynamics. A quick and binding decision is therefore essential to create investment security and ensure long-term growth in the storage sector.
Technologically, 2025 will be characterized by advances in the energy density of battery cells. While 5 MWh 20-foot DC containers are currently the common standard, the trend is clearly towards even higher capacities. Containers with 6, 7 or even 8 MWh capacities could soon be available across the board. At the same time, battery cells are becoming ever larger and more powerful: While 314 Ah cells are currently the norm, it will only be a matter of time before cells with a capacity of over 500 Ah are used regularly.
Despite the focus on innovations, LFP battery technologies remain the dominant implementation variant of battery storage systems. Alternative technologies, such as NAS battery cells, appear less suitable for the current licensing and market-specific framework conditions in Germany. There are signs of consolidation and optimization of proven lithium iron phosphate (LFP) technology, which remains the preferred choice due to its safety, cost structure and performance. Another important trend is the increasing use of AC containers, in which the inverters are integrated directly into the battery container, which significantly simplifies installation and operation.
2025 will be a year of transformation for the energy storage industry. The start-up of major projects, technological innovations and decisive regulatory decisions will determine whether the sector can continue its dynamic development. With the right framework conditions and a clear focus on innovation and efficiency, 2025 could be a turning point that will sustainably strengthen the role of battery storage as a key technology in the energy transition.
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