Flexibility in the power grid is essential to successfully master the energy revolution. In the context of the German energy system, this means that both the electricity grid and the electricity market have the ability to compensate for fluctuations in the demand or supply of electricity and thus guarantee the stability of the power supply and thus security of supply. This takes into account both temporal and spatial options for balancing imbalances between production and demand.
Battery storage systems play an essential role in providing flexibility. Despite high demand, storage technologies in Germany are not yet ideally integrated into the network, meaning that their potential cannot be fully exploited.
Battery storage systems are an essential element for maintaining system stability. Due to their high level of dynamic controllability, battery storage systems can already be used today in various application scenarios. They form an essential component for taking over voltage and frequency regulation of conventional, fossil must-run power plants and are used in particular for very rapid regulation of power grids (primary control power). From a network engineering perspective, the exact location of the grid connection is not decisive for the provision of balancing power as long as the amount of power determined by the transmission system operator for the grid area is maintained. In Germany, demand is just under 593 MW, with a core share of 178 MW (as of 13.04.2023) must always be provided by yourself within Germany. The rest can theoretically be imported. The location itself does not matter for this, but an even distribution of delivery is desirable.
The same applies to the second major area of application of battery storage systems, electricity trading. Since the liberalization of the European electricity market over 20 years ago, all trade has been decoupled from the grids. Accordingly, battery storage systems pay the fixed unit price within the German-Luxembourgish bidding zone at any time and regardless of location and can only react to price signals that vary over time. Trading in electricity is not just a business area for speculators but also fulfills an important task, as it leads to price stabilization and thus also to lower electricity costs for the entire society (see our article on”Why battery storage systems lower electricity prices“). However, it should be noted that regional shortages or surpluses in the zonal electricity system within bidding zones are not taken into account. According to European legislation, structural bottlenecks must not actually occur so that the adoption is still justified. However, this situation no longer exists in Germany, with its slow network expansion.
The existing flexibility of battery storage systems can also play a key role in preventing grid bottlenecks in order to reduce or even completely avoid them in the bidding zones. Like generation plants, storage systems such as large battery storage systems must also be available for redispatch measures by transmission system operators. If these are strategically placed at network nodes where network bottlenecks often occur, they can even contribute particularly effectively to preventing bottlenecks. In addition to normal redispatch measures, the memories can also optionally function as consumers. In this way, large battery storage systems can not only be throttled down to zero like generation plants before bottlenecks, but can also absorb surplus electricity produced. Once the bottleneck has been resolved, the storage systems can feed this electricity back into the grid with a time delay.
Especially in view of the urgency with which flexibility options are currently required in the power grid, storage systems thus offer an enormously important addition to grid expansion, which, above all, can be implemented much faster. This alternative is also extremely relevant from an environmental and social point of view, as the German power grid is characterized by bottlenecks on the generation side. This means that in the event of excessive electricity production, more renewables must be curtailed in order to ensure secure network operation. At the same time, predictable (and therefore almost always conventional fossil) plants must be ramped up elsewhere in order to make up for the deficit. This process increases CO2-Output from electricity production and also causes costs due to the necessary redispatch of the systems, which in turn are socially borne by network charges.
In order for battery storage systems to make the best possible contribution to the integration of renewables and avoid grid bottlenecks, it is necessary to build these storage systems explicitly in areas that are already polluted today. From a technical point of view, they can make the greatest possible positive impact here and also accelerate expansion through better integration of renewable plants. From a regulatory perspective, however, there are still a number of hurdles to overcome that still hinder the most holistic use of storage systems today.
Although German network operators recognize the technical possibilities of battery storage for network support and for improved integration of renewables, they are unable to access storage flexibility. The reason for this can be derived in part from the purely cost-oriented German redispatch regime. The cost-based approach requires that investments affected by redispatch may not be economically better or worse off as a result of the intervention. This logic worked well in the past, when electricity costs could be assessed by fuel costs and working hours. For storage, however, the economic analysis is significantly more complex, as the basis for decision-making must be based on fluctuating opportunity costs. Since redispatch costs for storage are difficult to determine, network operators are currently refraining from using these resources at all due to uncertainty in recording costs. Equally, the process-related integration of storage systems into network operators' existing congestion management is an enormous challenge. Because network operators are not 100% certain that storage systems are actually serving the grid at times of peak network load, they tend to grant network access very restrictively. Considering storage systems as an additional load on the power grid results in one of the biggest hurdles for storage projects — grid connection. Network operators must ensure that network operation is possible at any time, meaning that battery storage systems with their high outputs do not have a grid connection at locations at risk of bottlenecks. This is because, as things stand, these network nodes are already particularly busy. And although storage systems could contribute to significantly alleviating the load on networks right here, from a bottleneck prevention perspective, they are often simply not placed in the right place to provide the most meaningful additional regional flexibility.
In the meantime, politicians are also making clear demands for the provision of flexibility for the power grid, including through storage. It was only on March 15, 2023 that the EU Commission very urgently addressed this requirement to all member states in the new proposal for the reform of the electricity market design (see also our article “EU Commission publishes proposal for electricity market design reform — The changes and effects for storage“). They attach a decisive role to storage technologies in the success of the energy revolution. However, in order for your potential to be used now, existing regulatory hurdles must be urgently reduced.
In order to quantify the actual potential of using storage for congestion management, in a scenario in which regulatory hurdles have already been overcome, we analysed publicly available data on congestion management in network areas from northern to southern Germany. In doing so, we found that storage at the respective affected network node can lead to a significant reduction in local congestion management.
The analysis examined the feed-in management of four major distribution system operators for 2022, as well as the reasons for this. It was then examined to what extent storage would have helped to reduce or prevent these bottlenecks through an appropriate dispatch plan. In order to analyze the feed-in management, it was necessary to obtain more detailed information about the respective plant. The market master data register was used for this data analysis, which, however, remains incomplete despite registration requirements. As a result, all substations were excluded whose feed-in management entries could identify less than 97% of the affected systems. In reality, significantly more substations are affected by regulations than can be seen from the graph; the picture only shows the part about which a meaningful statement can be made based on public data.
The area of the circles is a measure of the controlled amount of electricity. For better readability, an exponential presentation was chosen instead of a linear increase, because in Schleswig-Holstein, the feed-in management volume at a substation is on average 20 times higher than in Bavaria. A doubling of the area in the image therefore corresponds to a multiplication of the feed-in management by a factor of 32. The color of the circles indicates what proportion of bottlenecks could have been prevented by a battery storage system with a fixed, currently typical system size of 20 MW/40 MWh. For this purpose, the energy throughput of the storage device is divided by the actually regulated amount of energy as a result of the dispatch. A relative proportion of α=0.5 therefore means that half of the bottleneck volume at the network node could be prevented in the simulation by using a battery storage system. Only the impact of the measure on the locally affected substation is considered.
It was found that providing storage, particularly to support periods of short but significant performance spikes, is a very effective method. Here, battery storage systems can consistently prevent generation plants from shutting down. This effect is already occurring in many regions in Germany where renewable energy sources are used and is being taken into account in grid planning as a result of the peak load shutdown. As a result, power grids with comparatively low generation bottlenecks will no longer be expanded until the last kilowatt hour. This is because feed-in management is less than 3% of the annual energy volume, it is rated as so low that grid expansion here is not an economically viable alternative. In these regions, the need for flexibility can therefore also be expected in the long term as an alternative to peak capping. As a result of the current sluggish progress in network expansion, demand is expected to be significantly higher in the medium term. Particularly in the south, where bottlenecks are mainly driven by photovoltaics, the relative effectiveness is particularly high, as can be seen in the graph. The green circles make it clear that the use of storage at this point could have contributed to a significant reduction or even an avoidance of bottlenecks.
In the wind-dominated north, however, the relative effectiveness in some regions is significantly lower. On the one hand, this is due to the fact that electricity generation from wind power significantly exceeds the generation from PV, so that a 40 MWh storage system assumed for simulation reaches its limits more quickly (an absolute storage size was assumed for all grid areas). On the other hand, wind power generation is also more continuous and less characterized by peaks.
Despite the lower percentage effect, however, the absolute benefit of battery storage systems in the North when used to avoid bottlenecks is very high and is currently very useful here.
The analysis once again makes it clear that additional network expansion is essential in such regions with continuous generation and, in particular, with chronic network expansion delays. Using storage alone would make less sense at this point, as other factors must be taken into account that have a significant impact on the economic efficiency of the system. A battery storage system that is used exclusively to avoid energy bottlenecks is currently not economical and would therefore not be built. Battery storage systems should therefore be built as a supplement here, as the need for flexibility becomes apparent, especially after network expansion has been completed.
The regulation of renewable energy plants due to a lack of flexibility in the power grid can be clearly described by the analysis. The most affected wind turbine was limited to a total of 75 days a year, cumulated based on retrieval times. It was even 84 days for the most affected PV system and the leader among biomass systems is a plant that was affected by feed-in management for a total of 238 days. Feed-in management for PV and wind turbines in particular is particularly annoying because, in contrast to biomass, no fuel is saved. Instead, the electricity is simply not generated, although the opportunity existed in the situation.
The sensible placement of storage facilities could have made a significant difference in both ecological and macroeconomic terms at the affected production plants.
Due to the lack of flexibility in the distribution network and slow progress in grid expansion, cancellations of generation plants are currently often the only option to keep the electricity system in balance. Creating flexibility in the power grid is therefore becoming increasingly important as the share of renewables increases. Storage systems offer an opportunity to contribute to relieving the load on the power grid in the short term and thus enable an accelerated expansion of renewables. They can be seen as a supplement to network expansion because they can be set up significantly faster in comparison. Due to their high performance, battery storage systems offer a good opportunity to absorb brief spikes. Because of their flexibility, they can concentrate on other business models even after network expansion. In order for storage systems to offer this flexibility in the best possible way, it is necessary to develop meaningful concepts for implementation. From a technical point of view, there is already nothing wrong with its use, but as shown, the storage systems are not yet being used in the right place for this purpose. Kyon Energy is working to create a suitable regulatory framework so that storage can also reduce the regulation of renewables in practice and maximize economic benefits.
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