The energy storage revolution

How large-scale battery storage systems are shaping the future of the energy transition

At EARLY BRANDS, we focus on leveraging value potential with new technologies, creating benefits here and now and for future generations. In this article, our Managing Partner Alexander Witte provides insights into an exciting key technology of the energy transition: Stationary large-scale battery storage + how it creates values and benefits.

What are large-scale battery storage systems and why are they a key technology of our time?

Large-scale battery storage systems are stationary systems for storing large quantities of electrical energy. They enable us to store energy within seconds, e.g. when there is high availability from the grid, and feed it back into the grid when there is greater demand. Li-ion (lithium-ion) and LFP (lithium iron phosphate) batteries are currently the most commonly used storage media. These combine high energy density, fast charging and discharging times and a long service life of 12-15 years in some cases.

Large battery storage systems can be operated very well “standalone” in containers, e.g. at power plant sites with existing grid infrastructure. They are also gaining in importance as a co-location solution with a connection to wind farms and solar parks. Storage systems are an important key technology for a robust energy infrastructure and the success of the energy transition in Germany, Europe and worldwide. Their operation opens up numerous innovative opportunities for economically attractive use cases in order to leverage the value potential of the energy transition and successfully shape corporate development.

What is its significance for the success of the energy transition?

Large-scale battery storage systems are like a “pocket knife” for the energy transition. In the event of sudden peaks in demand or unexpected power plant outages, they step in like a service technician in a matter of seconds, balancing the energy demand and thus stabilizing the grid to a pulse of 50 hertz. They are the key to reducing current grid bottlenecks by storing surplus energy and releasing it when needed.

Today, more than 63% of electricity consumption in Germany is already covered by renewable energies. When the wind is strong, grid bottlenecks occur and the wind turbines come to a standstill. In some cases, this results in negative electricity costs because the surplus electricity is available and cannot be stored. Gas-fired power plants step in when there is too much wind or solar power in the grid.

The standstill of wind turbines is currently leading to redispatch costs of around 20 billion euros, which are currently being passed on to the taxpayer. This means that electricity bills are becoming more expensive, while the operators of renewable energy plants continue to receive their money. These so-called “redispatch” measures can be greatly minimized with large-scale battery storage systems. The energy transition therefore forgot to consider the infrastructure for storing renewable energy in parallel with its expansion. Storage systems help to ensure that fewer fossil fuel power plants, e.g. gas-fired power plants, have to be used to stabilize the grid in the future.

With large-scale battery storage systems as the “pocket knife of the energy transition”, flexibility can be provided in the grid and electricity can be traded on the energy markets at the same time. This is done by storing electricity during the course of the day when large quantities are available at low cost – and by withdrawing it 1-2 hours later, for example, when there is more demand for electricity on the market. Grid bottlenecks and peak loads will increase.

On the positive side for Germany: for two years now, large-scale battery storage systems have become very economically viable thanks to technical advances and increasing battery production capacities. Some of the systems pay for themselves in less than 10 years, even without state EEG subsidies. Since the beginning of 2024, there has also been a tailwind from the Bundestag, which has recognized across all parliamentary groups how important large-scale battery storage systems are as a building block for the success of our energy transition. The expansion of storage systems must now catch up with the expansion of renewable energies such as wind and photovoltaics (PV) as quickly as possible so that the German energy transition as a whole succeeds and makes economic sense.

What is the growth potential?

The importance of large-scale battery storage systems for the electricity system will increase significantly in the future. This is because without energy storage, the further expansion of renewable energies such as wind and PV will be difficult to manage. At the beginning of 2024, there will be around 1.5 gigawatt hours (GWh) of installed capacity on the grid in Germany. Our estimate is that capacity in this country will increase to 15 MW or 55 GWh or more by 2030 – if the political framework conditions are right. This would mean that we would install 10 times as much output and hourly capacity in 5-6 years. Current market analyses by Frontier Economics, the Fraunhofer Institute and the German Energy Storage Association support this assessment. According to the Fraunhofer ISE research institute, much more is needed for a functioning, climate-friendly economy and energy infrastructure: up to 104 GWh by 2030, which is 100 times more than today! By 2050, the stock of large energy storage systems in Germany could even grow to 60 gigawatts of power and more than 270 GWh of capacity.

What topics and developments are you actively involved in at EARLY BRANDS?

Without more storage, there will be no successful grid expansion with wind and PV in Germany and Europe. There is attractive economic growth potential for large-scale battery storage as a key technology, which we at EARLY BRANDS are actively helping to shape. Together with leading energy companies, storage manufacturers and infrastructure partners, we are part of the implementation. We advise and support our clients from industry, such as leading production companies from the consumer goods industry or logistics, in realizing attractive value potential from battery storage. In such projects, we support production companies in optimizing energy costs through physical or virtual battery storage, reacting more flexibly to peak loads and at the same time integrating more renewable energies into their energy mix.

In teaming up with leading energy companies as well as larger operators of renewable energy systems, we are currently also designing and implementing large-scale battery storage projects in which medium-sized companies and the financial sector are involved as facilitators, accelerators and implementation partners. We use our strong EARLY BRANDS network of leading technology companies from the energy sector and the storage industry and have our finger on the pulse of current trends and technological developments. We are involved in BVES, the Bundesverband Energiespeicher Systeme e.V. (Federal Association of Energy Storage Systems).

What are the current trends and developments that fascinate you?

In addition to the use of stationary large-scale battery storage as a building block of the energy transition, many exciting applications are developing in parallel. In many cases, these are the result of technological leaps, as is currently the case with innovative storage media such as redox flow, solid flow or solid-state batteries. In other words, material innovations leading to higher energy densities and new economic applications.

What is already working today in laboratory or pilot tests will be economically exciting in the near future and create value for new generations. What would it be like if inland waterway vessels were powered by large batteries instead of or in addition to diesel? The first ports, such as Hamburg or Antwerp, are already using large-scale battery storage systems for ship power and balancing the grids. The leap via innovative storage materials to ships or, in the medium term, to airplanes is still a long way off, but is becoming increasingly tangible.

Catch the Future…!