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Energy storage market in Germany

Germany’s electricity portfolio

In our last posts we introduced electrical energy storage (EES) and the EU market for EES. Now, we focus on some important EU members, beginning with Germany. The country’s electrical energy portfolio reflects its status among the most progressive countries in the world in terms of climate action. As of November 2016, Germany had produced ~35% of its 2016 electricity needs from renewable sources as outlined in the Figure below.

Electricity Production in Germany (Source: Fraunhofer ISE)

The growth of renewable energy has been driven by Germany’s strong energy transition policy – the “Energiewende” – a long-term plan to decarbonize the energy sector. The policy was enacted in late 2010 with ambitious GHG reduction and renewable energy targets for 2050 (80-95% reduction on 1990 GHG levels and 80% renewable-based electricity).
A major part of the 2010 Energiewende policy was the reliance on Germany’s 17 nuclear power plants as a “shoulder fuel” to help facilitate the transition from fossil fuels to renewables. In light of the Fukushima disaster just six months after the enactment of the Energiewende, the German government amended the policy to include an aggressive phase-out of nuclear by 2022 while maintaining the 2050 targets. This has only magnified the importance of clean, reliable electricity from alternative sources like wind and solar.

Existing Energy Storage Facilities – Germany

As of late 2016, there is 1,050 MW of installed (non-PHS) energy storage capacity in Germany. The majority of this capacity is made up of electro-mechanical technologies such as flywheels and compressed air energy storage (CAES; see figure below).

Capacities of EES Types in Germany (Source: Sandia National Laboratories)

However, these numbers are somewhat skewed based on the fact that the electro-mechanical category is essentially two large capacity CAES plants. In reality, electro-chemical projects (mainly batteries) are much more prevalent and represent the vast majority of growth in the German storage market. There are currently 11 electro-chemical type energy storage projects under development in Germany and no electro-mechanical projects under development (see figure below).

Number of EES Projects by Type (Sandia National Laboratories)

Services Uses of Energy Storage – Germany

As outlined earlier, there are a multitude of service uses for EES technologies. Currently the existing EES fleet in Germany serves grid operations and stability applications (black start, electric supply capacity), and on-site power for critical transmission infrastructure. A breakdown of service uses in the German market is shown below.

Service Uses of Energy Storage Facilities in Germany (Sandia National Laboratories)

Most notable in is the fact that renewables capacity firming only represents 0.3% of EES currently operating in Germany, excluding pumped hydro storage. In order to understand this, it must be noted that Germany is a net exporter of electricity (next figure below). Having one of the most reliable electrical grids in the world and an ideal geographical location give Germany excellent interconnection to a variety of neighboring power markets; making it easy to export any excess electricity.

This “export balancing” is a primary reason why the EES market has not seen similar growth as renewable energy in Germany − it is easy for Germany to export power to balance the system load during periods of peak renewable production. However, there are negative aspects of this energy exporting such as severe overloading of transmission infrastructure in neighboring countries.

Net Exports of Electricity with Average Day-Ahead Market Pricing for Germany in 2015 (Source: Fraunhofer ISE)

Energy Storage Market Outlook – Germany

Logic seems to indicate that with aggressive renewable energy targets, a nuclear phase-out, and increased emphasis on energy independence Germany will need to develop more EES capacity. However, many have conjectured that the lagging expansion of EES in the short and medium term will not pose a barrier to the Energiewende. In fact, some claim that EES will not be a necessity in the next 10-20 years. For example, even when Germany reaches its 2020 wind and solar targets (46 GW and 52 GW, respectively), these would generally not exceed 55 GW of supply and nearly all of this power will be consumed domestically in real-time. Thus, no significant support from EES would be required.

The German Institute for Economy Research echos these sentiments and argue that the grid flexibility needed with significant renewable energy capacity could be provided by more cost-effective options like flexible base-load power plants and better demand side management. Additionally, innovations in power-to-heat technologies which would use surplus wind and solar electricity to feed district heating systems present significant opportunity, while creating a new market of energy service companies.

Power-to-Gas

Germany’s Federal Ministry of Transport and Digital Infrastructure found that P2G is ideally suited for turning excess renewable energy into a diverse product that can be stored for long periods of time and Germany has been the central point for P2G technology development in recent years. There are currently seven P2G projects either operating or under construction in Germany.

While there is work being done, economically feasible production of P2G is currently not achievable due to limited excess electricity and low guaranteed capacity. This limited excess electricity, is an example of the effect of power exports discussed earlier. While there may not be a significant commercial market in the short-term, introduction of P2G for transport could act as an additional driver behind continued renewable energy development in Germany.

(Jon Martin, 2019)

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Energy storage in the European Union

Grid integration of renewables

In our previous post of this blog series on Electrical Energy Storage in the EU we briefly introduced you to different technologies and their use cases. Here, we give you a short overview over the EU energy grid.  Supplying approximately 2,500 TWh annually to 450 million customers across 24 countries, the synchronous interconnected system of Continental Europe (“the Grid”) is the largest interconnected power network in the world. The Grid is made up of transmission system operators (TSOs) from 24 countries stretching from Greece to the Iberic Peninsula in the south, Denmark and Poland in the north, and up to the black sea in the east. The European Network of Transmission System Operators (ENTSO-E) serves as the central agency tasked with promoting cooperation between the TSOs from the member countries in the Grid. The ENTSO-E, in essence, acts as the central TSO for Europe. With over 140 GW of installed wind and solar PV capacity, the EU trails behind only China in installed capacity. A breakdown of the individual contributions of EU member states is shown below in the figure above.

Energy Storage in the EU

For this study a number of European countries were selected for more detailed investigation into energy storage needs. These countries were selected based on a combination of existing market size, intentions for growth in non-dispatchable renewable energy and/or energy storage, and markets with a track record of innovation in the energy sector.

On a total capacity basis (installed and planned MW) the top three energy storage markets within the EU are: Italy, the UK, and Germany. These countries were selected on the basis of these existing market sizes.

Spain and Denmark were selected based on their large amounts of existing renewable energy capacity and − in the case of Denmark − the forecasted growth in renewable energy and energy storage capacity.

While still lagging behind the rest of the EU in terms of decarbonization efforts and having a small portion of their energy from renewable sources, the Netherlands were also selected for further investigation.

Each of the selected countries (Germany, UK, Italy, Spain, Denmark, Netherlands) are discussed in the proceeding sections, providing a more detailed overview outlining their current electricity portfolios and decarbonization efforts, current energy storage statistics, and a brief discussion on market outlook.

Pumped Hydro Storage

With over 183 GW of installed capacity worldwide, pumped hydro storage is the most widely implemented and most established form of energy storage in the world. Due its extensive market penetration, technology maturity, and the fact that this blog is aimed at emerging new storage technologies, the data presented in the following posts excludes this technology.

Find more details about the energy storage market of selected European countries in our next postings.

(Jon Martin, 2019)

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Electrical energy storage

Electrical Energy Storage (EES) is the process of converting electrical energy from a power network into a form that can be stored for converting back to electricity when needed. EES enables electricity to be produced during times of either low demand, low generation cost, or during periods of peak renewable energy generation. This allows producers and transmission system operators (TSOs) the ability to leverage and balance the variance in supply/demand and generation costs by using stored electricity at times of high demand, high generation cost, and/or low generation capacity.
EES has many applications including renewables integration, ancillary services, and electrical grid support. This blog series aims to provide the reader with four aspects of EES:

  1. An overview of the function and applications of EES technologies,
  2. State-of-the-art breakdown of key EES markets in the European Union,
  3. A discussion on the future of these EES markets, and
  4. Applications (Service Uses) of EES.

Table: Some common service uses of EES technologies

Storage Category

Storage Technology

Pumped Hydro

Open Loop

Closed Loop

Electro-chemical

Batteries

Flow Batteries

Capacitors

Thermal Storage

 

Molten Salts

Heat

Ice

Chilled Water

Electro-mechanical

Compressed Air Energy Storage (CAES)

Flywheel

Gravitational Storage

Hydrogen Storage

 

Fuel Cells

H2 Storage

Power-to-Gas

Unlike any other commodities market, electricity-generating industries typically have little or no storage capabilities. Electricity must be used precisely when it is produced, with grid operators constantly balancing electrical supply and demand. With an ever-increasing market share of intermittent renewable energy sources the balancing act is becoming increasingly complex.

While EES is most often touted for its ability to help minimize supply fluctuations by storing electricity produced during periods of peak renewable energy generation, there are many other applications. EES is vital to the safe, reliable operation of the electricity grid by supporting key ancillary services and electrical grid reliability functions. This is often overlooked for the ability to help facilitate renewable energy integration. EES is applicable in all of the major areas of the electricity grid (generation, transmission & distribution, and end user services). A few of the most prevalent service uses are outlined in the Table above. Further explanation on service use/cases will be provide later in this blog, including comprehensive list of EES applications.

Area

Service Use / Case

Discharge Duration in h

Capacity in MW

Examples

Generation

Bulk Storage

4 – 6

1 – 500

Pumped hydro, CAES, Batteries

Contingency

1 – 2

1 – 500

Pumped hydro, CAES, Batteries

Black Start

NA

NA

Batteries

Renewables Firming

2 – 4

1 – 500

Pumped hydro, CAES, Batteries

Transmission & Distribution

Frequency & Voltage Support

0.25 – 1

1 – 10

Flywheels, Capacitors

Transmission Support

2 – 5 sec

10 – 100

Flywheels, Capacitors

On-site Power

8 – 16

1.5 kW – 5 kW

Batteries

Asset Deferral

3 – 6

0.25– 5

Batteries

End User Services

Energy Management

4 – 6

1 kW – 1 MW

Residential storage

Learn more about EES in the EU in the next post.

(Jon Martin, 2019)

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Hydropower

Hydropower is electricity generated by the movement of water.

In the late 19th century, hydropower became an industrially efficient method of generating electricity. Waters falling from high altitudes, e.g. mountain streams or rivers, as well as strong currents are the best candidates for generating electricity from hydropower. This electricity is a considerable global energy source. It is generated by water entering a turbine which then rotates. When this turbine is connected to an electric generator, this mechanical energy is converted into electrical energy. The Niagara Falls and the Hoover Dam are two examples of electricity produced in this way.

Hydropower provides about 20% of the world’s electricity.

Hydropower has recently gained popularity. The World Bank called it a workable solution to keep up with growing energy needs while avoiding CO2 emissions.

(Photo: Wikipedia)