ESS in Germany Business Models and Regulatory Framework

ESS in Germany Business Models and Regulatory Framework Energy Storage Summit Japan 2016, Nov. 8, Tokyo Urban Windelen, Executive Director and Member of the Executive Board, German Energy Storage Association (BVES)

Agenda BVES German Energy Storage Association German Energiewende Status Quo Current situation of Energy Storage in Germany Regulatory Framework Conclusions

The German Energy Storage Association (BVES) The BVES is the industrial association of German energy storage companies that is open to all technologies in the areas of electricity, heat and mobility. We are a dialogue partner for politics, administration, science and publicity. With targeted lobbying at the interfaces of political decision making we are trying to improve the German regulation and policy framework. In addition, the BVES monitors research and development activities and informs members of new results and developments.

Members (extract)

Agenda BVES German Energy Storage Association German Energiewende Status Quo Current situation of Energy Storage in Germany Regulatory Framework Conclusions

Targets of German Energiewende Source: Germany Trade and Invest

Paris agreement (COP 21) Goal: Limiting global warming to well below 2 C Source: www. http://climateparis.org The only focus on the electricity sector is not enough!

RE-Share by sector (2014) Source: AGEE Stat., Umweltbundesamt, Team Consult

Changes in GHG-emissions by sector Source: AGEE Stat., Umweltbundesamt, Team Consult

Installed RE-Capacity in 2015: 84 GWp

German Energiewende The fossil age New electrification wave 400 kv 400 kv 110 kv 20/10 kv 0,4 kv 110 kv 20/10 kv 0,4 kv Source: Alexander Zeh, Simon Müller, Marcus Müller (2016) 11

Current situation Milestone of more than 35% of energy demand by renewable energy sources. (~190 Billion kwh) Some regions up to 80% and even 100-140%. Grid cannot cope with such high percentage and the fluctuating feed-in of renewable energies. Energiewende yes, but not in my backyard Energiewende behind the plan.

A basket full of technologies 13 Bundesverband Energiespeicher e.v.

A basket full of applications 14 Bundesverband Energiespeicher e.v.

Matrix Technology/Application

Storage is an ideal tool Peak load smoothing Black-Start capability Optimization of selfconsumption Positive/negative control energy Increase of efficiency Reactive power compensation Voltage control Shifting excess energy to other Inertia reserve sectors Off-grid supply Back up energy

Agenda BVES German Energy Storage Association German Energiewende Status Quo Current situation of Energy Storage in Germany Regulatory Framework Conclusions

Storage capacities in Germany 29 TWh/a Heat pump 2 GW lading 1800 h/a 3 TWh/a Thermal storage heaters Installed base 14 GW loading 1400 h/a 20 TWh/a 0,02 TWh/a 10.000 Cars 2 MWh/10.000 km 0,04 TWh/a 40 MW loading 1000 Jahresvollbenutzungsstuden 4 TWh/a 7 GW loading 600 a/year Domestic hot water cylinders 6 GW Loading ; 1000 h/a 6 TWh/a E-Mobillity Battery Source: E-Mobilität: Berechnet auf Basis von 10.000 Fahrzeugen. Thermische Speicher: Fraunhofer IBP, Bericht ES-342 01/2012 und BWP-Branchenstudie Pump storage Thermal energy storage solutions

Agenda BVES German Energy Storage Association German Energiewende Status Quo Current situation of Energy Storage in Germany - residential scale - mid scale mixed models - large scale Regulatory Framework Conclusions

Until 2011: Market driven by Feed-in tariff

Since 2011: Market driven by own-consumption Today: Optimized self-consumption with batteries

Market prizes for batteries

Newly installed battery systems (<30 kwp)

Residential Storage Market ~1.500.000 PV on rooftop ~45.000 home storage systems (+ ~25.000 in 2016) (~200.000 in 2020) enormous retrofit potential, new systems mostly bundle of PV + battery

Not only batteries Heat Pump The opposite refrigerator Moving thermal energy opposite to the direction of spontaneous heat flow Purpose: heating and hot water preparation Thermal Storage Heating Electrically operated heating in combination with thermal energy storage Taking advantage of different price levels, charging the storage at lowload periods Faster than heat pump

Cross sectoral integration Electricity + Heating + Cooling intelligent energy management

Applications for SMEs and small industries Reduction of grid charges by peak-load management and atypical grid use Combined Heat and Power (CHP) using thermal energy storage allows additional benefits CHP bonus fee from electricity price arbitrage effects Uninterruptible Power Supply (UPS) e.g. in hospitals or at production lines that are highly sensitive to power variations Reduction of energy cost by optimizing self consumption rates

Balancing the grid

Installed capacity of batteries in Primary Reserve Power 10/2016: ~75 MW 12/2017: ~170 MW 31

New technologies are arriving.. Power to Gas

New technologies are arriving.. Fly Wheel

New technologies are arriving.. Redox Flow

New trend in storage Combination of storage technologies, combination of sectors PV + lead acid battery + combined heat and power plant + heat storage

New trend in storage Combination of storage technologies, combination of sectors PV + wind + biogas plant + Li-ion battery + heat storage = 100 % autarchy Reduction of energy costs: 0,3 cent/liter

New trend in storage Combination of applications = multi use solutions District storage by ads-tec = own consumption + primary control + +

New trend in storage Combination of applications = multi use solutions Swarm storage by Caterva = own consumption + primary control

New trend in storage Combination of applications = multi use solutions Energy communities, sharing communities

Agenda BVES German Energy Storage Association Current situation of Energy Storage in Germany Regulatory Framework Conclusions

Regional energy storage funding Federal funding in Bavaria, Saxony and Saarland (NEW: North Rhine-Westphalia) Some cities and municipalities offer their own energy storage funding programs Additionally a couple of municipal utilities sell energy storage systems to reduced costs Quelle: Enerkeep.com

Lack of legal classification The absurd situation of charging twice... Concession fee CHP surcharge 19 NEV surcharge, offshore liability surcharge Grid usage fee EEG surcharge Concession fee CHP surcharge 19 NEV surcharge, offshore liability surcharge Source: BVES + DIHK, Faktenpapier Speicher, p. 11

Prequalification process 9. For the CE and Nordic synchronous areas, each FCR provider shall ensure that the FCR from its FCR providing units or groups with limited energy reservoirs are continuously available during normal state. For the CE and Nordic synchronous areas, as of triggering the alert state and during the alert state, each FCR provider shall ensure that the FCR from its FCR providing units or groups with limited energy reservoirs are able to fully activate FCR continuously for a time period to be defined pursuant to paragraphs 10 and 11. Where no period has been determined pursuant to paragraphs 10 and 11, each FCR provider shall ensure that the FCR from its FCR providing units or groups with limited energy reservoirs are able to fully activate FCR continuously for at least 15 minutes or, in case of frequency deviations that are smaller than a frequency deviation requiring full FCR activation, for an equivalent length of time, or for a period defined by each TSO, which shall not be greater than 30 or smaller than 15 minutes. 10. For the CE and Nordic synchronous areas, all TSOs shall develop a proposal concerning the minimum activation period to be ensured by FCR providers in the CE and Nordic synchronous areas. The period determined shall not be greater than 30 or smaller than 15 minutes. The proposal shall take full account of the results of the cost benefit analysis conducted pursuant to paragraph 11.

New opportunities Regardless of non suitable regulation for storage industry, business is growing. Besides that vivid deployment in core area of energy storage, new business models occur: Amendment of German Renewable Energy Act in 2016: NEW: Flexible additional load (door-opener for PTX-technologies) NEW: Self-consumption models in multifamily houses (opportunity for storage in urban areas)

Agenda BVES German Energy Storage Association Current situation of Energy Storage in Germany Regulatory Framework Conclusions

Residential Home Storage Sector fast growing business Future: new business models in smart combination of components Big part of Energiewende in the heating market Mixed models

Large Scale Hydro pump storage still relevant and crucial, daily on duty Primary reserve interesting market (especially for batteries) New products and business models ( Super Primary Reserve Power ) and mixed business models sighted Fast growing interest in thermal Storage technologies New technologies on a great leap forward into the market

finally Mixed models: win-win situation Prosumers Grid operator Utility Government fosters flexibility of the energy system BUT: For a real level playing field there are still a few issues to solve Regulatory Framework has to be adjusted

Necessary adjustments to pave the way into the market Definition of energy storage as 4th column of the energy system Uniform and transparent standards for prequalification Storage industry gets louder Rising pressure on policy

Thank You! 52