FACT SHEETThe Energy Storage
Market in Germany

ISSUE 2019

Energy storage systems are an integral part of Germany’s
Energiewende ("Energy Transition") project. While thedemand for energy storage is growing across Europe,
Germany remains the European lead target market andthe first choice for companies seeking to enter this fastdeveloping industry. The country stands out as a uniquemarket, development platform and export hub.
The German Energy Revolution
The German energy storage market has experienced a massive boost in recent years. This is due in large part to Germany’s ambitious energy transition project. Greenhouse gas
emissions are to be reduced by at least 80 percent (comparedto 1990 levels) up until 2050. Germany will also graduallyphase out all of its nuclear power plants by 2023 – and indoing so will revolutionize its energy infrastructure. Germany
is already a front-runner in renewable energy development.
Renewable energy sources currently produce around 36 percent of all electricity consumed in the country. In line with thegoals of the German government, this share is to be increased
to at least 80 percent of electricity consumption by 2050.
Solar power, onshore- and offshore wind power will be themain pillars of renewable energy production.
Grid Integration and Security
The Energiewende brings with it huge challenges. The integration of fluctuating renewable energies into the electricity grid
demands innovative storage solutions and major investmentin the transmission grid. Substantial and fast-reacting storage
capacities are needed to balance out short-term fluctuations.
Long-term storage solutions are needed to shift loads throughthe seasons. Germany’s geographical makeup places restrictions on the possibility of developing new pumped storagecapacity. This makes the use of new storage technologies andsmart grids imperative. Energy storage systems – from small
and large-scale batteries to power-to-gas technologies – willplay a fundamental role in integrating renewable energy into
the energy infrastructure to help maintain grid security.

Energy Storage Building Blocks – Electric Mobility
Electric vehicles play an important role in the success of theenergy transition and integration of renewable energies
into the grid. They can become zero-emission vehicles using
renewable electricity sources. As such, fuel-cell cars that run
on green hydrogen are also helping contribute to reach climate goals in the transportation sector. Furthermore, throughenergy storage innovations in the transportation and automotive sectors, electric vehicles can serve as storage units tobalance out fluctuating electricity levels in the future.
Research and Development
Germany boasts a dense landscape of world-leading research
institutes and universities active in the energy storage sector.
They work closely together with industry to bring innovations
to the market. The federal government supports researchand development in the energy storage, hydrogen, fuel cell,and electric vehicle sectors. Public research and development
incentives for EV and stationary battery research amount tobetween EUR 80 million and EUR 85 million every year.
Business Opportunities in a Pioneer Market
As the European lead market in the energy transition age,
Germany provides the opportunity for companies to develop,
test, define and market new energy storage solutions. Innovative sales strategies, system configurations, and integration
processes are intrinsic components of the specialist expertisecurrently being developed in Germany. The country actively
welcomes international enterprises seeking to participate in
the changing energy market landscape.
Contact our industry specialists to explore the individual
investment opportunities available to your business:renewables@gtai.com

MARKET OPPORTUNITIES

Small-scale Battery
Systems
Energy Self-Sufficiency
The German population supports the goals of the energy
transition. Improved energy self-sufficiency in privatehouseholds and commercial operations enjoys widespread
acceptance. More than 1.7 million solar power plants, with a
total capacity of more than 45 GWp, have been installed inGermany over the past 25 years. The majority are solar power
plants with a capacity below 30 kWp installed on residential
rooftops. They build the foundation for the promising market
development of small energy storage systems. On average,
the own-consumption share of PV-generated electricity canbe increased from 35 percent to more than 70 percent withthe use of a battery.
The PV Storage Business CaseWith falling PV system and battery costs, the business casefor storage is gathering pace. By the end of 2018, some
120,000 households and commercial operations had alreadyinvested in PV battery systems. The market is forecast toexperience a massive deployment of energy storage systems
in the next years as a response to decreasing battery costs.
According to GTAI research, PV battery systems could reach anannual installation volume of over 50,000 systems by 2020.
Retrofit Storage Installations
When the 20-year guaranteed feed-in tariff for older installations is phased out, retrofit installations will represent anadditional driver for the household energy storage market.
More than one million households already have a PV systemon their roof and could be potential customers for retrofit
batteries in the coming decade. A number of federal states inGermany also offer regional incentives, making investment inbattery systems even more appealing.
PV Storage Trends: Service Solutions
Large and small utilities alike offer battery systems withdiscounted electricity tariffs to their clients. New businessmodels arise from interconnecting several small household
storage devices to create a centrally controlled unit. The
resulting virtual power plants ensure grid stability byallowing renewables to be integrated into the grid in timesof high energy fluctuation. As Germany expects a massive
push in electric car sales, private charging infrastructurecomplements perfectly with the PV-battery home energy
system. In addition, first pilot projects with interconnected
electric car fleets to stabilize the grid are under way. Innovative rental and leasing models, as well as district storage
solutions which allow private PV systems owners to feed
their surplus energy into a central energy storage device, arealso being developed.

From PV Grid Parity to Battery Parityin EUR/kWh

0.50
Prognosis

0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.1020101112131415161718192020

Electricity price for households (2.5-5 MWh/a)Electricity costs for PV*
Electricity costs for PV + Battery***Model calculation for rooftop systems, based on 802 kWh/kWp (Frankfurt Main),
100% financing, 6% interest rate, 20 year term, 2% p.a. O&M costs** Based on 5,000 cycles, 87% efficiency
Sources: GTAI estimate; System Prices: BSW 2016; Model Calculation:
Deutsche Bank 2010; Electricity Prices: BDEW 2017;
Electricity Prices 2017-2020: GTAI estimate at 0.29ct/kWh

Battery Retrofit Potential: Installed PV Systems
Exiting 20 Year Feed-in Tariff Period
in thousand

250

1136346
18192021

2023

2025

Source: Federal Network Agency, BSW 2017

2027

2029

2031

Large-scale Battery
SystemsControl Power Market
Large battery systems are playing an increasingly significant
role in integrating and balancing large amounts of energy
from wind and solar plants in real time. Fast reaction times
mean that batteries are ideally suited to providing control
power to stabilize grid frequency. The German and European
control power markets are attractive for large battery-systemmanufacturers and operators. Around 1,250 MW of primarycontrol power is traded in the coupled German, Belgian,Austrian, Dutch, French, and Swiss markets with around3,000 MW in Europe. Prices for primary control power are
determined through an auction system with individual prices
varying accordingly. Assuming that the minimum attainable
price drops to EUR 2,500 per MW, a battery system participating exclusively in the control power market could effectively
recoup capital expenditure at system prices below EUR 870
EUR per kWh. This calculation is based on a capital interest
rate of five percent, operating costs of two percent, and anamortization period of 10 years.
Projects Growing in Size
A number of public and private initiatives in Germany are
currently cooperating on the development of energy storage
technologies. Demonstration and commercial projects havebeen operational in Germany for a number of years. Companies can find a large pool of potential partners to optimize
their technology on the road to commercialization. Many
existing battery storage systems have proved successful inimproving the reliability of transmission networks – evenduring heavy fluctuation periods. In 2016, power station
operator STEAG built six new large-scale 15 MW lithium-ion
batteries alongside existing power stations. Subsequent totheir prequalification, the systems went online in November
2016 and now provide primary frequency regulation. To beprequalified, a technical unit must demonstrate that it meetsthe transmission system operator’s (TSO) reliability requirements for the secure supply of frequency response. In 2018,
Eneco's 48-megawatt storage facility in Schleswig-Holsteinwent online. The "Enspire ME" facility, operational after aneight-month construction period, is the largest single-sitebattery energy storage system project realized in Europe
to date. The facility will provide primary control power andreduce the curtailment of wind turbines. Wind farms in theregion will be connected to the battery storage facility inorder to store electricity in periods of high production.

New Trends and Developments
Further large battery system applications include uninterrupted power supply and black start capabilities. In recent
years these have been used as a buffer for PV and wind
generators to offset quick shutdowns in the event of surplus
energy in the grid. Commercial storage applications are also
gaining momentum. A combination of income streams andthe reduction of grid charges (through peak shaving, load
shifting and provision of primary control power) will allow
amortization periods of four to eight years subject to theindividual case. Further trends in the large-scale battery
segment include the development of district storage andrental and leasing models. District storage involves storingsurplus electricity from private local generation plants, suchas rooftop PV systems, in a central battery. Car manufacturers
are also entering the stationary battery market, building storage systems from retired car batteries. In cooperation withother partners, Daimler has launched a 13 MW “second use”
project in the German town of Lünen, and a 15 MW project inHanover. BMW, Vattenfall and Bosch have also set up a 2 MW
testing facility, using 2,600 battery modules from electric cars.

Large-scale batteries in Germany
Total power capacity in MW

250

371

400
350

200

300
250

150

200

172

100

150
100

50

5450

26
026

28

117

199

2012–2015

2016

2017

2018

cumulative
new yearly additions
Note: no claim for completeness; usually 75% of installed capacity isqualified for primary control power
Sources: GTAI, BVES 2019; For a full list of projects, please contact GTAI.

0Power-to-Gas
Large-scale Power-to-X Plants
Hydrogen and power-to-gas technologies occupy a prominent place in the long-term energy storage plans and future
mobility and fuel strategy of the German government.
Large amounts of surplus energy from fluctuating renewable sources can be stored as hydrogen gas in the country’s
extensive gas grid. A number of power-to-gas pilot plants are
already in operation. Three grid operators plan to build a 100megawatt power-to-gas pilot plant in Lower Saxony, making
it the biggest venture of its kind to date. The development
will see Gasunie, TenneT and Thyssengas implement powerto-gas into their green integrated energy supply management
model. Power-to-gas can help stabilize the energy grid,
minimize curtailment of wind energy and limit future grid
expansion need.
Green Hydrogen in the Transportation Sector
The introduction of power-to-gas technologies is imperative
as the German government seeks to meet its climate targets
and reduce primary energy demand in the transportationsector. These goals include a 40 percent reduction of energy
consumption in the transportation sector and greenhousegas emission reductions of 80 percent until 2050 (comparedto 2005 levels) in all sectors. Substantial reductions of power
demand and emissions in transportation are only achievablewith high fuel-demand coverage with renewable hydrogenin combination with drive-train electrification (battery andfuel-cell electric engines).
Nationwide Hydrogen Infrastructure
Around 300 German companies – from the automotive andsupplier industries, utility providers, specialty chemical industry, and machinery and equipment producers – have plans
to invest more than EUR 2 billion through to 2024 in orderto activate the market for sustainable, secure and economichydrogen mobility. The world's first hydrogen fuel-cell train
commenced regular passenger service in Germany's Lower
Saxony in 2018, making it ready for serial production. The
Coradia Lint, built by Alstom in Salzgitter, Lower Saxony,reduces emissions in daily operations to zero. More plans topromote the expansion of nationwide hydrogen infrastructure are already under way. One notable example is theH2 Mobility Initiative, which is committed to establishinga large network of hydrogen fueling stations throughout
Germany. There are currently 54 hydrogen fueling stationsin operation and 40 under construction. By 2023, the statedobjective is to have 400 hydrogen filling stations acrossGermany in operation. Thanks to its strong industrial basein the relevant technology application fields, Germany is theideal location for attracting participants to this market. The
German government also provides funding for research anddevelopment in hydrogen and fuel cell development.

Power-to-Gas (P2G) Demonstration Projects

SchleswigHolstein
Hamburg

MecklenburgVorpommern

BremenBrandenburg

Niedersachsen

BerlinSaxonyAnhalt
North RhineWestphalia

Thuringia

SaxonyHessenRheinlandPfalz

SaarlandBavaria

BadenWürttemberg

in operationin planning
Sources: NOW/DENA

High Investment Potential
Power-to-gas technology creates investment potential along
the entire supply chain: from long-term storage, production
and trading to electrolyzer production, gas compression, andsmart gas metering. Within Europe, Germany boasts thelion’s share of European fuel cell and hydrogen technology
demonstration projects. Thanks to internationally recognizedcertification institutions, the large number of players, andregional and international activities, Germany is developing and setting tomorrow’s global technical framework andstandards.

MARKET OPPORTUNITIESBatteries for ElectricVehicles
E-Mobility: Central Pillar of the Energy Transition
The transport industry – alongside the energy and industry
sectors – is one of the world’s biggest producers of greenhouse gases. Within Europe and Germany, it is responsible
for around one fifth of CO2 emissions. E-mobility represents
a central pillar of Germany’s energy transition. Currently,
there are around 180,000 electric vehicles – supported by an
infrastructure of around 7,900 AC and more than 1,400 DC
charging stations – on German roads. Industry experts expect
exponential e-vehicle registration growth in the years ahead.
The National Electromobility Development Plan has set atarget of one million fully and partially battery-powered
electric vehicles by 2020 as Germany seeks to establish itself as a lead market and supplier for e-mobility solutions.
In order to achieve this ambitious objective, the German
federal government introduced a purchase bonus of EUR
4,000 for BEVs and EUR 3,000 for PHEV. The total incentive
volume of EUR 1.2 billion is split equally between car OEMsand the government. Additionally, the government will invest a further EUR 300 million into the expansion of thepublic charging infrastructure (including 5,000 new DCcharging stations) up to 2020.
The Battery: The Key to Electric Mobility
The battery represents the key component in an electrified
drive train. The battery system – comprising the cells, battery management system, electrical and sensor systems,
safety elements, cooling periphery, and housing – determines
vehicle efficiency and counts as the single vehicle elementwith the greatest wealth creation share (direct share of value
added of up to 40 percent).
Ongoing Technology Improvement
Developments made to date in first- and second-generation
cells and battery systems have helped create energy density
levels of around 200 Wh per liter for today’s battery packs.
Energy and power density levels will continue to improve,with further marked developments expected in terms ofsafety (crash resistance) and service life. The federal government supports e-mobility R&D activities with around a quarter billion euros annually. The further improvement of battery
technology and recycling remains one of the country’s maine-mobility areas of R&D activity. As part of the technologicaldevelopment of third- and fourth-generation batteries,battery density by volume levels of 310 Wh per liter are predicted by 2025. In combination with expected economies
of scale, battery system prices are predicted to fall below
USD 150 per kWh.

Number of Electric Vehicles in Germany

1,000,000
180,000
75,0002014
Market Preparation2017
Market Ramp-up

2020*
Mass Market*as planned
Source: National Electric Mobility Platform 2014, GTAI Research 2018

Battery Technology Development Roadmap
energy density in Wh/l70060050040030020010002016

20202025

Cell Level
Battery Pack Level
Source: National Electric Mobility Platform 2016

World-Class Automotive Industry
Germany is synonymous with world-class automotive innovation. A number of studies attest to the fact that Germany
is already one of the world’s leading electric vehicle technology supply markets. By the start of 2019, German OEMs had
released around 40 different e-models (EV, PHEV and REEV).
Mercedes intends to produce an electric version of every
major model by 2022. BMW plans to introduce 25 new electricvehicles by 2025. The Volkswagen group also plans to build its
first battery plant in Germany and to offer more than 30 allelectric vehicle models by 2025.

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Authors
Energy Storage Team:anne.brautigam@gtai.com
tobias.rothacher@gtai.com
heiko.staubitz@gtai.com

Executive Board
Dr. Jürgen Friedrich, Chairman/CEODr. Robert Hermann, CEOPrint
Kern GmbH, 66450 Bexbach
www.kerndruck.deEditor
William MacDougall, GTAI

Picture Credits
Front page: Fotolia/pholidito

Transportation Technologies Team:
stefan.dibitonto@gtai.com
LayoutDanielle Röbbenack, GTAI

Notes
All rights reserved ©Germany
Trade & Invest, January 2019
Reproduction, in whole or in part, only permissible with express prior authorization. All market
data provided is based on the most current market information available at the time of publication. Germany Trade & Invest accepts no liability
for the actuality, accuracy, or completeness of theinformation provided.

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