Is Distributed Energy Storage the Energiewende’s Missing Link?

A year ago, Germany’s beleaguered solar industry rejoiced when the government-owned development bank and federal environment ministry announced loans and repayment support for combined rooftop PV and battery storage options of up to 30 kW. The sector thought it spotted an opportunity to redeem itself on the German and international markets with a technology that German PV and energy management firms had long been perfecting.

The logic of battery technology is pretty straightforward: By storing power generated when the sun is shining bright and demand is low, the owners of household battery systems can use more of the electricity they generate when they need it — twice as much, say experts. Larger storage systems, if connected to solar plants, could help integrate even more renewables into the system, dramatically reducing disparities in supply and demand — the bugbear of PV and wind power. 

A schematic of a typical home energy storage system setup. Credit: Saft.

Yet, 14 months down the road, German PV and energy management companies have sold only around 10,000 decentralized battery systems (not all in Germany), with about 50 percent of the new German owners taking advantage of the subsidies. The Leipzig-based PV company Deutsche Energieversorgung says that only 15 to 20 percent of its battery customers use the supports. Roughly a third of RWE Home Power Storage’s clients have availed themselves of the subventions.

Critics say the bureaucracy required to obtain the credit is cumbersome, and that new laws in Germany that will tax self-consumption have put a damper on PV sales. The fact that these small-scale systems are designed only for self-consumption (in other words they’re not connected to smart grids or the larger power system) limits their usefulness for proving extra grid flexibility to balance renewables. 

Indeed, the numbers so far are modest, even though both producers and suppliers of distributed storage hardware say business has been picking up as of late spring.

A study of 13 European (mostly German) firms conducted by the magazine Sonne Wind Wärme, found that Bavaria-based Sonnenbatterie led the field having sold 2,500 transportable intelligent lithium storage systems in 2013-14, mostly in Germany. It was followed by Deutsche Energieversorgung that sold just 100 fewer, and Nedap of the Netherlands with 2000. Saft Batteries out of Nuremburg moved roughly 1000 systems, half of those in Germany and the other half in Austria, Switzerland, Italy, and Luxembourg. A number of other firms, including E3/DC, Bosch Power Tec, and Frankensolar sold less than 1000 models.  

About 85 percent of the units sold were the more traditional and substantially cheaper lead-acid batteries; while 15 percent were the newer lithium-ion-based models, which are more expensive but also tout more capacity. Not only can lithium-ion batteries store more power while requiring less space, they can be charged and discharged more frequently than lead-acid batteries. The prices of the systems range from 6,000 to 30,000 euros, depending on size, model, producer, and type. Most of the investors were households, followed by small businesses.

Since the program was launched last May, 4,000 solar battery buyers were awarded a total of 66 million euros of low-interest loans and grants of over 10 million euros. The state development bank KfW grants a low-interest loan for the purchase of a combined photovoltaic and solar-power storage system or for retrofitting an existing solar-power installation with a storage system. In addition, the state may cover up to 30 percent of the loan.  Yet in 2013, more than half of the available monies went untouched.

“The support programs were slow getting started,” says Tom Rudloph of SMA Systems, one of the early Germany-based pioneers in battery storage. “But they’ve ironed out some of the wrinkles, so it’s working better now.”

The jury is still out on whether the batteries — with or without the supports — are worth it for small PV users.

Germany’s main solar advocate, the German Solar Energy Association (BSW), claims that small battery units won’t make or save homeowners a bundle, but — in economic terms alone — are probably a break-even proposition, depending on consumption behavior, type of PV system, location and other factors. “There wouldn’t be government incentives if small-scale battery storage was completely economical at the moment,” admits David Wedepohl of the BSW. “But at least half the systems in Germany sell without any incentive.»

The SMA Sunny Boy Smart Energy is a combination of a modern PV inverter and a battery with an effective capacity of 2 kWh. Credit: SMA.

“The point is to create a market for storage, create economies of scale, and generate experience with this new technology,” says Wedepol. “In the future, if we’re serious about running our economies on 90 percent or 100 percent renewable energy, we’re going to need it.” He notes there are factors besides economic viability that motivate people to invest in storage, such as energy independence. Most of the battery companies say independence is their customers’ primary motivation.

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