The venture capital investors PT1 and Future Energy Ventures are joining forces with the German Energy Storage Systems Association BVES for a ‘Think & Do Tank on Battery Energy Storage Systems’. The initiative kicked off at the beginning of September with a roundtable on the topic of ‘Grid Level Battery Energy Storage Systems – Status Quo Germany’.

The roundtable format brought together a diverse range of players from the BESS value chain and created an intimate discussion space for experts, but also enabled interested parties to get involved in the topic. These players ranged from project developers, traders, producers, operators, infrastructure and multi asset investors, energy suppliers and grid operators.

We want to shape an asset class for BESS. The goal is to enable both investors and companies to secure the financing needs for various energy storage business models – standalone, co-located, VPP and flexibility marketing. From identifying synergy effects along the value chain together to defining pivotal challenges to be resolved by policy makers and to define regulatory frameworks.

The initiative is addressed to all players in the value chain from production, development, operations, sales and optimizing as well as recycling of battery storage systems, regulators and investors.

In addition, we want to bring the importance of BESS for the energy transition more to the forefront of public attention and place the topic in the mainstream press.To reach that objective we derived five working theses from the roundtable event.

Impact of Negative electricity prices
The occurrence of negative electricity prices will become more frequent and last longer in future due to the oversupply of renewable energy and incentive structures under the EEG (In August of this year (01-08/2024), we already had more hours with negative prices in Germany than in the entire previous year (01-12/2023)). The abolition of the EEG levy will probably have a lasting (negative) impact on the expansion of renewables. These price effects on the energy system show the lack of flexibility through energy storage. BESS helps mitigate negative price periods by storing excess energy and redistributing it during higher demand times, such as evenings. This creates economic opportunities and could prevent future costlier energy challenges. The EEG phase out will push financial focus away from solar towards storage.

Impact of project conditions for financing of large-scale storage 
To secure and stabilize cash flows and revenue streams, infrastructure investors need the certainty that the projects can be realised and built in time and budget. Depending on the size and maturity of the project, different financing options need to be explored. Investments have to be structured in a manner that fits into the investment criteria of small and large asset pools. Different project phases call for different investor profiles.

Going forward it is important to closer define which framework conditions and return/risk profiles the different types of investors need for financing. Transparency over the full grid connection process for all stakeholders is a key element.

The further development of the energy grid
The grid should not be the bottleneck. We heavily need grid optimization through flexibility enablers such as storage alongside grid expansion. Getting a timely grid connection for energy transition assets such as storage and renewable generation should not be the make or break question for project development.

Impact of regulatory status quo
From market design and the remuneration of system services to specific construction law features, to the structure of taxes, grid surcharges and further levies – it all matters. The special role of flexibility services needs to find an entrance into market designs as the whole energy system paradigm shifted. Physics needs to overrule politics.

Impact of collaboration (Black box project development)

Time-related competencies in project development play a critical role in influencing project risk. In the case of battery storage projects, the development process is often seen as a „black box“ due to the many stakeholders involved, particularly in the approval phase.

To reduce risks and ensure smoother project development, it is essential to engage all stakeholders early in the process and provide them with the right incentives to stay aligned throughout the project. Given the diverse skill sets and competencies of these stakeholders, effective collaboration and cooperation are key to successful project outcomes.

The BESS value chain is very complex and the expansion of storage capacities requires the involvement of many different players with different interests, incentives and risk attitudes. Initiatives such as the roundtable are intended to help bring the various players to the table, to bring together and define the pain points. At the same time, we want to promote understanding between the individual players in order to accelerate expansion.

In the coming months, further roundtable events are planned on the topics of financing, revenue staking, non-physical trading, alternative battery technologies, battery storage production and battery recycling. We will discuss and draw up further working theses for these topics with the participants of the event and other members of our initiative.

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