ECO STOR, a German Energy Storage developer, said recently that recent events and regulatory changes have completely reshaped the revenue mix of energy storage projects in Germany as the market shifts to grid-scale energy storage systems of more than 100MW.
Georg Gallmetzer, managing director of ECO STOR, said German energy storage projects will get about half of their revenue this year from peak shaving, with the rest coming from grid support services and day trading. ECOSTOR's main business is the design and development of Battery Storage systems.
Peak-modulated service is a service for which power is injected by a generation facility during peak demand loads of the distribution system operator (DSO) at an annual rate of eur 50 to EUR 100,000 /MW. But Gallmetzer said energy storage projects that come online after December 2022 May not get that revenue stream.
"So from now on, the value of new projects will have to come from ancillary services and short-term deals, but fortunately the energy world has changed. The price of the auxiliary market has gone up and the spread on the short-term trade has multiplied, but at the same time the battery price has gone up by about 30 percent compared to last year."
He added that ECO STOR's investment decisions on its current projects were made before the Conflict between Russia and Ukraine and the rise in commodity prices, but that the profit opportunities for these energy storage projects had increased significantly.
It is remarkable that all this is happening because some of the pioneers in Europe's largest energy storage markets, such as the UK, such as Gore Street Capital and Anesco, have recently entered or made specific plans to enter the German energy storage market.
When asked to comment on these initiatives, Gallmetzer cited land and grid access pressures in the UK market as key drivers of these companies' expansion abroad.
"I think the land shortage in the UK has led to very high transaction prices for the rights to deploy energy storage projects, in the region of £100,000 /MW, which is actually a bit of a brake on the growth of the UK energy storage market," he said.
Not all energy storage projects in the UK are trading at that price, though. Earlier today, Bluefield Solar announced the completion of a ￡56,000 /MW project rights deal.
Part of the reason for these companies' increased interest in the German energy storage market may be the increased scale of new projects. So far, the market has been dominated by smaller energy storage projects, with battery storage systems operating with an average capacity of just 2.9MWh in 2021, according to a recent study published by the research firm.
That is beginning to change. Power operator RWE, based in Essen, Germany, expects to have a 72MW energy storage project (one of two projects with a total scale of 117MW/128MWh) operational by the end of 2022. Fluence also announced that it is deploying a 100MW/200MWh battery storage project, but the exact delivery date is not yet known, while ECOS TOR expects to commission a 100W/200MWh battery storage system in 2024.
Gallmetzer added, "This 100W/200MWh battery storage system will be the largest in Germany, but its time to hold this record may be short as many market participants have similar plans. And investors have been trying to make small investments and get more experience before scaling up, and these storage systems are starting to operate in the market and the experience with them is going to be very positive."
ECO STOR is deploying a portfolio of energy storage projects that will be delivered by the end of this year with a total storage capacity of 100MWh. The company is comprised of Norwegian-based investors Agder Energi Ventures and Klaveness Marine Holdings, Delph25 and IGE (a holding company controlled by the founders of Covalis Capital) and ECO STOR is owned by the management.
