It’s pretty clear that batteries have a big role to play in the future of electricity, but the EU isn’t sure how they fit with the bloc’s effort to create a single market for energy.
That’s at the heart of a scrap among European institutions as they restart negotiations Thursday on updating EU electricity market rules.
Those plans are built around integrating national power grids to create a seamless EU-wide network from Portugal to Estonia. A continental electricity market is supposed to better integrate renewable energy into the grid, something that is increasingly important after the EU recently agreed to boost the share of renewables to 32 percent by 2030.
The problem with renewable power is that it surges and drops depending on the sun and wind. As a result, utilities have to keep backup sources of power generated by coal, gas or nuclear on standby. Those surges can be evened out by taking power from other countries, or by temporarily storing it either in traditional systems like hydro dams or in batteries.
But the Commission is wary of regulated entities like national grid operators and power distributors (DSOs and TSOs) owning and operating battery storage.
It feels that if EU countries throw money into storage technology, that risks skewing prices upward, as well as reducing the amount of energy available for export to other countries — running counter to the Commission’s plan for a continental market of cheap and clean power.
The Commission instead proposed that regulated TSOs and DSOs be limited to owning batteries only in cases of a market failure. National energy regulators would need to hold a tender and authorize public ownership of storage only in exceptional circumstances.
Divided opinions
The European Parliament backs the Commission’s idea, but some member countries are skeptical.
That’s why the Council slipped a pro-battery ownership provision into the directive on the common rules for the internal market in electricity. The amendment would allow those regulated entities — which are public monopolies in their areas of coverage — to keep running battery storage facilities acquired before 2024 until their end-of-life, normally about a decade.
France and Poland backed this, while countries like Denmark, the Czech Republic and the Netherlands would have preferred to stick with the Commission proposal.
However, the Commission worries this “grace period” would incentivize public ownership of battery storage, something it is trying to limit.
The Parliament also thinks this would be “a major obstacle to the internal market” and expects a “major fight” among institutions during negotiations, in the words of one parliamentary official.
While negotiators argue, grid operators and private investors are continuing to invest in battery banks.
“Our members are very actively looking into this,” said Susanne Nies, strategy and communications manager for ENTSO-E, which groups 43 European grid operators.
Grid-scale battery storage capacity more than doubled across Europe between 2015 and 2017, reaching 928.52 megawatt hours, according to data from Delta-ee, a consultancy. The largest market is Germany — with 340.5 MWh of total installed capacity in 2017 — followed by Italy and the U.K.
“Batteries are needed,” said James Watson, CEO of Solar Power Europe, the solar industry lobby. “Every scenario by every company puts solar as the world’s leading energy generation technology in the next few decades … But we will need support — batteries will be a key element to this.”
And the technology keeps improving. The global price of lithium-ion batteries is expected to fall sharply to $70 per kilowatt hour by 2030, down almost 200 percent from today, according to Bloomberg New Energy Finance.
However, battery capacities are still nowhere near what will be needed as the amount of renewable energy in the system steadily rises. Total demand for storage is estimated by the European Association for Storage of Energy, an industry body, to reach 1,500 gigawatts to 5,500 GW by 2050, assuming renewables will account for 35 percent of power consumption.
“It’s a mental change that needs to happen and [the] cost curve is not there yet,” said Brittney Elzarei, a policy officer at the energy storage lobby. “We won’t wait very long to see that.”
This article is part of Raw Power, a series on Europe’s clean energy revolution.