Green energy isn't Europe's problem — storage is

During the day, when the wind blows and the sun is shining, the amount of electricity available in Germany and some other European countries is often more than is needed.

But insufficient battery storage has made it impossible to store that energy for later use. Once the sun goes down, it's often left to natural gas power plants to pick up the slack.

That has to change if Germany wants to become climate neutral by 2045. Large-scale storage facilities for green power are essential to keeping electricity prices stable and making the transition to 100% renewable energy.

The European Union, which has set its own climate-neutral goal for 2050, currently generates around half of its electricity with renewable energy. Across Europe, existing storage facilities add up to a capacity of about 14 GW, according to data from the European Commission's Joint Research Centre.

In recent years, that expansion has accelerated dramatically: 84 GW of additional storage capacity, representing a sixfold increase, is currently in the planning or construction phases and expected to go online in the next few years.

That mirrors a global trend, according to research group Bloomberg New Energy Finance. A recent analysis showed that the strongest growth in large-scale storage facilities is expected in Asia, especially in China and India. In Europe, both Germany and Italy, countries with significant renewable energy output, are also major markets for new storage.

Part of that rapid growth is down to sinking costs. Over the last few years, the price for lithium-ion batteries has dropped by about 20% every year. By 2030, according to an EU forecast, the cost for batteries is expected to fall by half, compared to 2022 prices.

When smaller, private storage systems and large-scale facilities are put together, the capacity in the EU has increased tenfold since 2022. But to meet the bloc's climate goals, that figure would have to increase by another factor of 10, to around 750 GW — a target that's still some way off.

Investment in batteries can keep power prices stable

The price of renewable energy is especially low during the day, at times even dipping below zero, often due to the surplus of power generated by wind and solar. As a result, some renewable plants are taken offline for a few hours to compensate, denting profits for energy producers.

When gas and coal power plants go online in the evenings to make up the energy shortfall, that pushes prices back up, explained Dirk Uwe Sauer, a professor and storage systems expert at Germany's RWTH Aachen University.

"If we take a look at these prices, for example, from last year, then we see that at around midday the average price of electricity wasn't much more than €0.03 ($0.04)," he told DW. "In the early evening, it was closer to €0.18."

This considerable difference has made investing in battery storage tech attractive from an economic standpoint — especially at a time when the cost of natural gas has jumped due to the wars in Ukraine and Iran.

Sauer pointed out that each additional storage unit can help to moderate price spikes, benefiting both the renewables industry and private consumers. Until recently, the expansion of renewables in Europe has been hampered by a slow approval process, long planning phases and major obstacles connecting battery storage to the grid.

Better batteries key for energy transition

"Every year, we spend around €80 billion to import energy from abroad. That's a major dependency, and renewable energy could help us break free from that," said Sauer. For that to happen, he added, the buildout of battery storage facilities and electricity grids have to be considered a whole.

"Alongside wind and photovoltaic facilities, we have to build local power grids to distribute power directly and storage facilities to keep it for later. Both are absolutely essential," he said.

But part of the problem lies with Europe's existing electricity grid. Many are more than 40 years old, and most are not designed to take up large amounts of green electricity and transport it to where it's needed. Grids in Germany, and across Europe, need to be modernized and connected to wind parks, solar farms and storage facilities.

The European Commission has previously said the EU would need to invest around €580 billion ($675 billion) to improve its grids by 2030. But progress has so far been mixed, even in Germany. The federal government has been planning to build some 16,000 kilometers (10,000 miles) of power lines for years; today, just 20% is operational. However, the permitting process has recently been streamlined to speed up the process.

Though investment in improved grids is gathering pace, the €580 billion goal looks unlikely. Data from the European Union Agency for the Cooperation of Energy Regulators shows an injection of some €35 billion in 2024; by 2027, that's expected to be €47 billion.

EU working to secure future of electricity

Industry analysts don't expect the ongoing war in Iran to have a significant effect on the growth of battery sector and grid expansion, despite the global energy turbulence.

Bloomberg BNEF reports the three-month old conflict has so far had minimal impact on the battery storage market, most of which is based in China. The war has pushed electricity prices up, with shipments of fossil fuels stuck in the Strait of Hormuz, which could mean short-term profits for battery storage facility operators. But Sauer said that wasn't enough to support sustainable growth in the sector on its own.

"Temporary crises [such as Iran] are generally not a good basis to make investment decisions on products that will be in use for many years," he said. And despite an increase in investment, he still sees signs of uncertainty in the market.

By the time large-scale facilities that are being planned today are actually built and connected to the grid, the Iran war and the energy crisis will be long over, said Sauer. That's why governments needed to make long-term goals. "Electricity grids are built for the next 40 or 50 years."

Just as important for EU member states, alongside the political will, is access to lithium and other metals needed for battery production. The bloc has been prioritizing the development of its strategy for raw materials, supporting domestic production of rare earths, reducing dependence on China and developing secure supply chains. In addition, the EU wants to promote the recycling of critical raw materials like lithium, nickel, gallium and cobalt.

This article was originally written in German.