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Germany will need to double its electricity storage capacity in the next 15 years to keep pace with its growing demand for clean energy. Deutsche Bank analysts say businesses have been slow to get what it means for them.
Few countries are rolling out renewable energy as swiftly as Germany.
Clean sources of power have tripled in the last decade to provide 20 percent of the electricity supply. Yet according to a recent Deutsche Bank report, this investment is creating bottlenecks that few businesses are planning for.
"It's about time that companies focus on the issue of storage facilities," said Josef Auer, an energy analyst with Deutsche Bank.
"In Germany alone, we expect an investment volume of 30 billion euros in the next 20 years."
Germany's laws to promote renewable energy require utilities to accept any clean energy fed into the grid by authorized providers.
This has promoted their uptake by sending a clear signal to investors. But it has also caused stability problems.
The amount of electricity in the grid at any time is a fine balance between demand and supply.
During times of high input of clean energy, utilities are obliged to power down more flexible source of energy like gas. Sometimes there is so much wind energy on offer that wind turbines need to be turned off to prevent the grid from overloading.
Storing energy at peak times could provide part of the answer, but Auer says short term storage capacity lags way behind the pace of investment in renewables.
"Short-term storage needs to at least double by 2025," Auer said.
German companies are ill-prepared
It's a problem that is gathering pace. By the end of the decade, Germany hopes to get a third of its power from renewable energy.
When he investigated Germany's electricity storage potential for Deutsche Bank, Auer initially expected big companies to have their own calculations ready, and that those numbers would affect investment decisions.
"In fact we were asked by some of them how we did our calculations and what results we derived," Auer said. "This showed that medium-sized and bigger companies and also municipal energy suppliers are not prepared."
Future wind parks in the North Sea will further aggravate the problem, said Norbert Allnoch, Director of the International Economic Forum for Renewable Energies.
"The greatest challenge will occur once we have wind power of 20,000 megawatts at sea. This cannot be used regionally."
Wind power produced in Germany's north needs to find its way to industrial centers in the south. Pan-European grids are needed which could diminish regional power fluctuations within Europe.
But it's not only too much energy that's causing problems. Volatile supplies are also harming the economics of stable sources of power.
Other problems with volatility
"Until now, power plants have made very good money at noon, because the peak at noon was always very expensive," said Allnoch. Now, at noon time, solar energy sources are pushing those peak load power stations off the market.
"This leads to a decline in those power plants, because they no longer pay off," Allnoch said.
Even though Auer calculates that flexible gas-fired power plants still pay off when electricity tariffs are high, he agrees that investments in those plants have declined. That makes it all the more important to secure stable sources of power by alternative means.
Such storage facilities already exist - for instance pump water reservoirs. During peak times, clean power can be used to pump water to basins on higher ground. If power is short, the water flows back to basins at lower elevations, driving turbines along the way, effectively drawing on 'stored' clean power.
In addition to pumped storage, investments need to happen in technologies employing a similar principle to transform power into gas, said Deutsche Bank's Auer. Such ideas offer the prospect of saving huge amounts of clean power, and delivering steady levels of energy, without inventing new batteries.
Author: Insa Wrede / sst
Editor: Nathan Witkop