Hurdles to battery storage that could relieve the strain on the power grid

Legal framework slows down investments – stand-alone large-scale battery storage systems incur double grid charges

With the ongoing expansion of renewable energies, the need for flexibility in the electricity grid is also increasing in Austria. Large-scale battery storage systems are considered a key component for temporarily storing surplus electricity from renewable sources and feeding it back into the grid when needed, or even providing it as a rapid reserve to compensate for fluctuations in the electricity grid as part of balancing energy. However, despite their technically promising role, the expansion of these storage technologies in Austria is progressing slowly – and this is due not least to an economic stumbling block: the high grid fees.

Double Fees: Large-scale stand-alone battery storage systems, in particular, can be an effective solution for fluctuating feed-in. Stand-alone battery storage systems are independent energy storage systems that are not coupled to other generation facilities, such as solar or wind farms. They draw energy directly from the power grid and feed it back into the grid at a more favorable time, thus relieving the grid's load.

Under current law, battery storage systems are classified as both withdrawing and feeding energy into the power grid due to their dual function. This dual classification means that grid usage fees must be paid for both withdrawal and feed-in. This makes the operation of standalone storage systems, in particular, much less economically attractive.

For battery storage systems coupled to generation facilities (e.g., solar or wind farms) or integrated battery storage systems, the cost structure is significantly better in comparison due to a different cost structure and thus greater economic efficiency. Such projects have therefore already been implemented several times in Austria or are currently in the planning stages. A look beyond the borders shows that there are other options: In countries like Germany, measures have already been taken to promote large-scale standalone battery storage parks on a large scale. Accordingly, adapted grid fee regulations apply there, preventing the double burden that exists in Austria. Due to the better framework conditions, significantly more standalone storage systems have been built in Germany.

Existing business models such as electricity price trading or balancing energy business are currently not cost-effective for stand-alone storage facilities. In the current Austrian market environment, external financing for long-term investments in Austria is therefore difficult, because banks can only grant large loans if the economic viability of the business model is ensured.

It is encouraging that the new Austrian government has already proposed a reduction in, or possibly an exemption from, grid fees for storage facilities in its government program. However, it is currently unclear whether and in what form the fee reduction for "grid- or system-serving" storage facilities proposed in the current draft of the Electricity Industry Act (ElWG) will also apply to stand-alone large-scale battery storage systems.

It is clear that the Austrian market will only become attractive for companies when the regulatory and economic framework conditions meet the requirements of a modern energy system.

Alexander Schultmeyer is a lawyer and partner at the Vienna-based law firm Akela. He specializes in finance and energy law.

The Standard