Faster approvals & fair subsidies: Accelerating the energy transition

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2024/07/05 – The energy transition gained significant momentum in the first half of 2024. Fifty-eight percent of electricity production came from renewable sources, setting a new record and exceeding the previous year's figure by six points. Solar power plants, in particular, produced 37 billion kilowatt-hours between January and June 2024, more than ever before, thanks to record installations in 2023. The Federal Association of Energy and Water Industries (BDEW) reported that solar power plants generated more than ten billion kilowatt-hours of electricity in June 2024 for the first time.

Energy Storage Must Synchronize Production and Demand

However, stable and long-term grid stability requires sufficient balancing energy – even when the wind isn’t blowing, and the sun isn’t shining. Instead of new gas power plants, stationary energy storage systems could make a significant contribution. The planning and approval processes for the necessary production capacities are complicated and lengthy, potentially becoming a further obstacle to the energy transition.

“In Europe, the timelines for construction projects and approval of funding are about two to three times longer than in China,” explains Kai-Uwe Wollenhaupt, President of SVOLT Europe. “This is a significant competitive disadvantage for companies in fast-paced technology sectors.” Wollenhaupt calls for accelerated and simplified approval processes to ensure that the battery technology sector and its supply chain are not disadvantaged.

Subsidy System Needs Urgent Optimization

The current situation makes it difficult to establish new production clusters, which are essential during this transformation phase. International companies face the challenge that investments in Europe take much longer to amortize compared to other regions. As a result, projects are delayed, stopped, or moved to more innovation-friendly regions. The current status quo must not be accepted without challenge.

In addition to the lengthy and impractical approval processes, unbalanced subsidy conditions are slowing down the entire industry. Wollenhaupt: “Fair competition is hindered by an opaque, cumbersome, and lengthy subsidy system, which does not create planning security for potential investors. The current subsidy policy is not an effective growth incentive for local battery production. The subsidies are particularly low in relation to the investment intensity. In the chip industry, an investor receives multiple times the total amount given to the entire battery industry.”

Demand: Recognize Storage Solutions as Essential for the Energy Transition

Wollenhaupt sees a major challenge in the lack of awareness of the importance of storage systems for the success of the energy transition: “We need broad societal and political consensus that storage solutions support the energy transition. Efficient use of green energy will not be possible without energy storage. Innovative energy storage solutions must be advanced just like solar or wind power plants. This includes providing locations and simplifying approval processes for new manufacturing facilities.”

Important steps in this direction could include incorporating approval processes for energy storage into the Building Code (BauGB), as well as a network fee exemption for operators of energy storage solutions and recognizing storage electricity as green electricity.

According to Wollenhaupt, only the accelerated expansion of energy storage solutions can prevent a situation that will occur more frequently with an increasing share of renewable energies in the grid: “A good example is the year 2022. During this period, about 900 million euros had to be spent to stabilize the power grid because renewable energies could not be used due to grid bottlenecks. We should avoid these inefficiencies in the long term.”