Is grid expansion really the decisive lever for scaling up battery storage in Germany? Florian Antwerpen, Managing Director of Kyon Energy, a project developer and operator of large standalone storage projects, takes a more nuanced view.
In this interview, he explains why storage plays a key role in lowering electricity prices and ensuring security of supply, which regulatory hurdles are currently slowing expansion, and why more flexibility rather than purely grid expansion is crucial for the success of the energy transition.
Florian Antwerpen: About five years ago, large-scale stationary battery storage systems in Germany – particularly as power plant solutions – were still largely uncommon. At the time, many market participants did not yet believe in a viable business model. At Kyon Energy, however, we were convinced from the outset that such projects are necessary from an energy economics perspective. Based on this conviction, Kyon Energy was founded at a time when the market was still in its early stages of development. Although Kyon Energy is a young company, we have grown significantly in recent years and developed into one of the leading providers of stationary battery storage systems in the construction and operation sector.
Florian Antwerpen: As developers and operators of our storage projects, our work includes identifying suitable sites, acquiring land, securing grid connections, obtaining the necessary construction permits, and arranging financing. We currently have around 1.2 gigawatts of storage capacity under construction. The majority consists of our own projects, while a smaller portion relates to systems that we have sold to third parties and are still completing. Overall, we support projects from the initial idea in a greenfield setting through to the end of their lifecycle, and we generally keep them within our own portfolio.
We pursue what is known as an “integrated power strategy.” This means that we not only sell electricity on the market, but also purchase it, while covering the entire value chain of large-scale battery storage – from project development and construction to operation and commercialization. On this basis, we see ourselves as an independent provider of flexibility in the energy market.
Florian Antwerpen: At the moment, I am primarily concerned with regulatory uncertainties. In construction law, the privileged status of battery storage systems in undeveloped areas has recently been significantly restricted: such systems are now only privileged within a 200-meter radius of substations. From our perspective, this is not effective, as these areas are needed for grid expansion, leading to conflicts of use, even though close coordination between the grid and storage infrastructure would actually be necessary.
Another key uncertainty concerns future grid fee regulations. The current exemption under Section 18 of the German Energy Industry Act (EnWG) applies only to battery storage systems that go into operation by August 4, 2029; this exemption then remains valid for 20 years. However, discussions are currently underway as part of reform considerations by the Federal Network Agency regarding how the regulation will be structured after this cut-off date.
Since project development and construction take more than three years, it means that new projects can hardly meet this deadline anymore. Due to these long lead times and the unclear regulatory outlook, developing new projects is currently associated with considerable risks. As a result, we are currently investing only very cautiously in the development of new projects, as the economic framework conditions are too uncertain.
Florian Antwerpen: The abolition of the KraftNAV and the introduction of the so-called “maturity level procedure” were fundamentally sensible, as they respond to changing framework conditions. However, so far, there is only a new procedure for projects in the transmission grid, and this shifts the influence more strongly in favor of grid operators. This aligns with a general trend in the current legislative period, in which the voices of grid operators and large energy suppliers are given particular weight.
It is important to distinguish between transmission and distribution system operators: while the former are technically well-positioned and, in my view, capable of handling complex challenges effectively, many distribution system operators are under significant pressure. They serve a large number of end customers, including many private households, and are overstretched in many areas. In my view, there is still, in some cases, a lack of understanding of their central role in delivering a sustainable energy supply. Yet one thing is clear: without well-positioned distribution system operators, there will be no sustainable, cost-efficient, and future-proof energy supply.
Florian Antwerpen: In political discussions, grid expansion is often presented as the central solution. However, grid expansion is expensive, takes a long time, and is not always efficient. Of course, a certain level of expansion is necessary, but not all problems can be solved this way. Instead, I see significant potential in better integrating generation assets, making use of flexibility, and incorporating storage systems. A key issue is the low rollout of smart meters. Currently, only about five percent of end consumers are equipped with such systems. Without this infrastructure, the necessary data and price signals are missing to manage flexible assets such as heat pumps or electric vehicles in a targeted way. As a result, large flexibility potentials in the grid remain unused.
I also have the impression that storage systems are not always recognized by policymakers as a key component of a flexible energy system. A shift in thinking is needed here: redispatch measures should be better planned, and it is necessary to gain a more comprehensive understanding of processes within distribution grids. At the same time, I would like to see distribution system operators being more strongly challenged and more effectively incentivized – for example, by making them share in redispatch costs if they do not sufficiently use available flexibility to prevent such measures.
In addition, it can be observed that current regulatory discussions are calling existing business models for battery storage into question. Although the majority of projects are financed by private capital, the lack of regulatory stability creates uncertainty and leads to prolonged debates, which can slow down investment. Here, I would like to see greater stability from policymakers. This is not only about the interests of storage operators. Expanding flexibility is in the interest of the entire energy market. If different flexibility options are more strongly integrated and compete with one another, this can lead to significantly lower electricity prices. This is a decisive advantage, as high and volatile energy prices place a heavy burden on both businesses and private households. For this reason, I consider the expansion of storage and flexibility to be a central building block of a future-proof energy supply.