Germany: Battery Storage as a Key to the Energy Transition – Grid Connection, Regulation, and Economic Risks – The Major Challenges for Storage Projects

At the same time, technological progress opens up new economic potential – for example, through arbitrage trading on the electricity exchange, participation in control power markets, or the optimization of own generation portfolios.

However, this dynamic market ramp-up also brings significant challenges that go beyond mere technical integration and substantially influence the economic viability and feasibility of storage projects.

Grid Connection Bottleneck

A central obstacle is the availability of grid connections. Germany is currently facing an extremely high number of grid connection requests for large battery storage systems: According to the Federal Network Agency, grid operators received almost 10,000 connection requests for battery storage systems from the medium-voltage level in 2024, with a planned capacity of approx. 400 gigawatts and 661 gigawatt-hours. Approximately 3,800 requests were approved (25 gigawatts of power and 46 gigawatt-hours of capacity).² For large-scale storage systems from 1 MW gross capacity, power requests even amount to 720 GW, according to a survey by the German Association of Energy and Water Industries (BDEW) from November 2025³. For comparison: currently, large-scale storage systems with about 2.6 GW of power are installed.⁴ Many of these requests are an expression of an approval process that operates on a “first come, first served” basis and makes little distinction between technically feasible projects and speculative applications. This leads to an unpredictable queue that slows down the process for all parties involved and creates uncertainties in project planning. Grid operators and industry associations are therefore urgently calling for a reform of connection procedures to prioritize viable projects and ensure better coordination between grid capacity, storage demand, and other consumers.⁵ The Federal Ministry for Economic Affairs and Energy (BMWE) published an initial adjustment with the draft of an ordinance amending the Power Plant Grid Connection Ordinance (KraftNAV) in December 2025, which removes large battery storage systems from the scope of KraftNAV. Instead, the BMWE envisages a new grid connection procedure for storage projects. We reported on this on December 11, 2025⁶.

Regulatory Framework as Another Challenge

The market is also undergoing regulatory upheaval: the legal classification of battery storage systems between generation, consumption, and grid operation often remains unclear in practice. In addition, regulations on grid fees, grid connection contributions, and market roles significantly influence incentive structures and the development of viable business models.⁷ The question of the system-serving benefit of large battery storage systems also calls for action: confronted with the price signals of the electricity exchange and the control reserve markets, large-scale storage systems are currently operated primarily in a market-oriented manner. However, there are still obstacles regarding the grid-serving nature of large-scale storage systems: due to a lack of local price signals, there are currently no incentives for grid-serving operation that would reduce grid bottlenecks and thus costs for redispatch measures and grid expansion. This is also confirmed by the recently published study by Neon Neue Energieökonomik, commissioned by Kyon Energy, LichtBlick, ECO STORE, and Flence, which analyzes the system-serving nature of large batteries. While the market orientation of storage systems already reduces electricity generation costs, decreases price volatility, and generates macroeconomic added value, the potential in the grid sector remains untapped. The authors therefore propose, in addition to dynamic, time- and location-variable price signals, uniform connection rules and market mechanisms that appropriately reflect and remunerate grid- and system-serving behavior.⁸

Lack of Quality in Procurement as a Potential Risk

Beyond regulation and grid connection, technical and operational challenges also arise in the implementation of battery storage projects. Proper dimensioning, especially in conjunction with renewable energy plants, is complex. Cell imbalance (cell imbalance) limits overall capacity and can shorten lifespan.⁹ ¹⁰ Quality-assured procurement of storage components is therefore essential for a successful project. At the same time, requirements for safety concepts, approval capability, and insurability of the systems are becoming stricter, which makes project implementation even more demanding.

Economic Uncertainty and Lack of Transparency

There are also challenges in the operation of battery storage systems, including the complexity, lack of transparency, and uncertainty of the underlying market and revenue models. Battery storage systems are usually deployed simultaneously by a marketer in various markets – for example, for arbitrage trading on the electricity exchange and participation in control power markets – to benefit from a combination of these revenue streams. However, current analyses by RWTH Aachen (Battery Charts) show that the potential annual revenues of stationary battery storage systems in 2025 have significantly decreased compared to 2024, which is reflected in a shrinking spread between purchase and sales prices and weaker revenues from certain control power markets.¹¹ A sound financial modeling that maps various scenarios (i.e., considers sensitivities) should therefore serve as the basis for an investment decision.

Marketing as Key to Success

Furthermore, battery storage operators can currently only select marketers based on their remuneration models, particularly profit-sharing. A reliable comparability of the actual expected absolute revenues – and thus the real “quality” of the marketing – is not possible. This complicates an objective evaluation of different providers and leads to an overall opaque market situation.

The Way Forward

Against this background, it becomes clear: the successful development of battery storage projects requires more than just technological know-how. A comprehensive understanding of the regulatory framework, in-depth analyses of the location and grid connection situation, and a robust economic evaluation under uncertainty are crucial.

We are happy to support you with our interdisciplinary team in every phase of your battery storage project regarding legal and economic issues.

With our algorithm-based revenue forecasting tool ENERGY PROPHET, revenues on the electricity exchange can be simulated and used as a basis for a sound economic assessment.
Through our collaboration with NOVUM engineering GmbH, who excellently complement our service portfolio with their technical expertise, we can fully support you in the procurement of battery storage systems.
Regarding storage operation, our industry comparison for battery storage operators offers the opportunity to evaluate the marketing quality of your storage. Simply contact us.

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Sources and notes:

1 Electricity Generation Pie Charts | Energy-Charts
2 Federal Network Agency – Press – Federal Network Agency publishes figures for 2024 on connection requests and approvals for battery storage
3 BDEW Survey: Grid Connection Boom for Large Battery Storage Requires New Rules | BDEW
4 Battery Charts – Data on Stationary Battery Storage in Germany
5 BDEW Survey: Grid Connection Boom for Large Battery Storage Requires New Rules | BDEW
6 KraftNAV – zurück auf Los? Neues Netzanschlussverfahren für Großbatteriespeicher | RÖDL
7 Bundesgerichtshof bestätigt Baukostenzuschüsse für Batteriespeicher | RÖDL
8 Neon-Consentec-Systemdienlichkeit-Großbatterien.pdf
9 Analysis of Aging Effect and Cell Balancing Problem of Lithium-Ion Battery , Journal of Electrical and Electronic Engineering, Science Publishing Group
10 Limitations of cell imbalances on the operation of a large-scale battery storage system: example LTO batteries (https://doi.org/10.1049/icp.2024.3880)
11 Revenue Potentials for Stationary Battery Storage in Germany Decreased in 2025 – pv magazine Germany