The German Federal Network Agency's new proposal for market integration of battery storage in private households is a milestone for system-friendly operation of home batteries. It envisions two models for how private storage systems can participate in the electricity market without having to pay grid fees for every kilowatt-hour consumed.
The Two Models
With the separation option (Abgrenzungsoption), the storage system is measured separately – with its own electricity meter. In this case, charging and discharging are precisely recorded, and grid fees are completely waived for these electricity volumes. This makes system-friendly operation of storage systems economically attractive and enables optimization of existing home batteries that have previously been used inefficiently from an economic perspective.
The so-called flat-rate option (Pauschaloption) dispenses with separate metering. Instead, it assumes that every kilowatt-hour fed into the grid beyond a flat-rate PV feed-in amount comes from the storage system. This feed-in amount depends on the size of any existing PV system. For this "excess" feed-in, the operator receives a refund of grid fees – amounting to 15 to 20 cents per kilowatt-hour.
The Problem: Misaligned Incentives
This regulation creates misaligned incentives.
Since the PV system and the storage together feed in more than the flat-rate amount, each additional kilowatt-hour of PV electricity marginally leads to a fixed income equal to the refunded grid fees – in addition to the market value of the electricity and the market premium.
This is effectively – at the margin – an additional PV feed-in tariff of approximately 15 to 20 cents per kilowatt-hour, with the corresponding well-known misaligned incentives.
A household that has chosen the flat-rate regulation will continue to feed electricity into the grid even at very negative market prices to receive this effective compensation from the grid fee flat-rate, since no hourly rule applies when counting the volumes.
They will also orient their PV system for maximum production facing south, instead of choosing an east-west orientation, which would be much better aligned with the relationship between supply and demand in the electricity market.
And they would have little incentive to focus self-consumption during midday hours, since the income from fed-in electricity now roughly equals the costs for electricity consumption during off-peak hours.
A Partial Mitigation
A mandatory metering solution for home batteries would therefore be more system-friendly. However, given the high installation costs in Germany, such a requirement would make many storage projects economically unattractive – and particularly prevent existing storage systems from being used for arbitrage trading at all.
Therefore, it is difficult to make a clear recommendation against the flat-rate option.
But it would make sense to sharpen one central point:
Volumes fed into the electricity grid during times of negative day-ahead prices should not be considered for the grid fee refund.
Since all households with the flat-rate option are required to have a smart meter, this would be easy to implement – and would eliminate the most extreme misaligned incentives.
We will make the best of it
No matter what the rules are, akkuplan will consider all of them and make sure to find the optimal schedule for your battery and make you the most money possible.