Evaluating regulatory and market frameworks for energy storage deployment in electricity grids with high renewable energy penetration

Investment volumes in renewable energies in Germany are far ahead of the necessary infrastructure to integrate them into both the electricity market and the grid. For storages and other technologies offering flexibilities the current regulatory framework and the market design in Germany remain a barrier for upcoming investments. In this paper regulatory barriers for an economically efficient energy storage deployment are presented and evaluated using a generic optimization model for a multifunctional operation of storage technologies on electricity markets capable to consider different market and regulatory design changes. Due to the rising significance of grid restrictions for the integration of intermittent resources and upcoming new innovative storage technologies on distribution grid level, the electricity grid was integrated into the model. Such an approach enables a quantitative analysis of interaction between market operation and grid congestion. This is shown using a 110kV high-voltage grid in the North of Germany as a representative congested grid with ongoing curtailments due to high wind energy penetration. Storage technologies - and also other measures as demand-side and generation management - will need a flexible market and a sophisticated regulatory design in order to significantly add value to the future energy system.