Germany´s Climate Protection Law: Opportunities for the Storage Sector

December 2019

By Flérida Regueira Cortizo and  Anne Bräutigam, Germany Trade & Invest

In the fall of 2019, Germany’s Federal Cabinet passed a climate protection law making Germany the first country to adopt a binding roadmap towards greenhouse gas neutrality. It provides legally comprehensive climate targets for the transport, energy, industrial, building, agricultural and waste-management sectors. Several new measures for each of these areas, including incentives, promotion and investment programs, are planned. The goal of making Germany greenhouse gas neutral by 2050 will also be anchored in law for the first time. The law is in parliamentary deliberation.

Expansion of renewable energies and electric vehicles push storage systems

In the energy sector, emissions are to be reduced, and coal-fired power plants phased out by 2038. Germany’s energy demands will be supplied by expanding renewable energies. Wind and photovoltaic have been earmarked for a 65% share of Germany’s gross electricity consumption by 2030. The use of wind power is to be stepped up via, among other things, modifications to environmental and conservation law and air safety regulations. For offshore wind power the expansion target for 2030 has been raised to 20 GW.

The government aims to have between 7 and 10 million electric vehicles registered by 2030. This goal is to be achieved through specific promotion incentives on electric, hybrid and fuel-cell car purchases lasting until 2025. Charging infrastructure will also be expanded to achieve one million charging points. They will be located in gas stations, parking lots, and private and public buildings.

The expansion of charging infrastructure and renewable energies will raise demand on grid and storage capacities, but heightened storage capacities will also stabilize the grid by balancing out short-term fluctuations. In the private segment, batteries can help consumers optimize their own consumption of electricity from solar PV. Today, every second household PV system comes with a PV-storage system. With almost 57,000 newly installed small private PV plants in 2018, the research and consulting company EuPD Research predicts a fourfold increase in annual new PV installations through 2035. In addition, 60% of new small PV systems in Germany are expected to be installed in combination with PV storage and EV wallbox solutions. The commercial PV-storage segment can also anticipate robust growth due to the great potential for cutting costs as consuming electricity becomes more flexible.

Battery cell production in the Volkswagen factory in Braunschweig © Volkswagen AG

Battery cell production is taking off – billions in investment planned

Germany’s federal government has decided to establish a strong battery industry. This encompasses the entire value chain: from material producers through mechanical and plant engineering to cell manufacturers and, of course, recycling companies. The Ministry for Education and Research is funding comprehensive battery research from transfer to industrial application. The Federal Ministry of Economic Affairs and Energy is offering additional support for industrial implementation and production in Germany.

The federal government is also funding a 500-million-euro research facility for battery cell production in Münster, while Volkswagen has announced that it will invest one billion euros in battery-cell production at its Salzgitter plant.

Last May, Germany and France sent a joint letter of intent to the EU Commission supporting a new battery production consortium. This initiative is to be underwritten to the tune of 1.2 billion euros and will include a pilot factory in France and further factories in Germany and France in 2022 and 2023 respectively.

The European Commission is planning to set binding standards for raw materials and production processes in cell manufacturing as well as cell recycling. Germany has already introduced this concept into its battery strategy and will play a major role in accessing secondary raw materials.

Financing and incentive instruments

Implementing all these solutions requires the public and private sectors to work hand in hand. This is why considerable support is being made available to firms thinking of investing in green tech in Germany.

Companies can take advantage of a wide range of financing and incentive instruments in the promising German market. Visit www.gtai.de/incentives for information on the incentives and funding available. Germany Trade & Invest (GTAI) offers free support services for companies planning to expand to this promising market.

Authors: Flérida Regueira Cortizo  (flerida.regueira@gtai.com) and Anne Bräutigam (anne.brautigam@gtai.com) are industry experts in energy, building and environment technologies at Germany’s economic development agency, Germany Trade & Invest (GTAI). If you wish to discuss, how you can grow your business in Germany, just e-mail them to arrange a call.