How battery storage expansion in Germany will affect power prices

By the end of 2025, around 2.2 million battery storage systems were in operation in Germany, including large-scale, commercial, and residential systems. These correspond to an installed power of nearly 16 GW and a usable storage capacity of approximately 25.5 GW. 

However, the vast majority of this capacity is still attributable to smaller systems. Large-scale battery storage systems currently account for only a relatively small share, with around 2.4 GW of BESS power and approximately 3.2 GWh of storage capacity. Nevertheless, there are strong indications that this balance will shift significantly in the coming years. 

Germany’s large BESS project pipeline – but with uncertainty

A key indicator of this development is the project pipeline. At the end of 2025, the ‘Bundesnetzagentur’ published detailed information on grid connection approvals for battery storage systems. According to this data, grid operators approved around 3,800 grid connection applications for large-scale battery storage systems at the medium-voltage level in 2024. In total, these approvals correspond to approximately 25 GW of battery storage power and 46 GWh of energy storage capacity (Source: Bundesnetzagentur, 2025).

These figures highlight the strong investment interest in BESS in Germany. At the same time, it is clear that not every approved project will be realised. Delays, economic conditions, regulatory uncertainty, or financing constraints mean that a share of these projects will never reach commissioning. Grid connection approvals therefore do not guarantee full implementation but rather indicate the theoretical maximum expansion potential.

When storage capacity becomes price relevant

Large-scale battery storage systems can generally operate across multiple markets, most notably the Day-Ahead market, the Intraday market and the balancing energy markets. In order to model future price developments in these markets, however, it is crucial to determine which share of storage power/capacity is actually available to each market and therefore contributes to price formation.

Against this background, our long-term Day-Ahead price modelling includes only those battery storage systems that are expected to actively participate in the Day-Ahead market. Moreover, we explicitly avoid assuming full realisation of all approved projects, reflecting the uncertainties discussed above.

To transparently assess the impact of this assumption, we conducted an additional sensitivity analysis as part of our Q1-2026 update of the European power price scenarios. We considered, through four sensitivities relevant for Germany, the impact that varying levels of BESS power could have on baseload and capture prices (compared to our assumptions in our standard scenario “Central”). We also investigated how the roll-out of flexible demand affects this relationship, therefore considering the different flexibility assumptions in these sensitivities.

Day-Ahead power price scenarios for Europe

The analysis of the impact of more battery storage systems on the Day-Ahead power market is based on our European power price scenarios, which are developed using our fundamental model Power2Sim. Power2Sim is an hourly, fundamentals-driven power market model that consistently represents electricity supply, electricity demand and flexibility options such as large-scale battery storage systems, enabling a model-based derivation of long-term power and capture prices. Electricity demand is also distinguished between flexible and inflexible demand. The “flexible” demand consists of electrolysers, heat pumps and electromobility.

Rather than modelling a single future, we work with scenario frameworks that reflect different plausible developments of the energy system. These scenarios differ in their assumptions regarding renewable energy expansion pathways, demand growth, commodity prices, CO₂ costs, flexibility options, and regulatory frameworks (other aspects can differ too).

The “Central” scenario serves as the reference scenario for this analysis and the assumptions are based on current political targets. In the “Central” scenario, we assume a continuous expansion of renewable energy in line with the objectives of the German Renewable Energy Act (EEG), a moderate increase in electricity demand and a gradual expansion of flexibility options, such as large-scale batteries and  flexible demand. Large-scale battery storage systems are modelled as independent market participants that charge and discharge in the Day-Ahead market based on price signals. A more detailed description of this scenario, as well as the additional European scenarios, can be found in our EU Energy Outlook.

Key assumptions on battery storage and demand flexibility

In this analysis, alternative modelling assumptions for future development of battery storage systems and flexible demand are examined. Their impact relative to the results for the “Central” scenario in the Q1-2026 update is then assessed.

In the reference case, the “Central” scenario, a share of 60% of the grid connection commitments from the ’Bundesnetzagentur’ is expected to be completed by 2030, leading to the inclusion of approximately 15 GW of large-scale battery power in 2030. Subsequently, the targets from the grid development plan in scenario B are applied, corresponding to around 68 GW in 2045.

Furthermore, the “Central” scenario accounts for the flexible electricity demand associated with e-mobility, heat pumps and electrolysers which is assumed to respond to the price signals by shifting the consumption subject to the predefined technical and temporal constraints.

To assess the impact of different directions of flexibility developments on the price behaviour, the sensitivity analysis is structured around a certain assumption. Specifically, two alternative assumptions to the “Central” scenario are considered for battery power capacity expansion: 

• noBESS : no battery power capacity to be built until 2045.

• highBESS : the full implementation of the grid connection commitments from the ‘Bundesnetzagentur’ is assumed, leading to the inclusion of approximately 25 GW of large-scale battery storage capacity in 2030. In order to reflect a more progressive scenario, the targets from the grid development plan in scenario C for 2045 are considered, resulting in roughly 94 GW of battery storage capacity.

Simultaneously, a modified assumption for flexible electricity demand is considered, in which only 50% of demand-side flexibility is price-responsive, compared to the 100% in the “Central” scenario. In this context, “flexibility” refers to the proportion of this load that can be spread over several hours or even days, i.e. that does not necessarily have to be covered at a specific time. This also means that no volume-related adjustments are made under this assumption; instead, the same demand volume is assumed across all sensitivities, with only its flexibility being varied. The variant of the 50% flexibilization is referred to as lowFlex. 

The combination of above assumptions defines the set of analysed sensitivity:

• highBESS

• lowFlex

• highBESS & lowFlex

• noBESS & lowFlex

The following section presents the results of the sensitivity analysis and discusses their impact on long-term power price developments. 

Implications for the German power prices

Flexible demand and battery storage play a crucial role in the effective integration of renewable generation and maintenance of system stability. Flexibility supports more stable capture prices through the absorption of renewable production during periods of high output. It also improves investment incentives for renewable technologies.

The sensitivity without battery power capacity and lower flexibility of the flexible demand (“noBESS & lowFlex”) shows the worst-case situation in our comparison, where the solar capture prices are up to 30% lower than in the “Central” scenario. This indicates that a complete removal of battery power capacity is detrimental for further renewable expansion. Without sufficient storage, solar generation cannot be efficiently absorbed, resulting in decreased solar capture prices. Increased reliance on conventional generation during periods of high demand and limited flexibility leads to substantially higher electricity prices too. This clearly demonstrates the need for greater flexibility in order to facilitate greater volumes of renewable power.

A comparison with the sensitivity where battery power capacity progresses as expected under the “Central” scenario and the lower flexibility sensitivity (“lowFlex”) is assumed, reveals the value of additional battery power capacity and its substantial impact on the solar capture prices. However, the analysis of the sensitivity with even higher battery power capacity and lower flexibility (“highBESS & lowFlex”) demonstrates that the impact on the solar capture prices is limited and depends on the demand for flexibility driven by fluctuated renewable energy sources. Under certain operating conditions, the existing levels of battery power capacity can be considered sufficient, with additional BESS remaining inactive most of the time.

In the next stage of analysis, the results from the “Central” scenario are compared when isolating the impact of increasing the battery power capacity (“highBESS”) and decreasing the flexibility of the flexible demand (“lowFlex”).

In these case, expanding battery power capacity, while maintaining the same level of flexible demand, leads to only slight increase in solar capture prices. This effect reflects the improved integration of solar generation into the power system, as additional storage enables the absorption of solar production during periods of high output, but also demonstrates the limited need for additional source of flexibility in the current power system configuration.

In order to explain the decreasing impact on solar capture prices, the sensitivity “highBESS” is compared with the sensitivity “highBESS & lowFlex”, where the level of flexibility is lower for the same amount of battery power capacity. The average daily battery activity for that sensitivity is analysed, indicating that many storage systems in the sensitivity “highBESS” remain inactive. On the other hand, battery power capacity in sensitivity “highBESS& lowFlex” plays a more critical role, as the reduced capability to shift demand toward periods of high renewable generation increases reliance on storage.

Lastly, the sensitivity “lowFlex” indicates that a reduction in flexible demand has a negative effect, as it leads to slightly lower solar capture prices in comparison to the “Central” scenario. This is due to the limited ability of demand to respond to price signals, thereby constraining the absorption of solar generation during high-output periods and increasing reliance on higher-cost generation during peak demand hours.

All of the presented sensitivities underline the importance of battery power capacity and flexible electricity demand on power system efficiency and reliability. The analysis shows that the deployment of flexibility in different forms is required to enable further renewable expansion and its integration into the power system. However, it is important to maintain the balance between the share of flexible electricity demand and battery power capacity in the power system to achieve the stability of the network.

Storage and flexibility as joint enablers of the energy transition

Overall, the analysis highlights that future development of electricity prices in Germany will not be driven by battery storage expansion alone, but by the interaction between storage capacity and demand-side flexibility. While additional BESS capacity supports the integration of renewable generation and stabilises capture prices, its price impact becomes significantly more pronounced when demand-side flexibility is limited.

At the same time, the results clearly show that reducing flexibility (either on the supply or demand side) leads to higher power prices and lower capture prices, particularly for solar generation.

From a system perspective, battery storage and flexible demand should therefore be understood as complementary flexibility options rather than substitutes. A balanced expansion of both is essential to absorb increasing volumes of renewable electricity, limit price volatility, and ensure efficient market outcomes. As Germany moves towards a power system with higher renewable penetration and structurally more frequent surplus situations, the coordinated deployment of storage and demand flexibility will be a key determinant of price formation and system stability up to 2045.

Sources:

Bundesnetzagentur (2025): Bundesnetzagentur veröffentlicht Zahlen für 2024 zu Anschlussanfragen und zusagen für Batteriespeicher [online] https://www.bundesnetzagentur.de/1079644