Best and worst Euro nations for storage grid fees

• Large grid fees restricting growth of energy storage in Europe
  
• But Ireland and Portugal examples of ‘best practice’
  
• ‘Double-charging’ highlighted as obstacle by policy body EASE

Excessively large grid-related fees across much of Europe are stifling the wider deployment of energy storage.

Indeed, critics argue that tariff structures in many European countries are failing to comply with the EU-level rules on electricity market regulation, which state that tariffs should be “cost-reflective” and not discriminate against energy storage.

The European Association for Energy Storage (EASE) made its position clear in a recent report when it said: “Quite often, storage operators face disproportionate network fees that don’t take into account the benefit brought by energy storage to grid stability and system flexibility”.

However, EASE has highlighted two countries, which it says are exhibiting ‘best practice’ when it comes to frameworks for charging grid fees. Those two countries are Ireland and Portugal.

The double-charging problem

A study published by the European Commission back in 2020 highlighted how double-charging of stored energy – that is, for storage charge and discharge – can be particularly detrimental to the deployment of energy storage.

It’s in this context that Ireland has been praised by EASE for taking steps to remove the barrier of double-charging. What did Ireland do? The Irish CRU (Commission for Regulation of Utilities) eliminated double charging for energy storage as a temporary solution to the problem pending a full review of grid charges. Specifically, the CRU decided to apply demand related network charges and cease generation related charges for commercial energy storage providers.

Portugal was also singled out for praise in the recent EASE report. By way of context, the European Union’s ‘Clean Energy Package’ – a policy framework adopted in 2019 to facilitate the transition away from fossil fuels towards cleaner energy – defined the concept of energy communities in legislation and defined two types: citizen energy communities, and renewable energy communities (RECs).

RECs aim to empower self-consumers and therefore it is imperative that EU member states ensure that they can participate on an equal footing with bigger participants. EASE says Portugal provides an “excellent example” of how this is being put into practice.

What exactly is Portugal doing? According to EASE, the REC regulations currently in place in Portugal “provide several benefits” – they include a full exemption from grid fees that RECs and collective self-consumers are subject to, as well as a partial grid fees’ exemption, which is applied to individual self-consumers.

However, other European countries fared less well in EASE’s assessment. Here’s a run-down of other major European nations’ position on transmission and distribution grid fees.

Austria

• On the transmission side, one of only two European countries to have special tariff regimes for energy storage facilities.
• Specific tariffs are applied to pumped-hydro storage facilities

Belgium

• Energy storage facilities must pay both transmission injection and withdrawal charges
• Energy storage facilities must pay both distribution injection and withdrawal charges
• Transmission network costs are among the lowest in Europe – grid fees are based mostly on the amount of energy transmitted.

Finland

• Energy storage facilities must pay both transmission injection and withdrawal charges
• The only EU member state not to charge injection or withdrawal fees for energy storage facilities at the distribution level
• Transmission network costs are among the lowest in Europe – grid fees are based mostly on the amount of energy transmitted.

France

• Energy storage facilities must pay both distribution injection and withdrawal charges
• On the distribution side, there is an optional structure for collective self-consumption
• Rebates applied to pumped-hydro storage facilities considered as electro intensive consumers.
• Transmission network costs are among the lowest in Europe – grid fees are based mostly on the amount of energy transmitted.

Germany

• On the transmission side, one of only two European countries to have special tariff regimes for energy storage facilities.
• Special tariff regime provides a 20-year exemption of the transmission tariff component for energy storage facilities built between 2011 and 2026.

Italy

• Storage facilities are exempted from the application of grid tariffs, charges covering transmission and distribution, and system costs for the electricity withdrawn and subsequently reinjected into the grid.
• Unlike most of the EU – where the dominant tariff design is volumetric – uses a more mixed approach between, volumetric, capacity, and fixed costs.

Luxembourg

• Energy storage facilities must pay both distribution injection and withdrawal charges

Netherlands

• Transmission network costs are among the lowest in Europe – grid fees based entirely on power (use of the transmission line at a certain level of capacity).
• Unlike most of the EU – where the dominant tariff design is volumetric – uses a more mixed approach between, volumetric, capacity, and fixed costs.

Norway

• Energy storage facilities must pay both transmission injection and withdrawal charges
• Unlike most of the EU – where the dominant tariff design is volumetric – uses a more mixed approach between, volumetric, capacity, and fixed costs.

Portugal

• Pumped-hydro storage withdrawals from the network are exempt from paying grid tariffs and system charges, however, for other types of storage, including batteries, the exemption is applied to the injection into the electricity network.
• Unlike most of the EU – where the dominant tariff design is volumetric – uses a more mixed approach between, volumetric, capacity, and fixed costs.

Spain

• Pumped-hydro storage plants withdrawals from the network are exempt from paying grid tariffs and system charges. Batteries are exempt from grid tariffs when withdrawing energy when they are directly connected to the grid, but not when they are embedded in customers facilities.
• Unlike most of the EU – where the dominant tariff design is volumetric – uses a more mixed approach between, volumetric, capacity, and fixed costs.

Sweden

• Energy storage facilities must pay both distribution injection and withdrawal charges
• On the distribution side, time-variable tariffs, and some tariff exemptions for generation, are available for energy storage.
• Unlike most of the EU – where the dominant tariff design is volumetric – uses a more mixed approach between, volumetric, capacity, and fixed costs.

UK

• Energy storage facilities must pay both transmission injection and withdrawal charges

It’s clear to see that there are no common practices across Europe when it comes to grid tariff structures for energy storage. In addition, as EASE has highlighted, in many countries in Europe, energy storage is treated the same as any other consumer, and “due to the specific attributes and services of energy storage, this may act as a barrier to the deployment of energy storage systems”.

What needs to be done to encourage the wider deployment of storage in Europe?

Here are two key proposals:

1. Abolish non-cost reflective grid charges for energy storage to ensure a level playing field.
   
2. Given that energy storage is critical to achieving the energy transition, it should be subject to specific, tailored regulation, rather than being treated as a subset of generation.

Only when these proposals are adopted can Europe effectively take the next step towards achieving the energy transition.