What kind of news is there in the Li-ion battery industry and energy storage industry recently, here is the market information collected by SES Power for you.

A: 32MWh! Berenberg Bank provides debt financing for two battery storage projects to be deployed in Germany

Munich-based Berenberg Bank has provided debt financing for two battery storage projects in eastern Germany with a total capacity of 32MWh.

The two battery storage systems are being deployed in Saxony and Saxony-Anhalt and will be completed by the end of this year, with a total storage capacity of 32MWh and a total installed capacity of 27.6MW.

(The Smareg4 battery energy storage project deployed by Smart Power in Eisenach, Germany, was recently acquired by BCP Battery)

The bank financed the procurement and construction costs of the two energy storage projects through its Green Energy Primary Debt Fund, but did not disclose the developers deploying the two projects.

The bank noted in a press release that the two battery energy storage systems will be profitable primarily through frequency response services to support the stability of grid operations. It was previously reported that the battery storage projects entering the German energy trading space will diversify their revenue streams.

Torsten Heidemann, Head of Infrastructure and Energy at Berenberg Bank, commented, "Energy storage systems play an important role in the energy transition, because only through energy storage systems will it be possible for Germany to realise its aspirations for large-scale deployment of renewable energy."  

The development of the German battery energy storage market has slowed in recent years and is expected to be on par with the installed capacity of energy storage systems deployed last year in 2022, but higher than the 200MW deployed in 2018.

While a major source of revenue for energy storage systems will be phased out, returns from battery storage systems will grow through increased revenues from frequency response services and energy trading.

The two energy storage projects, funded by Berenberg Bank, will come online and operate this year. With Smart Power and RWE deploying more than 200MW of installed energy storage systems in Germany in the last few months, plus the 220MW announced by RWE and the 250MW large battery storage project by Fluence, the trend in the German battery storage market appears to have started to reverse, according to the report.

According to data from the Fraunhofer Institute for Solar Energy Systems cited by Georg Gallmetzer, CEO of ECOSTOR, Germany needs to deploy 84 GWh of battery storage systems to meet its target of adopting 80% renewable electricity by 2030, and more effort is needed in the meantime.

B: Inflation Reduction Act sets the stage for rapid growth of the US energy storage industry

The passage of the Inflation Reduction Act in August this year has significantly improved the economics of deploying large-scale battery energy storage projects in the US. Independently deployed energy storage systems will be eligible for a 30% investment tax credit (ITC) and up to 70% tax credit freebies.  

This is a big deal for the energy storage industry," said Peter Cavan, director of market development at battery storage developer Convergent Energyand Power. Previously, the federal tax credit only applied to energy storage systems deployed in conjunction with renewable energy sources such as solar power facilities. This change could drive investment in the energy storage industry to $1 trillion by 2030."  

From an investment perspective, much of the potential impact of the Inflation Reduction Act is due to the medium to long-term certainty it creates. The bill and puts incentives in place until 2032. This provides ample time for investors and developers of energy storage systems to provide returns.

In addition, the new legislation expands the scope for calculating the total cost of a project, Cavan said, adding that the tax credits will now cover grid interconnections, microgrid controllers and a wider range of components used in clean energy systems.

In order to maximise the tax credits available under the Inflation Reduction Act, energy storage projects must meet two labour requirements. The first is to ensure that energy storage developers and operators pay prevailing wages, as determined by the US Department of Labor, for the first five years of construction and system operation. The second requires the project to meet the registered apprenticeship requirement.

If battery storage projects meet the wage and apprenticeship requirements, they can increase tax credit eligibility to 70 per cent through three potential further incentives - domestic content, energy community and low and moderate income (LMI) projects.

One of the additional 10% tax credit incentives is for projects built with US produced equipment and materials. This continues a long-term trend in US policy.

Cavan said, "Currently, it is difficult to meet domestic content requirements due to the lack of locally produced battery products, but by 2025, this process should change significantly as domestic battery manufacturing grows and manufacturing of other components returns to the US."

The Investment Tax Credit (ITC) for energy storage systems offered by the Inflation Reduction Act will be similar to the current law, which is a more favourable way to accelerate depreciation in the first few years of the life of an energy storage asset. The Act also aims to simplify the structure of investments in clean energy projects through the transferability of the tax credit.

Previously, clean energy developers typically had to work with larger companies or financial institutions, which often did not have significant tax liabilities, to take full advantage of the tax credits generated by their projects.

This was more complicated to deal with and therefore required the help of a lawyer," Cavan says. In the future, it will be simpler and more cost effective for developers like us to monetise tax credits by having the option of transferring them when the size of the energy storage project or capital expenditure does not lend itself to a long-term relationship with a tax equity investor with a complex transaction structure."  

Beyond the specific guarantees of the Investment Tax Credit (ITC), the changing competitive environment has greater implications for utilities and the owners and operators of energy storage systems. "The Investment Tax Credit (ITC) for energy storage systems will ultimately require utilities to reconsider what their electricity systems look like," says Cavan. -- what they pay for and how much, and what they expect customers and third parties to do."  

Deploying more energy storage systems will ultimately mean greater grid resilience and a reduction in carbon emissions. But it also means a boom in permitting and interconnection - challenges that the energy storage industry is struggling to overcome. says Cavan, "We are planning for the deployment of more battery storage systems, which at the current rate will take years to complete, and hopefully new rules and processes, such as FERC's RM22-14, will pave the way for faster deployment of energy storage systems."  

Cavan said this will also change the market dynamics for energy storage system operators as more energy storage systems come online and operate. Currently, the highest revenue opportunities for large-scale battery storage systems are in the provision of ancillary services to the grid, such as frequency regulation and backup power.

Cavan says, "As more energy storage systems add competition for ancillary services, their prices will be driven down and this will be the next stage in the maturation of the storage industry as battery storage systems focus more on other areas, such as arbitrage, shifting power from renewables when it is most useful."

The US government's goal is to have a carbon-free US power sector by 2035. Ultimately, this will require significant energy arbitrage to store electricity from wind and solar generation. The Inflation Reduction Act sets the stage for the energy storage industry to play this key role over the next decade.

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