The German energy market, particularly the commercial and industrial (C&I) sector, is experiencing a significant transformation due to the rise of battery storage systems. Among the key players propelling this revolution is Tesvolt, a developer and manufacturer of advanced battery energy storage systems (BESS). In an ambitious move to capitalize on the growing opportunities in the C&I battery storage market, Tesvolt launched its subsidiary, Tesvolt Energy. This new initiative aims to optimize energy trading and system performance using innovative approaches. The launch signifies a significant stride towards addressing market inefficiencies and optimizing the economic returns for smaller battery storage systems.
The Launch of Tesvolt Energy and Its Strategic Initiatives
Tesvolt Energy is making waves through collaborations with prominent energy trading firms such as enspired, Entrix, and The Mobility House. By uniting battery storage systems ranging from 100kWh to 10MWh into a virtual power plant (VPP) pool, they aim to maximize economic returns. Collectively managing these smaller systems enables more effective trading on the electricity grid. This collaborative effort is supported by Tesvolt’s proprietary software controls, which not only minimize wear and tear on the systems but also enhance the revenue streams for involved trading partners.
Tesvolt has a robust background in manufacturing Li-ion energy storage systems, utilizing Samsung SDI battery cells. The company is currently expanding its production capabilities, underscoring its commitment to scaling its operations. Last April, Tesvolt began constructing a new factory with an annual production capacity of 4GWh in Lutherstadt Wittenberg, Germany, right next to its existing plant. This expansion comes alongside Tesvolt’s largest project to date, a 65MWh utility-scale system in Rhineland-Palatinate, Germany. Despite these large-scale endeavors, Tesvolt maintains that its primary focus remains on the C&I projects, underlining the company’s strategic emphasis on this sector.
Challenges Faced by Smaller Battery Storage Systems
Sebastian Kratz, appointed as CEO of Tesvolt Energy, shed light on the historical challenges that have plagued smaller battery storage systems. He pointed out that high costs and limited revenue opportunities had previously discouraged energy traders from engaging with individual small systems. Tesvolt Energy’s innovative approach seeks to address these issues by leveraging a novel concept. This concept allows C&I storage systems to harness high cycle stability, guaranteeing more full cycles than even some utility-scale systems.
Smaller C&I storage systems often struggle to secure interested energy traders due to the market’s prevailing focus on large-scale utility storage. This perspective was echoed by Tesvolt’s co-founder and CEO, Daniel Hannemann, who emphasized how market conditions traditionally favor larger operations. By offering a workable solution to this problem, Tesvolt Energy is facilitating the participation of smaller systems in the energy market, enabling them to reap economic rewards and contribute to grid stability.
Virtual Power Plants and Market Access for Smaller Systems
Bundling smaller BESS into a VPP provides these systems with the same market access advantages typically reserved for larger projects. This strategic integration enables smaller systems to participate effectively in energy trading, optimizing their economic potential and providing the necessary leverage and flexibility. Analysts predict around 535MWh of new installations in Germany’s C&I segment this year alone, highlighting the immense potential within this market. This forecast is bolstered by Germany’s established C&I solar PV market, indicating a strong synergy between these complementary sectors.
Tesvolt Energy’s business model aims to capitalize on these favorable conditions, achieving high returns while managing risk profiles effectively. The strategy involves tapping into the inherent flexibility that energy trading brings to the grid. As a result, smaller systems can contribute to grid stability and benefit from increased economic opportunities, ultimately enhancing their viability and attractiveness to energy traders.
Competitive Landscape and Regulatory Advantages
To drive value for smaller BESS projects, Tesvolt Energy is fostering a competitive environment among its three trading and optimization partners, enspired, Entrix, and The Mobility House. This competitive dynamic is expected to create advantageous market conditions for smaller projects. Smaller battery systems enjoy fewer regulatory restrictions compared to their utility-scale counterparts, facilitating faster permitting processes for construction and grid connection. Germany’s energy storage market is among the most promising in Europe, boasting a substantial pipeline of approximately 230GWh of utility-scale BESS awaiting grid connection.
The appeal of Germany’s market lies in the depth and liquidity of its wholesale power markets, making it an attractive destination for BESS investments. Recent energy storage revenue benchmarking indexes, including those from Tesvolt Energy partner enspired, highlight the high-value opportunities in Germany. These indexes underscore the economic viability of smaller C&I battery storage projects, encouraging further investment and development in this sector.
Future Prospects and Expansion Plans
The German energy market, especially within the commercial and industrial (C&I) sector, is undergoing a major transformation driven by the rise of battery storage systems. A prominent player leading this change is Tesvolt, a company known for developing and manufacturing advanced battery energy storage systems (BESS). Seizing the growing opportunities, Tesvolt launched Tesvolt Energy, a subsidiary designed to optimize energy trading and system performance through innovative methods. This launch symbolizes a significant move towards resolving market inefficiencies and improving economic returns for smaller battery storage systems. With Tesvolt Energy, the company aims to enhance the overall efficiency and reliability of energy storage, making a notable impact on the C&I market. The establishment of this subsidiary not only exemplifies Tesvolt’s commitment to advancing energy storage technology but also highlights the potential for substantial growth and improvement in the energy sector.
