The Volkswagen Group is entering the electricity market on a large scale. The company is planning to build a large battery storage facility in northern Germany, which is due to go online next year. The project is planned to be so large that the electricity from the storage facility could replace the capacity of a gas-fired power plant, it was said at the presentation in Berlin.
Experts have long been aware that such storage facilities will play an important role in the transition from fossil to renewable energy. Electricity from wind and solar power is often generated when it cannot be used. Prices on the electricity exchange then fall into negative territory. Conversely, expensive gas-fired power plants have to be switched on when there is no wind or at night, which drives up the price of electricity significantly.
This price difference alone creates a business case for large storage facilities that store energy when it is cheap and feed it into the grid when supply becomes scarce and expensive. They also help to balance out the fluctuating electricity output from weather-dependent plants.
At the presentation, VW board member Thomas Schmall said that there are currently battery storage facilities in Germany with a capacity of one gigawatt hour (GWh). The company’s own “Power Center” will double this capacity. According to a Fraunhofer study, electricity storage facilities with a capacity of 100 GWh must be built in Germany by 2030. Many companies in the energy sector are also planning to build such storage facilities. VW says it is looking for potential partners.
Initially, the VW storage facility will have a capacity of 700 megawatt hours, which, according to the company, corresponds to an output of 350 megawatts. It will then be expanded further to up to one GWh. Additional plants in Europe are also possible. The groundbreaking ceremony is planned for six to eight weeks, said Schmall. He did not yet provide any further details about the project.
This new business will create synergies for Volkswagen, said the board member, who is also responsible for setting up the battery cell factories within the group. By this he means, on the one hand, the second sales channel for the batteries from its own production, and on the other hand, the charging subsidiary Elli, under whose direction the stationary storage units will be operated. To start with, VW will use batteries in the “Power Center” that will be supplied by its Chinese partner Gotion. When the new factory in Salzgitter starts up, the storage units will then come from there.
One synergy here is that in phases of weaker demand for electric cars, the cell factories do not have to reduce their production, but can supply batteries to stationary power storage units. In the future, it will also be possible to use used batteries from old vehicles in such central storage units.
In Elli boss Giovanni Palazzo’s strategy, the large-scale storage facility is a crucial building block for expanding the company into a comprehensive energy provider – and for making the business profitable. So far, Elli has essentially offered VW customers a charging card that gives them access to 700,000 charging points in Europe. Now a flexible electricity tariff is to be added, with which the company will pass on low prices on the stock exchange to customers – provided they charge their car at the right time.
Last year, Elli received a trading license for the EPEX electricity exchange. Thanks to its own storage facility, the company can now use this license for so-called arbitrage transactions, i.e. to earn money from price differences. The product range for customers is being expanded through a new cooperation with the Norwegian solar roof provider Otovo. Elli’s new wall box can be connected to the solar system so that the surplus electricity from your own roof is fed into the car’s battery.
Such extensions make the electric car part of a new “ecosystem,” said Stefan Bratzel from the Center of Automotive Management at the VW event. This creates added value, similar to that of a smartphone: Compared to a Nokia phone, it is not a better phone, but overall it is a more attractive product.