Germany could reinforce its energy security and reduce dependence on imported fossil fuels through battery storage, but policy uncertainty and the preferential treatment of gas in upcoming capacity auctions risk slowing deployment, according to a new report by Ember and Initiative Klimaneutrales Deutschland (IKND).

The analysis argues that Germany’s electricity backup system is at a turning point as lawmakers prepare reforms to the country’s renewable support framework (EEG), grid legislation and the Electricity Supply Security and Capacity Act (StromVKG), which is expected to launch backup power tenders from September 2026.

According to the report, the decisions taken in these reforms will determine whether Germany relies on clean flexibility technologies such as batteries or locks itself into decades of fossil gas dependency.

Germany leads Europe in battery storage deployment

Germany currently hosts around 25% of the European Union’s total large-scale battery storage capacity. By the end of 2025, the country had more than 2.5 GW of operational grid-scale batteries, more than double the 1.2 GW recorded two years earlier.

The report highlights a strong development pipeline, with more than 10 GW of battery projects announced as of December 2025, including 1.5 GW already under construction.

According to the analysis, falling battery costs and faster construction times are making storage projects increasingly competitive compared to new gas-fired power plants, particularly in countries dependent on costly LNG imports. The report also notes that battery technologies are improving rapidly, with four-hour storage duration expected to become standard across Europe in the short term.

At the same time, storage projects with longer duration are gaining momentum. Ember points to Italy’s MACSE storage tenders in October 2025, where all awarded battery projects had durations above six hours.

Batteries could cut curtailment and save €800 million

The study estimates that if Germany’s planned battery pipeline — equivalent to 10.5 GW and 26.3 GWh — had already been operational in 2025, it could have prevented around one-third of the country’s wind and solar curtailment.

Germany curtailed approximately 8 TWh of renewable electricity in 2025, equal to nearly 3.4% of total wind and solar output. According to the report, reducing this curtailment could have lowered redispatch costs and avoided gas purchases by around €0.8 billion, including €613 million in redispatch savings and €219 million in avoided gas imports.

The report stresses that these savings would have exceeded the investment required for batteries, estimated at €145 million annually over the lifetime of the technology.

Beyond reducing wasted renewable generation, the analysis highlights the growing role of batteries in providing grid services such as voltage control, emergency power and system inertia, traditionally supplied by fossil generators.

Residential battery market continues to expand

Germany also hosts Europe’s largest residential solar-plus-storage market. More than two million home battery systems are already installed across the country, representing roughly one in six homeowners.

A survey by the Institute für Demoskopie Allensbach cited in the report found that 30% of German homeowners are considering purchasing a home battery within the next five years. If realised, the number of residential battery systems could rise to seven million by 2030.

The report identifies self-consumption savings, resilience against outages and electric vehicle charging optimisation as the main drivers behind household demand. It also points to supportive measures such as VAT exemptions and dynamic electricity tariffs.

According to the analysis, smart charging of residential batteries during periods of high solar generation could also help reduce congestion in distribution grids and lower system costs.

Municipalities show strong interest despite financing barriers

Local governments are also increasingly interested in storage technologies. A survey conducted by IKND and Heimatwurzeln found that energy storage ranked as the most attractive energy transition technology among German municipalities, ahead of wind, solar and district heating networks.

However, the report warns that major barriers remain. Around 60% of mayors surveyed said their administrations have limited or no knowledge of battery storage technologies. Financial constraints are also significant, with 72% of municipalities describing their budgets as tight or very tight, while half identified financing as the main obstacle to implementing energy transition projects.

Grid connection challenges were another major issue, with 97% of respondents reporting local difficulties in accessing the grid.

Report calls for a clean flexibility strategy

The report concludes that Germany urgently needs a comprehensive clean flexibility strategy that gives batteries, demand-side flexibility and smarter grid infrastructure equal standing alongside conventional generation technologies.

The authors warn that granting preferential treatment to gas-fired power plants in upcoming capacity auctions could delay the deployment of clean technologies that are already commercially viable and ready to scale.

According to Clara Mewes, Lead Analyst Initiative Klimaneutrales Deutschland (IKND), demand for battery storage is growing rapidly among households and municipalities alike. She stated that by 2030, up to seven million single-family homes in Germany could be equipped with home battery systems, while by 2035 one in three municipalities could operate their own storage solutions.

The report argues that regulatory clarity and equal treatment for storage technologies will be essential to ensure Germany’s future electricity security is based on clean energy rather than a new generation of gas infrastructure and long-term fuel import dependence.