Co-Location refers to a plant configuration in which a battery storage system and a power generation asset – such as a wind or solar farm – share the same grid connection point (in German: Netzverknüpfungspunkt, NVP) to the public electricity grid.
Although both assets share the same grid connection point, the generation asset and the battery storage system remain legally and technically independent units. The storage system does not become part of the generation asset; it simply uses the existing grid infrastructure together with it. This is what distinguishes co-location from a stand-alone battery storage system, which has its own grid connection and is operated independently of any generation asset.
There are essentially two operating models for the storage system:
If both variants are combined, the setup is referred to as a hybrid storage system.
The design and profitability of a co-location project depend heavily on the type of generation the storage system is combined with. We cover the individual configurations in separate articles:
Co-location projects are usually implemented with large-scale battery storage systems or grid-scale battery storage systems. Depending on the operating model and the regulatory framework, such a storage system can in principle access the same revenue markets as other large-scale storage assets – for example via multi-use, intraday trading or primary control reserve.
The main advantage is that battery storage projects can be realised faster. A co-location storage system at an existing renewable energy asset benefits from the grid connection privilege for renewables under Section 8 EEG: the grid operator is obliged to process the connection request within eight weeks. In addition, at wind farms and ground-mounted PV plants the storage system can often be included in the existing building permit, which considerably reduces the approval effort. The battery storage system can help a co-location site perform better economically or technically than a generation asset alone – although from a pure storage perspective, a stand-alone system is more profitable.
Savings can arise in capital expenditure (CAPEX), because the storage system uses the existing infrastructure: no new substation has to be built, no new medium-voltage line has to be laid and no new grid connection has to be applied for – which in many distribution grids is hardly available anyway. There are also synergies in operating expenditure (OPEX): lease costs, vegetation management, video surveillance and maintenance staff can be shared between the generation asset and the storage system.
The electricity grid is lagging behind the expansion of wind and solar capacity. As a result, assets increasingly have to be curtailed, and electricity prices slip into negative territory around midday. At the same time, obtaining new grid connections for stand-alone battery storage systems is extremely difficult and time-consuming. Co-location solves this problem: the storage system uses the existing grid connection of a wind or solar farm, which is not fully utilised for most of the year anyway.
Co-location is not a new concept – what is relatively new is the structural need for it. Three developments are driving the growing number of co-located battery storage projects:
Both are economically attractive, but they follow a different logic. Because of the natural daily and seasonal rhythm, PV systems generate energy at specific times. As a result, a green-power storage system there achieves comparatively few usable cycles compared with a combination with wind energy, which is active throughout the year and less regularly. The outcome: at a wind farm, enough cycles are typically achieved to operate the storage system profitably as a green-power storage system, whereas PV farms tend to be combined primarily with grey-power storage systems.
The biggest hurdle is the so-called exclusivity principle in the EEG: anyone who charges their storage system with grid electricity loses the subsidy for the electricity fed in. Until now, this has forced operators into a hard either-or decision between green and grey power. In addition, authorities often lack experience with this young asset combination, which can delay building permits and grid applications.
Hybrid co-location is the operating model that is intended to be enabled in the future. A hybrid storage system would be allowed to participate in the electricity market without restriction and to charge grid electricity – like a grey-power storage system – while retaining the EEG subsidy for the share charged locally from wind or sun, based on quarter-hourly metering.
For existing assets, an additional amendment to the existing building permit (in German: Tektur) or a separate permit is required. For new wind or solar farms, the storage system can be built under the same application. Only a green-power storage system can be carried along via the planning privilege – regardless of whether wind or solar is involved – because it is regarded as a subsystem of the generation asset.
