System-serving energy storage

Author: Caroline Weiß

Pursuant to section 135(1) of the Austrian Electricity Industry Act (ElWG), the draft System Usage Charges Framework Regulation was recently published. This regulation establishes new principles for the network usage charges of electricity grid operators, effective January 1st, 2027. It also sets out the criteria under which an energy storage facility is considered “system-serving” and therefore eligible for preferential network charges. The aim is to encourage energy storage systems to be operated economically at suitable grid connection points in order to help relieve the burden on the power grids and avoid additional grid expansion costs.

If an energy storage system qualifies as system-serving depends on different criteria, based on whether it is connected to the distribution grid or the transmission grid. Accordingly, the draft regulation distinguishes between system-serving storage facilities in the distribution grid (section 24 of the draft) and system-serving storage facilities in the transmission grid (section 25 of the draft).

System-serving energy storage in the distribution grid

A system-serving storage facility at grid levels 4 to 7 is an energy storage facility that

does not require any additional grid expansion for its grid connection (with the exception of the connection facility itself);
is connected to a grid node at grid level 4 where certain thresholds for transformer utilization are exceeded;
uses connection capacities for system-serving operation;
has a congestion management capacity of at least 1 MW;
has an operator that has entered into a contract with the control area manager for the provision of flexibility services; and
for which the grid operator may contractually restrict the operating range.

These criteria must be met cumulatively. In addition, section 24(3) of the draft regulation provides for a special rule applicable to aggregators. Accordingly, by aggregating energy storage facilities with a congestion capacity of at least 50 kW each, in accordance with the provisions of the regulation, aggregators can meet the requirements for system-serving energy storage. This is intended, in particular, to enable smaller energy storage facilities (“swarm storage”) to qualify as system-serving storage through aggregation. The exemption from grid usage and grid loss charges ends upon the termination of a grid user’s participation in an aggregator’s aggregation.

System-serving energy storage in the transmission grid

A system-serving storage facility at one of grid levels 1 to 3 is an energy storage facility that

is directly connected to the transmission grid;
is connected at a location designated as suitable by the transmission system operator in the Grid Development Plan;
has an operator who has concluded a contract with the control area manager for the provision of flexibility services;
for which the grid operator may contractually restrict the operating range;
has an operator who provides reactive power to the transmission system operator free of charge; and
complies with the requirements or restrictions applicable at the time the grid connection is established that are imposed by the grid operator for the connection of a system-serving storage facility.

These criteria must also be met cumulatively. When determining system-serving locations in the transmission grid, the Grid Development Plan shall serve as the primary reference point. The designation of suitable locations by the transmission system operator must likewise be guided by the requirements of grid operation and the availability of grid connections for storage facilities as part of planned projects.

Grid fee exemptions for system-serving storage facilities

Pursuant to section 127(3) of the ElWG, the withdrawal of electricity by an energy storage operator is exempt from grid usage and grid loss charges if the energy storage facility qualifies as a system-serving storage facility in accordance with sections 24 et seq. of the draft regulation and is operated exclusively for reinjection into the grid (section 23 of the draft regulation).

“Reinjection” is defined in section 2(1)(13) of the draft regulation. According to the explanatory notes, reinjection refers only to electrical energy that was previously withdrawn from the grid at the same grid connection point, temporarily stored in an energy storage facility, and subsequently fed back into the grid.

Section 23 of the draft regulation establishes the basic requirements for preferential network charges for system-serving storage facilities. According to the explanatory notes, this applies only “if the withdrawal is exclusively for the purpose of filling or charging a system-serving storage facility that subsequently feeds back into the public grid. Any additional withdrawal (for other facilities at the same grid connection point) is not permitted.”

An exemption expires no later than 20 years after the respective energy storage facility is first put into operation. The exemption for system-serving storage facilities is to be granted up to a total of 5 GW of congestion management capacity for all of Austria.

Conclusion

The provisions of the regulation establish a legal framework defining the criteria under which energy storage systems qualify as system-serving and may therefore benefit from preferential network charges. A distinction is made between storage facilities in the distribution grid and those in the transmission grid.

From a regulatory perspective, the regulation aims to specifically promote the use of system-serving energy storage systems through clear, objective, and transparent criteria, thereby harnessing their potential to support the grid. At the same time, the requirements for qualifying as a system-serving storage facility are relatively demanding. Even though the regulation is based on objective criteria, certain requirements contain elements that allow for some leeway. How this will actually play out will ultimately only become apparent through practical application. At least the criteria are now defined more clearly than they were in the market consultation.