Storage adds flexibility to the process of balancing supply and demand, which aside from pumped storage is mainly achieved in Germany by exporting any excess power, or encouraging electricity-intensive industry to step production up or down using price signals.
Pumped hydro storage, where excess electricity is used to pump water into reservoirs for later release through turbines, is already in use in Germany and is a tried-and-tested technology, unlike more futuristic technologies, such as storing energy underground as compressed air or in car batteries. The new law provides an incentive for construction of more pumped storage by waiving use-of-network charges for operators of new facilities that are commissioned between 2009 and the end of 2019.
Though network charges are retained for existing pumped-storage plants, the incentive for new facilities marks a partial victory for Germany's federal renewable energy association, the Bundesverband Erneuerbare Energien (BEE). It expects as much as 13 GW of hydro storage - most of it pumped storage - to be available to Germany in 2020, compared with about 10 GW today. BEE says more pumped storage is vital to a power system with a large renewables component.
Last year renewables contributed nearly 15% of the country's electricity. That could increase to 30% by 2020, according to the federal environment ministry. Wind alone accounted for 6.6% of Germany's electricity in 2008 and could increase to 15% by 2020, it says.
Germany's renewable energy association has a more ambitious forecast. It says renewables can contribute 47% of total German electricity in 2020, with wind alone accounting for about 25% of total German electricity that year.