Co-located vs. stand-alone: which gives the better risk structure

Co-located means: battery storage and photovoltaics share the same grid connection. Stand-alone means: the storage sits at the grid without on-site generation. The choice between the two materially shapes the risk profile of a direct investment — and it is not purely technically determined, but also driven by economics and regulation.

This article puts both structures side by side — along the levers that actually make the difference in project evaluation: grid-connection utilisation, behaviour during negative power prices, revenue diversification, CAPEX efficiency and permitting.

What is a co-located battery storage system?

A co-located battery storage system is a battery that shares its grid connection point — the point where a project connects to the public grid — with a generation asset, in Germany usually a ground-mounted photovoltaic plant. A shared hybrid inverter is not required: most large co-located projects are AC-coupled, with PV and storage remaining technically independent installations behind one shared connection. Legally, the structure is explicitly provided for: §8 of the German Renewable Energy Act (EEG) allows several installations to connect to an existing grid connection point ("cable pooling"), and since the Solar Peak Act (Solarspitzengesetz) of February 2025, §8a EEG and §17(2b) EnWG enable flexible grid connection agreements under which the installed capacity may even deliberately "overbuild" the connection.

Why this is the central lever becomes clear from the queues: German grid operators are sitting on connection requests for more than 700 GW of storage capacity, of which only around 80 GW have been committed — and only a few gigawatts are actually connected. In many regions, the grid connection is therefore the scarcest asset of a storage project, slower to obtain than land or technology. Whoever uses an existing or already-planned PV connection twice bypasses exactly this bottleneck — that is the core idea of every co-located structure.

Co-located: PV and storage combined

The economic core of a co-located project lies in three effects. First, infrastructure: grid connection, substation and transformer are used twice — depending on the project, this cuts investment costs by roughly 7 to 15 percent compared with two separate installations. Second, negative power prices: in 2025, the German day-ahead price was negative in 573 hours — a record, after 457 hours the year before. Since the Solar Peak Act, these hours are particularly painful for new PV plants, because §51 EEG cancels the remuneration from the very first negative quarter-hour; it is only made up at the end of the 20-year support period (§51a EEG). A battery on the same connection turns exactly these hours into a charging opportunity: it absorbs the solar power instead of letting it be curtailed, and sells it into the evening peak. Third, the revenue mix: the PV plant delivers plannable EEG or PPA revenue, the battery earns market revenue from direct marketing — two revenue sources with different drivers on the same site.

Against this stand the real costs of complexity. The shared connection forces PV and storage to coordinate: in hours of full solar feed-in, the battery cannot additionally discharge at full power. With intelligent dispatch, market analyses put the cost of this at typically under 4 percent of storage revenue — little, but not zero. The regulation is more demanding: if the battery is to charge grid power in addition to solar power (for balancing services, say), the exclusivity principle long applied — a single charged kilowatt-hour of "grey" grid power within a calendar year could jeopardise the EEG support. Since the Solar Peak Act, §19 EEG opens the so-called demarcation option (Abgrenzungsoption) for this: green and grey power may be mixed, provided a metering concept cleanly separates the quantities. In practice, implementation hinges on exactly that metering concept and on ongoing clarifications by the Federal Network Agency — a point a serious project calculation should disclose openly. Add coordinated permitting and a larger site footprint.

Stand-alone: storage without generation

A stand-alone battery is the leaner structure: no generation asset, no EEG regime, no demarcation questions. The battery trades freely across all markets — it charges when power is cheap and discharges when it is expensive. Negative prices are no threat here but part of the business model: in those hours, the battery gets paid to charge. The structure is also simpler in practice: the footprint is comparatively small, permitting concerns only one asset, and the timeline does not depend on a PV park — stand-alone projects therefore often reach the grid faster.

The flip side is full market exposure: without an EEG or PPA base, the entire revenue depends on spreads and balancing-market prices — and thus on market development. The risks behind this are set out in detail in Risks in BESS direct investments — and how they are structurally addressed. The marketing model can cushion it: tolling or floor structures shift market risk to the trader in exchange for part of the revenue potential. Structurally, however, a stand-alone battery remains an entrepreneurial investment in a volatile power system — which is why revenue sensitivities with named assumptions belong in every calculation.

Co-located or stand-alone: what is the difference?

The difference in one sentence: co-located trades simplicity for efficiency — the shared grid connection lowers investment costs and diversifies revenue, but costs coordination and regulatory complexity. Stand-alone trades efficiency for focus — full market access and lean permitting, but full market-price risk without a revenue base.

Which structure fits which region?

As a rule of thumb: the scarcer the grid connections and the more pronounced the solar midday peak, the more a site favours co-located — the more wind-shaped the price structure, the more it favours stand-alone. In southern Germany, high PV density meets scarce connection capacity: negative midday hours are piling up, and a battery on the PV connection monetises exactly this structure. In northern Germany, wind shapes the price picture: volatility spreads across whole days and weather patterns rather than the midday peak, and connection points at wind-heavy grid nodes are more readily available — here a freely trading stand-alone battery plays its flexibility to the full. A rule of thumb, however, does not replace site analysis: what matters is the specific grid node, the local generation structure and the reliability of the connection commitment.

How we evaluate projects

We curate projects of both structures — and evaluate them against the same criteria: is the grid connection commitment solid, i.e. signed rather than "in prospect"? How do revenues react to changing spreads and balancing prices — the mechanics are explained in our article on direct marketing? Does the structure fit the site rather than the sales story? And who operates and markets the battery over the holding period? Questions you should ask any provider:

• Is there a signed grid connection commitment — for what capacity, at which grid node?
• For co-located: how is the EEG demarcation (§19 EEG) solved in metering terms — and who bears the risk if requirements change?
• How do PV and storage share the connection capacity in hours of high solar feed-in — and what does this coordination cost in the revenue model?
• For stand-alone: which marketing model applies (merchant, floor, tolling) — and who bears the market-price risk?

Whether a specific project convinces as a co-located or stand-alone structure — and how solid its grid connection, revenue assumptions and operator are — is what we discuss in a no-obligation first conversation: based on real project figures, with disclosed assumptions instead of a marketing number.