Germany's Evonik and Siemens are teaming up to convert excess renewable power into chemical building blocks that would normally require oil, the latest attempt to deal with erratic flows of wind and solar power in the country.

Engineering giant Siemens will work to electrolyse carbon dioxide and water into hydrogen and carbon monoxide, using electricity generated from green energy.

Chemicals group Evonik, for its part, will run a bioreactor to ferment those gases into industrial alcohols butanol and hexanol for possible use in plastics and dietary supplements.

Companies in similar development ventures include BASF , Clariant and ThyssenKrupp.

BASF, however, has warned that despite its attractions, converting excess electricity into chemicals still faces major cost hurdles and requires bigger government funding before it can go mainstream.

Years into Germany's energy transition away from fossil and nuclear power, almost half of the nation's installed power capacity now comes from renewable sources, mainly solar and wind. But the inability to store excess electricity remains a major drawback.

As a result, its gas-to-power plants need to be ramped up and down to accommodate the fickle supply from renewables, which enjoy priority access to the power grid over other sources.

Households and companies are paying more than 20 billion euros a year in surcharges on their utility bills to keep the system going, which sees some wind parks taken off-grid during storms but operators still getting guaranteed pay.

The pilot plant for the new initiative is scheduled to go on stream at an Evonik site in Marl, Germany by 2021.

If successful, the two companies' Rheticus alliance could follow up with a site producing 20,000 tonnes of basic chemicals a year, about one fifth of the average capacity of a petrochemical plant serving world markets.

Rheticus will for now receive 2.8 million euros ($3.4 million) in government funding over two years, with the companies contributing roughly the same amount.