Rapid Growth Seen for Europe's Battery Storage Sector

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe installed 4.5 gigawatts (GW) of battery storage last year, but rapid growth in the sector could see investment hit 70 billion euro (US$77 billion) by 2050.

Separate research studies from Aurora Energy Research and LCP Delta are tracking steady increases in the rollout of battery energy storage systems (BESS), with Aurora predicting that Europe will install at least 95 GW of grid-scale BESS by 2050, compared to 5 GW of installed capacity today. The five most attractive markets for battery storage in Europe, in no particular order, are Germany, Great Britain, Greece, Ireland and Italy, when considering factors such as policy support, revenue stacking opportunities and demand for low-carbon flexible energy.

With 14 of the 24 countries assessed in its European Battery Market Attractiveness Report not yet having a strategy or targets for energy storage deployment, Aurora sees "ample scope to increase the size and investment opportunities of European battery markets". Industrial Info is tracking 763 active and planned BESS projects in Europe worth US$29 billion in investment. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the report.

"Batteries represent an attractive investment opportunity in Europe's energy sector--new projects are announced on a near-daily basis as developers seek to capitalize on the need for storage in the energy transition," said Ryan Alexander, Research Lead, European Power Markets, Aurora Energy Research. "There will undoubtedly be an early mover advantage for investors: the anticipated surge in demand for batteries over the next decades creates saturation risk, causing revenues to decline as markets become overcrowded."

Installed grid-scale capacity will rise to 42 GW by 2030, and at least 95 GW by 2050, the report estimates. Over 40% of the capital investment of 70 billion euro (US$77 billion) will be deployed by the end of 2030, Aurora calculates, while average battery duration will increase over time as renewable power generation increases. Batteries with more than four hours' storage capacity will account for 61% of total installed battery capacity in 2050, compared with 22% in 2025. Ambitious deployment targets have boosted Greece and Italy's attractiveness according to Aurora, with Greece aiming to install 6 GW of battery storage by 2030--the highest target in Europe. Battery developers can secure revenues through the U.K.'s Capacity Market auctions or Ireland's DS3 programme. Germany's position reflects the projected growth of its installed renewable power generation capacity over the next two decades.

Last year, around 1.9 GW of grid-scale BESS was installed in Europe, reported Energy Storage News, with 85% of that installed in Ireland, the U.K., Germany and France, according to figures from research firm and consultancy LCP Delta. It tracked the commissioning of 170 BESS projects in 2022--a record-breaking year--and predicted that 2023 will see an almost doubling of new capacity additions with 3.7 GW. More than 830 megawatts (MW) of BESS came online in the U.K., followed by Ireland (328 MW), Germany (226 MW) and France (224 MW). Italy is expected to jump dramatically from 1.3% of deployments in 2022 to 22.7% in 2023.

In March the European Commission (EC) highlighted the vital role that energy storage will play in the region's efforts to decarbonize its system as part of the "Fit for 55" strategy. It stated that: "Energy storage can play a crucial role in decarbonising the energy system, contributing to energy system integration and security of supply. A decarbonised energy system will require significant investment in storage capacity of all forms. Different energy storage technologies (e.g. mechanical, thermal, electrical, electro-chemical and chemical) can provide diverse services on different scales and at different timeframes. For example, thermal storage, in particular large thermal storage in district heating systems, can provide flexibility and balancing services to the electricity grid and therefore provides a cost-saving system integration solution by absorbing variable renewable electricity production (e.g. wind and solar energy). In addition, energy storage technologies can be a technical solution to provide stability and reliability."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).