According to Aurora Energy Research, by 2030 the connection capacity of transmission networks may increase sevenfold, to over 50 gigawatts.
The UK, Italy and Ireland are the three most important markets for energy storage investments in the region. This will be joined by the emerging markets of Spain and Greece.
“Building grid-scale batteries has already gained momentum in 2023 and is accelerating even now,” said Ryan Alexander, principal researcher of European energy markets at Aurora, which published its report on Tuesday.
Energy storage plays a key role for renewable energy
Europe is rapidly increasing its use of renewable energy to meet climate goals. In a system based on intermittent renewable energy, energy storage batteries play a key role because they can store electricity when it is abundant and feed the grid when it is scarce.
Unfortunately, so far progress in building battery installations has been slow because many grid operators do not purchase the services that batteries can provide, such as quick startup when the wind drops and the sun sets, and long waits for grid connection.
There is no alternative to batteries
Battery-based energy storage does not operate all the time like a conventional power plant, so operators must contract with the grid to provide services such as frequency and voltage balancing. The ancillary services market, where batteries can find multiple revenue streams, is crucial for investment and development.
“There is no alternative technology that responds as quickly as batteries,” said James Basden, co-founder of manufacturer Zenobe Energy. In his opinion, without batteries, the net zero goal will not be achieved.
Some countries support battery energy storage technology to a large extent in the short term. The UK is forecast to increase its energy storage capacity fivefold by 2030 through auctions and accelerated battery-to-grid connections.
The number of utility-scale installations in Australia will more than double this year, and the US Inflation Reduction Act is supporting the development of energy storage with tax breaks on American investments.
Great Britain is a leader in energy storage
According to the industry group European Energy Storage Association, Great Britain is the leader in this type of energy storage on the Old Continent. In 2022, it expanded large-scale production capacity more than any other country.
“The UK put an emphasis on battery energy storage before anyone else did,” said Michael Longson, a trading partner at London-based private equity firm Gore Street Capital, which focuses on energy storage. “We have our own services that only batteries can provide.”
The UK national network offers contracts to solve voltage, frequency and short-circuit problems.
The British example showed that it works
The UK’s advanced planning paid off in December when a cable linking the power grid to France suffered a brief interruption, causing frequencies to plummet. Within seconds, the drop exceeded permissible limits and almost led to a complete power outage. Then the batteries turned on and filled up about 40 percent. deficiency.
The British example shows that the emergency battery system works. So what’s taking the rest of Europe so long?
The problem is not lack of financing. According to BloombergNEF, the EU spent $341 billion on implementing clean technologies last year, an increase of 35%. compared to the previous year.
Energy storage for utilities and residential users accounted for $8.4 billion, up 64%. during the same period.
“You’re going to see exponential growth in batteries around the world, and a major factor in that is how cheap renewable energy is,” said Peter Kavanagh, CEO of Harmony Energy Storage. In his opinion, without energy storage, the power generated from wind and solar farms is limited.
Energy storage is gaining popularity. Spending on energy storage in the EMEA region / Bloomberg
Complex EU law generates additional costs
Yet energy storage is not clearly defined in Community legislation, leading to unnecessary costs, excessive bureaucracy and an uncertain investment environment, says the European Agency for the Cooperation of Energy Regulators (ACER).
In Germany, for example, batteries are both producers and consumers of energy, which means that companies that deploy them have to pay twice to connect to the grid.
The EU also requires approval of development plans by individual countries, which have different requirements and definitions. This means that companies cannot copy and paste business models implemented abroad.
“France, Germany and Poland see what’s happening in the UK and say – great, the batteries work,” said Kavanagh, whose company operates industrial-scale installations across the UK.
Investments are starting
Some progress is being made. In December, the EU approved Italy’s plan to allocate €17.7 billion to build more than 9 gigawatts of storage.
The German energy giant RWE is implementing a project in the Netherlands that will help integrate its OranjeWind offshore farm with the network. Domestically, the company has launched mega batteries in Lingen and Werne and is building a similar-sized system in two other locations in North Rhine-Westphalia.
Households in Germany and the Netherlands are installing batteries for home use at a rapid pace, partly with the support of public funds. Residential batteries are currently the largest source of storage demand in the region and will remain so until 2025, when the scale of the grid will increase significantly, BNEF says.
