Storage facilities will be important in energy markets and, alongside power purchase agreements (PPAs), can offer a way out of volatility, low or zero prices and oversupply. This year, developers are gradually shifting their interest from the UK to EU countries where the urgent need for flexible resources is evident. Conditions of course are not the same everywhere in the EU. If you are interested – which countries will attract the most interest, we suggest that will be the countries with the optimal availability of revenue sources – commercial and contractual. There are countries, such as Germany, where commercial revenues from energy sales are relatively secure and those that depend mainly on auctions – in other words, on contractual revenues (Greece).
The largest economy, Germany, has announced that by 2033, the energy storage market will pass 15 GW in total, up from 1.4 GW today. The country’s growing demand is driven by existing energy trading opportunities, supplemented by revenues from ancillary markets and upcoming balancing services. In other words, Germany now promises healthy lifetime revenues from trading activity.
The story is different in Italy, where all participants are anticipating the upcoming MACSE capacity market auction. Italy has set itself the highest energy storage target in Europe – to install 71 GWh by 2030. To help achieve this goal, the country’s largest grid operator, Terna, has decided to use the regulated approach and provide developers with fixed-fee contracts for 12-14 years for lithium-ion batteries and up to 30 years for hydro. The terms would sniffle competition among technologies, players, and market prices, Italian consultancy Timera Energy wrote in its blog.
Meanwhile, in Greece, the government held two auctions for energy storage – in October 2023 and February 2024. The short interval shows that active players in that country are rushing to get contract revenues. Interestingly, the results of the auctions show that the companies that won with the lowest bid prices may win more trough the market, which is purely commercial.
Bulgaria does not yet have the legal framework to regulate energy storage companies. It is expected to be developed under the new RESTORE project (part of the Recovery and Sustainability Plan), managed by the Ministry of Energy. The idea is to set up a project company, which will manage the financing of energy storage system projects, with total funding of over EUR 750 million and with a total capacity of around 3,000 MWh. Two tenders for the construction of new storage capacities – up to 200 kW and over 200 kW – have now been completed. The aim is that the new facilities will be evenly distributed across the country and will play a role in balancing the electricity system, which is currently being done by the Pumped storage hydropower plants.
So, the change in the European market for grid-scale storage is obvious, with new opportunities opening. Different European countries offer various support mechanisms in terms of contracted revenues, in the form of capacity auctions, storage auctions or PPAs. The European Commission has identified existing mechanisms as insufficient and has proposed the introduction of a pan-European scheme to support flexibility. Energy storage futures are likely to emerge in the coming years, as well as storage contracts against tolling.
