Supercharging Battery Storage Growth across Europe

The share of renewable energy in the EU’s electricity system is expected to reach 69% by 2030, according to the European Commission (the “EC”) . The future energy system will need more flexibility, stability and reliability to achieve climate neutrality by 2050 (the European Green Deal). Energy storage provides flexibility. The rapid ongoing deployment of variable renewable energy generation will only reach its full potential with the deployment of additional energy storage. However, energy storage faces a number of challenges that can affect its deployment to the levels necessary to significantly support the energy transition. Some of these challenges are related to a need for a long-term visibility and predictability of revenues to facilitate access to finance.

The need to overcome these challenges was highlighted during COP28, where the Supercharging Battery Storage Initiative was launched by Clean Energy Ministerial, aiming to boost storage development and deployment, and reduce technology costs. The EC is a co-lead of the initiative, which has 3 pillars:

1. Policy & Regulation
2. Supply Chain & Manufacturing
3. Financing

Covering similar themes but going into much more detail, earlier in 2023 the EC adopted its ‘Recommendation on Energy Storage – Underpinning a decarbonised and secure EU energy system (2023/C10301) (hereinafter: the “Recommendations”). This addresses the most pressing issues to help accelerate the broad deployment of energy storage by the EU member states. The Recommendation provides member states with concrete recommendations and action points to help facilitate the fast and broad deployment of energy storage in their energy systems.

Recommendations

The EC made ten recommendations. We believe the most relevant recommendations or issues that member states should take into consideration are:

• Prevent double taxation and facilitate permitting procures - In some regulatory frameworks, energy storage is still double taxed because the activity is seen as consumption when storing energy and as supplying when feeding energy into the grid. Additionally, the permit-granting process can take a very long time and can be complex and not energy storage specific.
  
  
• Identify flexibility needs - Member states and system operators should identify the flexibility needs of their energy systems, including the potential of energy storage and whether energy storage can be a more cost effective alternative to grid investments.
  
  
• Identify financing gaps and de-risk revenues - The financing gaps for storage and behind-the-meter energy storage should be identified. Financing instruments that create visibility and predictability of revenues should be provided if a need for additional flexible resources to achieve security of supply and environmental objectives is identified.
  
  
• Facilitate revenue stacking - Revenues should be broadened by allowing more revenue stacking and services should be sufficiently remunerated.
  
  
• Provide transparent and detailed data - Member states and national regulatory authorities should provide real-time and detailed data on network congestion, renewable energy curtailment, market prices, renewable energy and greenhouse gas emission content.
  
  
• Support research and innovation – member states should in particular support long-term energy storage and storage solutions coupling electricity with other carriers and to optimise existing solutions (e.g. efficiency, capacity and duration).

The Recommendations mark the first time that the European Commission has addressed the relevance of energy storage in an official document so explicitly and with so much detail. It is by far the strongest and most concrete push for the deployment of energy storage in Europe. The most pressing issues and bottlenecks have been addressed, and the 10 recommendations provide a useful checklist for member states to act on.

If you have any queries regarding the Recommendations, please do not hesitate to get in touch with the authors.