The report, which examines 24 European countries, highlights the most attractive markets for Battery Energy Storage Systems (BESS) investment while also delving into evolving market dynamics and regulatory landscapes.

Great Britain, Italy, and the Ireland I-SEM are the top three markets for battery storage investment within Europe, Aurora’s latest findings show. The top players have several shared attributes: solid spreads, strong policy support, and capacity market remuneration, which provide investors with long-term contracted revenue, yet they differ widely regarding the markets’ maturity and size.

Great Britain has long been a frontrunner in battery and battery investments, boasting the most installed capacity as well as the most capacity in the pipeline.  As Aurora’s data shows, Great Britain’s robust installed capacity and growth—a projected quadrupling of capacity—supported by attractive and stackable revenue streams make it the most attractive market in Europe. Italy’s ambitious target of 9 GW battery capacity by 2030, coupled with the opening of its ancillary markets to BESS and the Ireland I-SEM’s strong revenue potential with the extension of lucrative DS3 tariffs, also make them attractive markets to explore.

Emerging opportunities identified in Spain and Greece are further emphasised by Aurora’s analysis. These opportunities are driven by robust public support, including public auctions for capacity allocation. Dedicated auctions for standalone or co-located battery storage in Europe have, to date, subsidised at least 1.8 GW of batteries in Germany, Greece, and Spain; upcoming auctions could procure over 15 GW across Europe by 2030, notably 9 GW of procurement from Italy’s new storage capacity procurement mechanism, MACSE, which aims to cover both capital and operational costs.

Overall, the pace of growth in the sector at a European level is accelerating. Rising from 7.1 GW of installed grid-scale BESS capacity across Europe as of Q3 2023, Aurora’s Central outlook sees total capacity grow sevenfold to 51 GW by 2030 and 9 8GW by 2050; these new capacity additions represent a cumulative investment opportunity of 78 billion € through 2050, including repowering opportunities.

 

Ryan Alexander, Research Lead, European Power Markets, Aurora Energy Research, commented:

“The market for grid-scale energy storage is set to increase exponentially in the coming years. This is no surprise—energy storage is one of the key enablers of the energy transition, and a complex interplay of cost and revenue factors are coming together to create a substantial investment opportunity. However, battery markets are challenging to navigate, and developers and investors alike will need to embrace complexity to deliver a compelling business case or keep a look out for public support schemes that can help them get a kick-start in emerging storage markets.”

 

Eva Zimmermann, Lead for Flexible Energy, Aurora Energy Research, added:

“Batteries serve as indispensable assets in driving the energy transition forward. However, the attractiveness of the market hinges on a multitude of factors. Elements such as risk appetite, investment scope, and preferred setup are just as pivotal as market design and a comprehensive understanding of future power market developments. Considering these variables collectively is essential for making informed investment decisions in this evolving landscape.”

 

The third edition of Aurora’s European Battery Markets Attractiveness Report is available now—download the redacted version here.

Source: Aurora Energy Research

 

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