Europe’s 6 hottest energy storage markets

With investors inreasingly drawn to the ‘two-way upside’ offered by energy storage assets, Tamarindo provides a run-down of the European markets currently providing the best opportunities


June 30, 2023

  • Energy Storage Report’s countdown of the markets currently offering the best investment opportunities
  • Countries included have ambitious growth targets and are expected to add significant capacity between now and the end of the decade
  • Leading market offers a wide range of revenue generating opportunities

Investing in energy storage is proving to be a very attractive proposition. As UBS Asset Management has highlighted, one of the most appealing aspects of this asset class is that there is a “two-way upside”, specifically financial performance can improve via either lower prices, through reduced charging costs, or higher prices, through increased revenues from selling energy. As a result, energy storage assets are especially robust as they are not exposed to the same types of risk as assets that lack this “two-way” benefit.

But which markets in Europe currently present the best energy storage investment opportunities? Here Tamarindo’s Energy Storage Report provides a run-down of the six hottest energy storage markets in Europe. Let’s begin the countdown, in reverse order:

6. Greece

As many holidaymakers will testify, the sun is frequently shining in Greece – studies have shown that the nation’s capital Athens is the fourth sunniest city in Europe – and the high levels of solar radiation mean it is an ideal location for solar and energy storage projects. In January this year, NextPower III ESG, the solar fund managed by NextEnergy Capital, acquired six utility-scale solar PV projects totalling 132MWp in Greece, as well as a majority share in six standalone battery storage projects totalling 400MW. Meanwhile, in November last year, Fotowatio Renewable Ventures acquired a 600MW Greek battery storage portfolio, with the projects scheduled to come online between Q3 2023 and Q2 2024. And be prepared for another burst of activity – earlier this month, after much delay, Greece’s Regulatory Authority for Waste, Energy and Water (RAWEW) announced the first in a series of battery storage auctions, which will seek bids for an initial 400MW in capacity. At the start of this year, Greece published its revised National Energy and Climate Plan (NECP), which targets 28 GW of renewables by 2030 compared to 19 GW under the previous plan, plus 8 GW of energy storage, up from 3 GW previously. The Greek government had previously said that up to €10 billion of investment will be needed to meet the nation’s storage targets.

5. Spain

Earlier this month, it was announced that the Spanish government would be making €160 million of grants available to fund around 600MW of new energy storage capacity coming online by 2026. Meanwhile, in March this year, Naturgy Energy Group revealed it was planning to invest €117 million in eight battery storage projects in Spain. Naturgy said the planned facilities would have a combined power capacity of 145MW and storage capacity of 290MWh. Seven of the projects will be linked to solar farms and the remaining one will be a standalone battery storage project. Back in January, the Spanish government launched a €150 million scheme that would mean new energy storage projects co-located with renewables will be eligible to apply for state funding to cover 40-65 per cent of their investment costs. Wood Mackenzie has estimated that Spain will add more than 8GWh of energy storage capacity during the period 2022-2031.

4. Ireland

Ireland has been hailed as one of the most advanced battery storage markets in Europe – data has shown that the UK and Ireland markets have accounted for 56 per cent of all new battery storage activity since 2018. Earlier this month, investment firm Adaptogen Capital confirmed that it had raised £207 million for its Adaptogen Battery Storage LP fund, an energy infrastructure fund focussed on developing grid-scale and distributed storage assets in the UK and Ireland. Taking into account policy frameworks, revenue-stacking opportunities, and demand for low-carbon flexible energy, Ireland is viewed as one of Europe’s most attractive markets for storage investment. The nation has 1.5GW of storage in planning, enough to power around 750,000 homes. It is anticipated that Ireland will install more than 4GW of new capacity during the period 2022-2031.

3. Italy

Energy investors are eyeing the Italian storage market with anticipation. Storage deployments in the country are expected to soar this year – in 2022, Italian deployments accounted for 1.3 per cent of European installations, but in 2023, the country is expected to account for more than a fifth (22.7 per cent) of installations in Europe. Enel Green Power has confirmed that it has begun building 1.6GW of energy storage capacity in Italy. At the end of 2022, it was revealed that Iberdrola Renovables Italia and Innovo Group had established a joint venture, iCube Renewables, for the development of renewable energy projects in Italy including photovoltaic plants, wind farms and battery storage facilities. Wood Mackenzie has forecast that Italy will install 12.23GWh of new energy storage capacity between 2022 and 2031.

2. Germany

RWE has begun construction of one of Germany’s largest battery storage facilities at its power plants in Neurath and Hamm. The facility – which will span both power plants – will have a capacity of 220MW and storage capacity of 235MWh. A total of 690 lithium-ion battery blocks will be installed, involving an investment of approximately €140 million. Meanwhile, earlier this month, long-duration iron flow battery energy storage system manufacturer ESS and German energy provider LEAG entered into an agreement to build a 50 MW / 500 MWh iron flow battery system at the Boxberg Power Plant site in Saxony, Eastern Germany, to be commissioned in 2027. Data has shown that the German battery energy storage system industry will grow at a compound annual growth rate of 24.6 per cent from 2022 to 2027. Battery storage for electric vehicles is set to take off – last month it emerged that Shell Germany and Volkswagen have put into operation a 150 kW Elli Flexpole charging station – an innovative battery storage system that enables connection to a low voltage grid – at a Shell service station in Göttingen, Germany. Similar charging stations are also planned for elsewhere in the country. Given its thriving electric vehicle industry, it is expected that Germany will substantially increase its share of global lithium-ion battery manufacturing capacity by 2025. Indeed, the expectation is that, in two years’ time, Germany will take over from the US as the country with the second-biggest share of such capacity (behind China). WoodMackenzie has forecast that Germany will install almost 9GWh of energy storage during the period 2022 to 2031.

1. UK

It’s estimated that the UK added a massive 800MWh of utility-scale energy storage capacity in 2022. But this is just the start, huge amounts of capital are set to be invested in utility-scale battery systems in the UK, with forecasts of investments of up to $20 billion by the end of the decade. This will mean the UK has sufficient combined energy reserves to power 18 million homes for a year, according to Rystad Energy, which has also predicted that battery storage capacity in the UK will increase from the current level of 2.1GW to around 24GW by 2030. Investors view the UK as the most mature market in terms of revenue opportunities as there is significant demand for frequency modulation, and ancillary surfaces. It is also forecast to be the largest market in Europe in terms of installed capacity by the end of the decade. Recent developments included Quinbrook Infrastructure Partners starting construction of Cleve Hill Solar Park, reportedly the largest solar and energy storage project in the UK, with 373MW of solar and more than 150MW of battery energy storage.

Source: LCP Delta / European Association for Storage of Energy [EASE]

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