The growing role of battery storage
Europe is currently undergoing a decarbonization revolution. However, renewables alone cannot guarantee a resilient and future-proof power system. To meet ambitious climate targets, the adoption of battery storage is crucial. By offering the flexibility to complement intermittent renewable sources, batteries are essential for advancing decarbonization efforts. They play a key role in stabilizing the grid as a climate-friendly and cost-effective solution.
The growing integration of intermittent renewable sources like wind and solar, combined with the lasting impact of the 2022 energy crisis, has amplified the demand for reliable storage solutions. Although the battery industry is still relatively young, it has progressed beyond its early stages. The deployment of gigawatts of battery capacity affirms its viability, and the sector is navigating a period of rapid expansion, innovation, and transformation as it scales up.
European battery storage market overview
Energy storage installations reached a new record in 2024 with 205GWh installed globally, marking an impressive 53% year-over-year growth, as stated by Energy Storage News.
The European battery storage market is witnessing rapid growth from 4.8 GW in 2022 to 7.1 GW in 2023, bringing a total of 10.8 GW, with utility-scale and commercial and industrial projects taking the spotlight. Projections for 2030 suggest that battery capacity could reach 51 GW, driven by favourable project economics, according to Aurora Energy Research. While countries such as Germany, Sweden, and Italy have seen substantial buildouts, Great Britain remains the leader in the battery sector. The UK increased its capacity from 3.2 GW to 4.3 GW in 2024, covering 9% of peak demand, as stated by the research center. The UK's Capacity Market has been key in providing stable, contracted, long-term revenue streams for battery operators.
Grid-scale batteries are expected to represent the largest share of storage growth globally. While the residential sector accounted for over half of the installed battery capacity in the region in 2024, the share of grid-scale batteries was projected to take over by 2028, as stated by Solar Power Europe in their latest European Market Outlook for Battery Storage 2024-2028 report. The reports shows that Austria added over 1 GWh of BESS capacity in 2023, primarily at the residential level.
Global BESS capacity additions added up to 74 GWh in 2023, and deployments are anticipated to grow by 24% each year until 2030, when they are expected to exceed 400 GWh, as reported by Statista.
The increasing significance of grid-scale flexibility
The market for energy storage is evolving, with the focus now shifting to larger-scale batteries. This change is driven by the accelerating deployment of renewable energy sources and the urgent need for grid-scale flexibility.
Austria, with its strong residential foundation and supportive policy framework, is well-positioned to capitalize on this transition. Although recent changes in financial support schemes may cause short-term fluctuations, the long-term outlook for Austria's BESS market remains positive. According to the “European Market Outlook for Battery Storage 2024-2028” by SolarPower Europe, annual installations are expected to reach 3.9 GWh by 2028, indicating continued growth and a maturing market. This growth is anticipated to be spread across different segments, with residential, commercial and industrial, and utility-scale projects contributing to a more robust ecosystem.
Austria’s progress in this segment highlights its commitment to a sustainable energy future, especially as the country moves towards a cleaner energy system. The increasing need for large-scale battery storage to manage intermittency from renewable sources and ensure grid stability will play a crucial role. Across Europe, the market is set to maintain a steady growth trajectory reaching 78.1 GWh annual installations by 2028, according to SolarPower Europe’s forecasts. This growth will be supported by ongoing reductions in battery technology costs and an increasing recognition of storage’s role in integrating renewable energy.
While behind-the-meter installations will remain a significant contributor, utility-scale projects will continue to gain prominence. This signifies a more balanced and mature market, reflecting the diverse applications and benefits of battery storage across the energy system.
Assessing the viability of Battery Energy Storage Systems
The feasibility of BESS involves evaluating both technical and financial considerations, which is vital for businesses to determine whether investing in such systems is practical and profitable.
At CyberGrid, we project revenues generated from past performance into future forecasts, which can be optimized through flexibility energy management and balancing services. Specifically, this process involves calculating revenues from day-ahead market optimization and ancillary services, considering available timeframes.
Several metrics are crucial when assessing the feasibility of BESS investments, including the potential for profit and cost reduction, the number of hours the BESS will be available for balancing market activities, and the overall profitability based on these available hours. The more hours a BESS can be actively used in the market, the greater the potential revenue. In co-located use cases, these hours are also critical for process optimization and cost reduction. Likewise, some influencing factors are the size and capacity of the assets at the use-case location; grid connection capacity; grid level; self-consumption profile and volumes; generation profiles when there is a co-location; and technical restrictions.
