Think of sunshine and what probably comes to mind are images of beaches, holidays and summertime. But for those in Europe’s energy markets, solar is increasingly being linked to something else altogether: batteries.
According to research released earlier this year by the industry body SolarPower Europe, battery energy storage system (BESS) capacity soared by an eye-popping 94% in 2023.
The 17.2 GWh of new capacity added last year was largely thanks to a growing trend of adding storage to solar systems, with residential batteries representing 70% of the total. Large-scale battery systems made up a further 21% of capacity, with commercial and industrial systems accounting for the remaining 9%.
The three biggest markets for energy storage additions, according to SolarPower Europe, were also among those with the largest solar markets. Germany installed 34% of all Europe’s new capacity, with the market adding 5.9 GWh and expanding by 152%.
It was followed by the Italian market, which grew 86%, adding a record 3.7 GWh and contributing to 22% of all of Europe’s battery storage capacity, and the UK, which grew 91% and added 2.7 GWh or 15% of the European total.
“In 2023, the equivalent of 1.7 million more European homes became solar-battery powered,” said SolarPower Europe. “In tandem with solar PV, growth was predominantly propelled by home batteries. In the wake of the energy crisis, European citizens turned to batteries to build their energy self-sufficiency.”
Last year was the third in a row where Europe’s battery storage capacity has practically doubled, said SolarPower Europe. The continent ended the year with 35.9 GWh of installed capacity.
SolarPower Europe market analyst Antonio Arruebo said: “Over the past decade, decreasing investment costs for battery storage, driven by technological advancements, economies of scale and lower raw material prices, have significantly enhanced the cost competitiveness of solar PV paired with battery storage.
“This combination already represents an optimal solution addressing our energy trilemma of security, sustainability and affordability.”
European battery energy storage system markets are expected to continue growing between 2025 and 2028, albeit at a more sedate rate of 30% to 40%. The overall installed BESS capacity in Europe is projected to expand more than sevenfold to reach 260 GWh of battery storage by 2028, said SolarPower Europe.
However, the level of growth will fall short of an estimated 200 GW of battery power capacity (rather than energy in GWh) that SolarPower Europe deems necessary to unlock solar energy’s true potential across the European Union (EU).
Storage is key to tomorrow's flexible energy systems
Battery storage faces obstacles across Europe, including missing targets, insufficient market signals, double taxation and restrictive grid policies for hybrid renewable installations, SolarPower Europe warned.
“New electricity market design—EMD—legislation lays the groundwork for a more robust energy policy,” said Walburga Hemetsberger, SolarPower Europe’s CEO. “We need to urgently implement these measures and call on the European Commission to report on the EMD implementation ahead of the first Energy Council in 2025.”
Recognizing the importance of storage is key to building the flexible energy systems of tomorrow, she suggested. “Growing battery storage and flexibility represents a fundamental shift from our current grid-centric view of the market,” said Hemetsberger.
“It impacts not only the way we plan infrastructure and the way we operate the system, but also the markets we engage with.”
Michael Schmela, director of market intelligence at SolarPower Europe, added: “While policymakers have focused on batteries for electrifying the automotive industry, their critical role in the green transition of the European power system has been largely overlooked.
“Flexibility through battery storage isn't solely a technical matter for regulators and standardization bodies; it demands immediate political attention and prioritization.”
Although solar only accounted for 7.7% of net electricity generation across the EU in 2022, SolarPower Europe’s call for further battery storage capacity is significant as the amount of PV installed across the continent continues to grow.
Last year, Europe’s solar capacity increased by 40%, a similar level to 2022 and more new power generation than all other technologies in the EU combined. SolarPower Europe now expects the continent to hit 320 GW of installed AC capacity by 2025, with much of the growth coming from the rooftop solar segment.
The EU is fostering installations through legislation such as the Renewable Energy Directive, which sets an ambition for 42.5% of energy to come from renewables by 2030. But as with battery storage, there are fears that the growth of solar may still fall short of what is needed to meet European climate targets.
“Despite impressive achievements until now, solar is reaching a critical juncture at which the further growth path for the lowest cost, most versatile and most simply deployable power technology will be decided on,” SolarPower Europe has warned.
“It needs to be crystal clear that the extremely fast growth period of the last three years was exceptional, triggered by extreme energy price spikes and the fear of supply outages. In the meantime, energy prices have come down close to pre-energy crisis levels, taking away the urgency to install solar.”
Another issue facing continued solar growth is the need for grid flexibility, which in practice can be largely overcome with the addition of storage assets.
“We are working on solutions to take a leap in supporting grids and flexibility,” said Kadri Simson, European Commissioner for Energy, in an introduction to SolarPower Europe’s EU Market Outlook for Solar Power 2023-2027.
“The electricity market design, expected to land soon in the trilogues, will already substantially improve the frameworks for reducing grid connection times and flexibility investments.”
Like solar, storage and energy transition observers generally, SolarPower Europe will be watching the outcome of these deliberations with interest. “The European Commission Joint Research Center calculated that flexibility solutions need to grow by a factor of two before the end of the decade,” says the trade association.
“SolarPower Europe has estimated that 200 GW of battery storage capacity needs to be installed by 2030, but current projections estimate less than 130 GW by that time.”
Publish date: 21 October, 2024