European battery market growth to drop off amid falling electricity prices

The latest analysis from SolarPower Europe reveals that, in 2023, Europe installed 17.2 GWh of new battery energy storage systems (BESS), up from up from 8.8 GW in 2022. While this marks the third consecutive year of doubling the annual market, much slower growth is expected in the years to come.
Screenshot of BESS market in Europe
Antonio Arruebo, Market Analyst at SolarPower Europe, presenting the findings of the European Market Outlook for Battery Storage 2024-2028 report in a webinar held on June 11, 2024. | Image: SPE webinar, screenshot

Europe’s BESS fleet continues to grow in leaps and bounds but projections still fall short of the estimated capacity needed to unlock the continent’s renewable energy potential.

In its first analysis of the sector, PV industry association SolarPower Europe (SPE) found that 17.2 GWh of new BESS capacity was installed in Europe in 2023, experiencing an impressive 94% increase compared to 2022. 

By the end of 2023, Europe’s total operating BESS fleet reached around 36 GWh. The residential segment accounted for 70% of this capacity, followed by large-scale battery systems (21%), and commercial & industrial systems (9%), the European Market Outlook for Battery Storage 2024-2028 report reads.

The dominance of home batteries came as a result of the energy crisis triggered by Russia’s invasion of Ukraine and disruptions to gas supply. However, as stated in Tuesday’s webinar hosted by SPE, this will change already this year as utility-scale batteries become the key driver behind deployment in Europe, accounting for almost 11 GWh of new additions, with 5 GWh in Italy alone.

In 2023, Germany led the market with 34% of the European market share, followed by Italy (22%), and the United Kingdom (15%). Specifically, Germany deployed 5.9 GWh last year, marking a significant increase of 152%. Italy followed, connecting a record-breaking 3.7 GWh (+86%), trailed by the United Kingdom with 2.7 GWh (+91%). 

Furthermore, Austria exceeded the one-gigawatt-hour milestone, while the Czech Republic got close to it with around 900 MW installed. With the exception of the UK, all top five BESS markets in Europe were driven by the residential market segment.

While this marks the third consecutive year of doubling the annual market, projections still fall short of the estimated 200 GW of battery power capacity needed by 2030 to unlock the EU’s solar potential.

Growing battery storage and flexibility represents a fundamental shift from our current grid-centric view of the market.
Walburga Hemetsberger
CEO of SolarPower Europe

Battery storage faces obstacles across Europe, including missing targets, insufficient market signals, double taxation, and restrictive grid policies for hybrid renewable installations. For instance, in a number of European markets, batteries collocated with solar or wind farms are not allowed to charge from the grid, undermining their business case.

Growing battery storage and flexibility represents a fundamental shift from our current grid-centric view of the market. It impacts not only the way we plan infrastructure and the way we operate the system, but also the markets we engage with,” Walburga Hemetsberger, CEO of SolarPower Europe, said.

“The new Electricity Market Design (EMD) legislation lays the groundwork for a more robust energy policy. 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,” she added. 

Continued but slower growth

BESS markets will maintain their upward trajectory between 2025 and 2028, with sustained, but slower, growth rates in the 30-40% range, SPE finds. In 2024, Europe is forecast to deploy 22.4 GWh, 31% more than last year.

This will come as a result of decreasing electricity prices, which are expected to cause a 26% market contraction in the residential BESS market segment in 2024 relative to 2023.

Therefore, 2024 is expected to see 49% of the market dominated by utility-scale batteries and followed by home systems (39%) and commericial and industrial installations (12%), which will continue their growth trajectory.

Projection of BESS markets in Europe

The overall installed BESS capacity in Europe is projected to expand more than sevenfold to reach 260 GWh of battery storage by 2028.  

Behind-the-meter batteries will have added more than half of storage capacity, while grid-scale batteries will reach 44% in 2028, up from 9% in 2024.

With batteries as a key flexibility source in a renewables-dominated grid, SPE is calling for a comprehensive EU electricity storage strategy and a target of 200 GW by 2030.  

Written by

  • Marija has years of experience in a news agency environment and writing for print and online publications. She took over as the editor of pv magazine Australia in 2018 and helped establish its online presence over a two-year period.

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