Germany, UK, Ireland, Poland offer best renewables + BESS colocation potential

Market analytics provider Aurora Energy Research has examined the potential for colocation of renewables with battery energy storage systems (BESS) across 12 European countries. It found that Germany, Great Britain, the Ireland I-SEM, and Poland are leading the pack.
Field of PV and wind mills
Image: Sungrow

Regulatory disparities across European markets for hybrid renewable installations are wide. While some faciliate colocated deployment offering faster grid access and a wide range of revenue streams, other lack specific policy schemes and targets. Confusing market signals, double taxation and restrictive grid policies, preventing BESS to charge from the grid, have also hampered deployment.

In the latest analysis, Aurora Energy Research has identified Germany, Great Britain, the Ireland I-SEM, and Poland as the top four European markets for renewables colocation.

Huge capacity addition

The consultancy predicts an additional 421 GW of intermittent renewable energy sources to join the grid by 2030. Such huge capacity addition will pose significant risks to renewable energy assets, including cannibalization of capture prices, increasing curtailment, and rising imbalance costs.

These risks will be particularly dire in Germany, Greece, the Netherlands, and the Ireland I-SEM, and incentivizing colocation of renewables assets with BESS is a way for mitigation.

“With intermittent renewables playing an ever more important role in the European energy landscape and the recent uptake of batteries, co-located projects will soon become an essential part of developers’ work,” said Rebecca McManus, senior research associate at Aurora Energy Research. “However, each asset type is challenging to navigate on its own and managing the interplay of both asset classes and how to operate them together, will remain an obstacle.”

Aurora’s inaugural European Renewables Co-location Report examined 12 European countries. It found that Germany offers strong opportunities for colocated assets through revenue stacking, low grid fees, and the urgent need to mitigate significant cannibalization risk for renewables.

Great Britain emerged as a leading market due to its favorable regulation, granting colocated assets access to multiple markets and offering faster grid access for colocated renewables projects.

The Ireland I-SEM is rated high for colocating renewables and BESS due to its beneficial legislation for colocated assets and high curtailment risk to renewables.

Market interest in co-locating intermittent renewables and battery assets has surged across Europe.
Jannik Carl
Research associate at Aurora Energy Research

Finally, Poland boasts a strong subsidy environment with cable pooling and access to long-term capacity market contracts.

“Market interest in co-locating intermittent renewables and battery assets has surged across Europe, with Great Britain at the forefront,” Jannik Carl, research associate at Aurora Energy Research, said. “However, policy frameworks in many markets lag behind, often focusing solely on individual aspects of co-located business models. To ensure successful projects in the years ahead, addressing the full complexity—including grid integration and market access—will be crucial.“

Aurora’s report also notes that several European markets lack colocation policy schemes. In Germany, requirements imposed on the battery asset as part of the innovation auction scheme drastically reduces commercial viability.

Increased BESS targets in Spain

Spain’s draft National Energy and Climate Plan (NECP) aims to increase BESS targets to at least 2.5 GW by 2030, with significant government grants allocated for colocated storage projects, but little capacity has been procured on a subsidy-basis in recent years.

Alongside Poland, Great Britain, and the Ireland I-SEM, Hungary and France complete the top five markets rated as the most favourable in terms of policy and regulation, according to Aurora.

Namely, Hungary has introduced mandatory colocation for solar PV assets above a certain size, while ​France allows colocated PV and BESS assets to participate in French Contract for Differences (CfD) auctions, which have historically cleared at high strike prices.

Finally, the report identifies markets to watch. It highlights recent announcements in Spain regarding potential Capital Expenditure (CapEx) support for colocated batteries, as well as the ongoing discussions in the Netherlands concerning battery storage obligations and potential reductions in grid fees.

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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