Why Ireland’s 10 GW energy storage pipeline is delayed by revenue uncertainty

According to Bobby Smith, head of Energy Storage Ireland (ESI), one of the main obstacles Ireland’s BESS market faces is the lack of route to market for battery operators.

“A lot of energy storage has crept under the radar so far in Ireland,” he told ESS News. Developers secure planning quite easily but the route to market is a challenge. Energy storage has the opposite problem to the wind industry where planning is an obstacle but the route to market is there.

There is just under a gigawatt of battery storage on the grid operating today. In addition to the almost 1 GW of BESS, Ireland also has 292 MW of pumped hydro at the Turlough Hill site in County Wicklow, which has been operating since the 1970s.

The pipeline of BESS under development is almost 10 GW, but the construction pipeline is comparatively low – at just 83 MW.

The development pipeline “includes things like battery storage, iron air storage, and CO2 batteries. So newer forms of technology that are coming on the system, although the vast majority is lithium,” said Smith.

“Of the 10 GW under development, just under 4 GW of that has planning permission already. And then there’s just under 4.5 GW that were in the pre-planning process – so they got the land agreement and they’re about to go into planning at some point this year or next year.”

Then there are projects with grid offers. There are just over 2.2 GW of projects that either have a grid connection in hand or are in the process of obtaining one, according to Smith.

The projects being built to go live in the next few months are limited, however. The majority of the pipeline is “holding fire until the market becomes a bit clearer,” he explained.

The main reason for the lack of clarity is the ongoing changes in revenue sources, which, naturally, is making a lot of developers uneasy.

 “The majority of the current operational batteries were built out under our ancillary services framework called DS3 system services,” said Smith.

“But that scheme is now changing and it’s due to expire at the end of 2026. It will be replaced with a competitive market auction type scheme, similar to what we see in Great Britain and on the continent.”

The DS3 was “quite an attractive investment scheme in 2019, 2020, because it was offering these fixed payments for battery storage to provide these services. So, we saw a lot of operators build assets quite quickly. And these assets were mainly half an hour to one hour storage, although there’s a couple of projects that are two hours, because the main source of revenues was around short duration battery storage. So, if you provide these services very quickly – ie. millisecond response times up to 20 minutes, 30 minutes – you got a lot of payment for it.”

With the scheme due be replaced, the revenue certainty that existed under DS3 is no longer there, said Smith. “It was almost like the first movers got in there under that scheme and built their projects, started earning and now the development pipeline is looking less certain.”

Who are the first movers?

ESI represents more than 70 member companies and the vast majority of operational and under development BESS projects on the island of Ireland – so including Northern Ireland and the Republic.

The biggest operator is ESB, which owns the current largest operating battery in Ireland – the 150 MW Aghada 2 project. ESB also owns the 19 MW Aghada 1 battery, the 73 MW Poolbeg battery, and the Kylemore and South Wall BESS which are both 30 MW.

Many of ESB’s BESS are on existing sites where it owned thermal or flex gen assets, said Smith.

“The next biggest standalone operator owner developer is VPI who are the majority owners in the Lumcloon and Shannonbridge batteries in the Midlands,” he added. Both batteries are 100 MW.

Another major player is the UK energy investment firm Gore Street Capital, which owns two 50 MW projects in the North – the Drumkee and Mullavilly batteries. According to its website, the firm is planning to add a further 180 MW of storage by the end of 2026.

And Smith said that pan-European energy supplier Statkraft is also making its presence felt. “They’re developing the Cushaling battery which is due to go live soon,” he said. Statkraft claims Cushaling is the first four-hour grid-scale BESS in Ireland, and it is co-located with a wind asset.

Rethinking the market

“The revenues are going to change after 2026, so I don’t have as much certainty as I used to and what we’re seeing is that a lot of projects are building at longer duration,” said Smith. “A lot of projects are targeting minimum to somewhere between four or six, even eight hours of storage, because they want to capture more of the energy arbitrage revenues in future.

“The problem is that will make up some of the revenue stack but it’s still very uncertain. It’s hard to go to a bank or financial institution and say a project is going to make this much revenue on the market over the next 10 to 15 years when we don’t know what the price is going to be like next week.”

In his view, Ireland’s market and the way it functions doesn’t work very well for energy storage. Unlike other capacity markets where the gap between revenue earnings and financing schemes is made up, Ireland’s is not.

“So, we need something to make up that difference to make storage investments bankable and we’re trying to develop a storage support mechanism to do that because our system operators realize we need storage on the system,” said Smith.

He said the country needs long duration storage to provide backup for wind and solar but added that “existing markets don’t really incentivize that, so we need to deliver a new market structure or support mechanism to do that.”

“Things are happening in Ireland to develop that scheme, but they’re not at an advanced stage yet so that people have certainty.” He hopes that in the next year or so some of the development backlog will clear.

“Overall, battery storage has plateaued since 2020 and 2021’s rapid ramp up and it’s actually gone down this year and it will probably go down further again next year before hopefully we will see a steady ramp up in 2027, 2028 and 2029, but that will only happen if we get the market right which is why it’s quite important for the next year or two,” he said.

The state’s role

Smith pointed out that Ireland’s energy storage strategy, published in 2024, was “quite positive.” A lot of high-level plans and a technology agnostic outlook.

“Unfortunately, we haven’t seen a lot of progress on those actions which is a problem we are trying to address,” said Smith. He said policy makers and state bodies are “very resource constrained at the moment”

“The fundamentals for storage are really strong in Ireland, because we’re a relatively isolated system on the periphery of Europe. As we get to 2030 and Ireland starts building lots of offshore wind and our solar increases, we’re going to need a lot of energy storage to help balance that.”