Long-duration storage gains ground in Europe as Spain, Portugal lead

Long-duration energy storage (LDES) technologies are beginning to establish themselves as a strategic component of Europe’s decarbonized power system. According to a new report by European electricity industry association Eurelectric and consultancy AFRY, every gigawatt of installed LDES capacity could generate between €150 million ($173.9 million) and €250 million in annual variable operating cost savings for the electricity system, while also reducing renewable curtailment, easing grid congestion and strengthening security of supply.

Until now, pumped hydro has been Europe’s dominant form of long-duration storage. However, Eurelectric and AFRY say emerging technologies are starting to demonstrate promising commercial potential.

These include iron-air batteries, compressed air energy storage (CAES) and liquid air energy storage (LAES), which can store electricity for more than eight hours and provide flexibility services over longer timeframes than conventional lithium-ion batteries.

Regional differences

One of the main benefits identified in the report is the reduction of renewable curtailment. According to the analysis, each megawatt of installed LDES could prevent between 1.3 MWh and 2.5 MWh of renewable generation from being wasted annually. The largest benefits are expected in Spain and Portugal, where rapid solar expansion is increasing the frequency of excess generation.

The study found that opportunities for long-duration storage vary considerably across Europe.

In wind-dominated markets such as Germany and the United Kingdom, technologies capable of storing energy for more than 24 hours could become commercially viable from the 2040s onward.

By contrast, in solar-heavy markets such as Spain and Portugal, the strongest business cases emerge for systems providing between eight and 12 hours of storage, shifting photovoltaic output from midday periods to times of peak demand.

The report nevertheless warns that significant barriers remain. High upfront costs and electricity markets that do not yet adequately compensate flexibility services continue to hinder project financing.

AFRY identifies the Iberian Peninsula as one of Europe’s most attractive markets for medium- and long-duration storage, driven by the rapid growth of solar capacity in recent years. According to the report, storage systems with durations of eight to 12 hours could play a key role in managing photovoltaic output.

The report also points to growing interest in grid stability services following the blackout that affected Spain and Portugal in April 2025.

Transmission system operators have highlighted increasing needs for frequency regulation, voltage control, inertia and fast-response services. While these functions have traditionally been provided by hydropower plants and combined-cycle gas turbines, LDES technologies could progressively assume part of these roles through synthetic inertia, dynamic reactive power control and rapid charging and discharging capabilities.

Another factor supporting storage deployment in the peninsula is its limited interconnection capacity with the rest of Europe. AFRY considers it unlikely that all planned cross-border transmission projects will be built, meaning long-duration storage could help integrate larger volumes of renewable energy and strengthen security of supply without relying exclusively on new interconnectors.

Revenue streams

The report says the future profitability of LDES will depend on more than energy arbitrage alone.

Potential revenue streams in Spain and Portugal include participation in day-ahead and intraday markets operated by OMIE, secondary and tertiary balancing services, European balancing platforms such as PICASSO and MARI, aggregation and virtual power plant (VPP) schemes, the planned Spanish capacity mechanism, and integration with hybrid renewable projects and firm power purchase agreements.

The planned introduction of Spain’s capacity market is identified as one of the most important measures for improving the bankability of LDES investments by providing stable revenues through long-term contracts.

From pv magazine España