From small to large – energy storage in Europe: private photovoltaic home storage, large storage and commercial storage

The European energy storage market is in a phase of dynamic growth, fueled by increasing investments, technological innovations and the expansion of renewable energies. An impressive 17.2 gigawatt hours of new battery storage systems were installed in 2023 - a growth of 94 percent compared to the previous year. This means that the market has almost doubled for the third time in a row. This development not only shows the increasing interest in energy storage, but also their essential role in the energy transition.

Suitable for:

• Renewable energies: Now it's all about energy storage systems

Market structure and dynamics

The energy storage market in Europe is broad and can be roughly divided into three main segments:

• Private photovoltaic home storage: This segment dominates with a share of around 70 percent of newly installed capacities. Households in particular are increasingly turning to storage solutions to maximize their own solar power supply.
• Large-scale storage: They contribute 21 percent of the total capacity and are becoming increasingly important due to the increasing integration of renewable energies into the power grid.
• Commercial storage: With a share of 9 percent, they play an important role, particularly in stabilizing the network and optimizing energy consumption in companies.

By the end of 2023, the total installed capacity of all battery storage systems in Europe totaled an impressive 35.9 gigawatt hours.

Leading countries and regional differences

Germany leads the European market by a wide margin and is consolidating its position as a driving force in energy storage.

• Germany accounts for 34 percent of newly installed capacities in Europe, which underlines the country's pioneering role.
• Storage expansion in Germany rose by a remarkable 152 percent in 2023 to a total of 5.9 gigawatt hours.

Other countries such as Italy and the United Kingdom are also making significant progress. Italy installed 3.7 gigawatt hours, while the United Kingdom installed 2.7 gigawatt hours. These figures make it clear that the entire European continent is embracing the energy storage trend, but at different speeds and to varying degrees.

Forecasts and future developments

A look into the future shows that the European market for energy storage will continue to grow, albeit at more moderate rates.

• SolarPower Europe forecasts annual growth of 30 to 40 percent, meaning total capacity could rise to 78 gigawatt hours by 2028.
• EUPD Research expects an increase of around 11 gigawatt hours in the home storage segment alone in 2024.

A shift in market segments is expected in the long term. While the share of private home storage could fall from the current 70 percent to 29 percent, the need for large-scale storage will increase. By 2028, this is expected to account for 45 percent of annual new installations, while commercial storage is expected to grow to 25 percent. This reflects the increasing importance of large-scale solutions targeting the challenges of grid stability and security of supply.

Obstacles and regulatory challenges

Despite the promising outlook, the energy storage market in Europe faces a number of challenges that could slow growth:

1. Lack of targets: Clear political guidelines are missing, especially at EU level. A binding strategy for energy storage could stimulate investment and innovation.
2. Double taxation: In some countries, energy storage is taxed twice, reducing its economic viability.
3. Restrictive network policy: Complex regulations and a lack of incentives hinder the expansion of hybrid systems that combine energy storage and renewable energy sources.

A comprehensive EU electricity storage strategy could help. “In order to exploit the full potential of renewable energies, the aim should be to have at least 200 gigawatts of installed storage capacity by 2030,” emphasizes SolarPower Europe.

Technological innovations and cost reductions

The battery industry is developing rapidly. Three aspects in particular are in focus:

• Sustainability: Recycling and the use of environmentally friendly materials are increasingly being prioritized. This is not only an environmental imperative, but also a strategic necessity given the limited availability of raw materials such as lithium and cobalt.
• New technologies: Advances in solid-state battery technology and the development of alternatives such as sodium-ion batteries promise greater efficiency, longer life and lower costs.
• Cost reductions: The prices for battery storage have fallen by around 30 percent in the last two years. This trend is likely to continue, further improving the economic viability of energy storage.

Importance for the energy transition

Energy storage is the key to a successful energy transition. They make it possible to compensate for fluctuations in electricity generation from renewable energies and to ensure grid stability. In addition, they contribute to the decarbonization of the energy sector by replacing fossil backup solutions.

Energy storage offers households the opportunity to reduce their electricity costs and reduce their dependence on the grid. Companies benefit from lower energy costs and increased security of supply. Large-scale storage plays a crucial role in integrating large amounts of wind and solar power into the grid.

A market with potential and challenges

The European energy storage market has enormous potential, but is heavily dependent on the right political and economic framework. Technological innovations and falling costs pave the way for sustainable growth. Nevertheless, it remains crucial to reduce regulatory hurdles and develop a coherent EU-wide strategy.

The coming years will show whether Europe is taking the right course to fully exploit the opportunities offered by the energy storage market. The signs point to growth, and the importance of energy storage will continue to increase in a world that is increasingly relying on renewable energy.

Suitable for:

• Potential untapped? New opportunities for solar power owners, especially in winter: Why Germany's energy storage systems could do more
• The winter strategy for PV systems in the 'dark months': optimization potential through energy storage, microinverters and dimensioning

Xpert.Digital has in-depth knowledge of various industries. This allows us to develop tailor-made strategies that are tailored precisely to the requirements and challenges of your specific market segment. By continually analyzing market trends and following industry developments, we can act with foresight and offer innovative solutions. Through the combination of experience and knowledge, we generate added value and give our customers a decisive competitive advantage.

More about it here:

• Use the 5x expertise of Xpert.Digital in one package - starting at just €500/month

The European energy storage market has been experiencing remarkable growth for several years. Battery storage in particular in the private, commercial and large industrial sectors has become an important pillar of the energy transition, as they support the integration of renewable energies into the power grid and help reduce CO₂ emissions. “Battery storage is the engine for a decentralized and flexible energy supply that is oriented towards the requirements of a modern, sustainable Europe,” is an often expressed assessment by industry experts. In the last three years, newly installed storage capacity in Europe has repeatedly doubled, demonstrating the outstanding growth potential of a market that will continue to grow in importance in the future.

The following presentation deals with the various segments of the European energy storage market, the technological developments, economic aspects and political framework conditions. The focus is on photovoltaic home storage, large battery storage and commercial storage. The role of leading countries, expected trends and necessary measures to create optimal conditions for further expansion are also discussed. This comprehensive overview is intended to show the challenges Europe faces in order to exploit its great potential on the way to a climate-neutral and secure energy supply.

Growth and market structure

According to current market analyses, new battery storage capacity of around 17.2 gigawatt hours was installed in Europe in 2023 alone. This represents a 94 percent increase over last year and the third consecutive year that the storage market has doubled. The newly installed capacities are distributed across three main sub-markets:

Private photovoltaic home storage

At around 70 percent, they take up the largest part of the newly installed storage capacity. One reason for this is that more and more homeowners want to combine their photovoltaic system with a suitable storage system in order to increase their own consumption, reduce electricity costs and at the same time become a little more independent of grid operators.

Large storage

This category includes large battery storage systems, which are often implemented on an industrial scale. They account for 21 percent of new construction and are becoming increasingly relevant because they can be used to stabilize the power grid, alleviate bottlenecks and make electricity available at peak demand times.

Commercial storage

At 9 percent, this area is still a relatively manageable market segment, but shows great medium-term potential. Commercial storage systems, for example, supply office buildings, supermarkets and other facilities with their own solar power. Commercial storage systems represent an economical solution, particularly where energy consumption varies during the day and load peaks need to be cushioned.

By the end of 2023, the total installed battery storage capacity in Europe reached almost 35.9 gigawatt hours. Given the dynamic growth of recent years, it is expected that this number will continue to rise in the coming years.

Leading countries and regional distribution

Germany is in first place in the ranking of the leading countries in the European energy storage market. Around 34 percent of the newly installed capacities in 2023 will be in Germany, and storage expansion there rose by 152 percent to 5.9 gigawatt hours. A key reason is the widespread use of photovoltaic systems in the private sector, promoted by various incentive programs and increased consumer demand. In addition, Germany has been relying heavily on renewable energies for years, thereby driving demand for storage systems.

Italy is right behind Germany in the European rankings, with an increase of around 3.7 gigawatt hours of newly installed storage capacity. In addition to the good solar radiation conditions and the strong spread of photovoltaics in large parts of the country, Italian private households and companies benefit from subsidies that are specifically aimed at improving the grid integration of solar power.

Another important market is the United Kingdom, where around 2.7 gigawatt hours of battery capacity were newly installed in 2023. As the country wants to continue reducing emissions in the power sector, the importance of large-scale storage projects for grid stability is increasing. In addition to these three pioneers, there are more and more countries with emerging markets for energy and storage solutions. France, Spain, the Netherlands and Austria are recording increasing storage capacities - especially when you look at their overall photonvoltaic output. The trends suggest that growth will be more widely distributed across different countries in the future.

Expected development and forecasts

The European storage market is forecast to continue to grow in the coming years, although perhaps at somewhat more moderate rates than in the past. Various market research institutes assume that the market will continue to develop positively in the next few years. For example, SolarPower Europe predicts annual market growth of 30 to 40 percent. If this were to happen, total capacity across Europe could rise to 78 gigawatt hours by 2028.

A look at Germany shows the growing importance, particularly in the home storage market: According to estimates by EUPD Research, an increase of around 11 gigawatt hours could occur in this area alone in 2024. “The trend towards combined solar and storage solutions is unbroken,” says industry experts over and over again in comments. Due to rising electricity prices, growing environmental awareness and improved funding instruments, more and more private households are turning to battery storage systems, while companies and commercial businesses are also increasingly relying on their own storage solutions in order to reduce costs and achieve their climate goals.

New market structure: shifting shares

While private home storage currently makes up the largest share of the market, changes in the market structure are already becoming apparent. Parallel to the growing number of small storage devices, the large storage segment is also developing rapidly. According to forecasts, the share of these large battery storage systems in annual new installations could rise to 45 percent by 2028. At the same time, commercial storage could grow to a share of 25 percent, while home storage could decline to 29 percent. This shift reflects the increasing interest in industrial and commercial applications where electricity storage is also becoming economically interesting. In this way, load peaks can be cushioned, electricity costs can be reduced and network services can be offered.

There are particular opportunities in the industrial sector, where production processes and logistics are tied to a constant energy supply. Large storage units make it possible to protect yourself from power outages or to react flexibly to fluctuations in the network at short notice. In addition, sectors such as the transport sector or data centers are also becoming increasingly important because they require gigantic amounts of energy and in many cases want to increasingly cover their energy supply from renewable sources.

Political and regulatory framework

Although the storage market in Europe is developing very dynamically, there are still challenges and barriers that could slow down expansion. In many countries there are no concrete targets for the expansion of storage facilities, so potential investors still have to take into account uncertainties regarding economic viability and the legal framework. “Our goal must be to create the same market signals and reliable perspectives across Europe,” demand industry associations. Without adequate political support, the potential of large-scale storage systems may remain untapped.

Issues such as double taxation can also hinder expansion. In some countries, storage systems have so far been charged multiple times in terms of network fees or surcharges, which makes economic viability difficult. In addition, bureaucratic hurdles in the approval process occasionally prove to be a problem. For example, for hybrid renewable systems – such as combinations of PV systems with integrated storage systems – it is often complicated to obtain quick and legally secure approval. Those who make investment decisions therefore want simplified procedures and clear, reliable regulations.

For this reason, SolarPower Europe has suggested developing a comprehensive EU electricity storage strategy in order to improve the framework conditions for the different storage technologies and segments. A proposed goal is to achieve a total capacity of 200 gigawatts of installed storage by 2030. This would allow the targeted expansion of renewable energies to be better supported and the power grid to be adapted to the increasing proportion of fluctuating solar and wind power.

Technological developments and innovations

Technological developments around battery storage are progressing rapidly. In addition to the lithium-ion systems that dominate the market, research areas such as solid-state batteries are also becoming more relevant. Solid-state batteries are considered a possible key technology of the future because they potentially have a higher energy density and are at the same time safer than conventional lithium-ion batteries. However, these memories are still in the research stage and are only commercially available to a very limited extent. Industry experts expect the first market-ready products to appear in the coming years, even if broad market penetration is still a while away.

At the same time, the costs for battery storage are constantly falling. “In the last two years, prices for storage solutions have fallen by around 30 percent,” says the industry. This trend is largely driven by economies of scale and advances in battery production. Europe is also working specifically to build up its own production capacities in order to reduce its dependence on Asia and stabilize supply chains. Investments in European gigafactories – large production facilities for battery cells – are therefore continually increasing.

While lithium-ion batteries form the backbone of the modern storage market, alternative technologies such as redox flow batteries are also gaining attention. They are particularly suitable for stationary applications where a large number of charging cycles with high reliability are required. The further diversification of the storage market promises to optimally cover various requirements depending on the application. Hybrid solutions consisting of lithium-ion and redox flow systems could be a truly unique selling point for flexible and reliable energy supply in the future.

Importance for the energy transition and grid integration

A growing role for energy storage is essential for the successful energy transition. With the increasing share of renewable energies such as solar and wind power, there are greater fluctuations in energy production. Battery storage can help compensate for these fluctuations by absorbing energy when there is excess supply and feeding it back into the grid when needed. This reduces the dependence on conventional power plants, which would otherwise have to be kept available to compensate for peak loads or as a reserve.

In addition, a larger storage capacity in the system makes it possible to increase the proportion of self-sufficiency. This reduces long-term electricity costs for private households, increases competitiveness for industry and increases supply stability for the entire energy system. The expansion of storage capacities is not limited to national borders: “Close coordination is necessary at the European level so that the individual member states can benefit from each other,” representatives of regulatory authorities regularly emphasize. Many countries within the European Union are already working together across borders on capacity reserves and electricity trading, and this is likely to be intensified even further in the future.

Storing electricity, reducing costs, protecting the climate: potential of home storage and large-scale systems

Despite rapid growth and technological advances, there is still much work to be done to realize the full potential of energy storage. There are still obstacles such as a lack of targets or regulatory obstacles that are delaying rapid market development. In addition, although investments in European battery production are increasing, the question of raw material supply remains relevant. Lithium, cobalt and other rare metals are indispensable for modern battery systems, but at the same time they are sometimes scarce or expensive on the global market. A sustainable supply chain and recycling strategies are therefore becoming increasingly important.

On the other hand, there are enormous opportunities. With the expansion of battery storage in Europe, new jobs are being created in research, production and installation. In addition, energy security will increase because fewer fossil fuels will have to be imported. For private households, private home storage offers the opportunity to decouple themselves more from rising electricity prices and to make an active contribution to climate protection. Commercial storage, in turn, plays a crucial role when companies reduce their CO₂ footprint and at the same time strive for flexible, predictable energy processes. Finally, large-scale storage systems show how the European power grid can be made more resilient: They stabilize frequencies, reduce load peaks and support secondary control energy - all of these are important building blocks for a sustainable energy system.

Energy storage as a game changer: Europe's path to sustainability and grid stability

The European energy storage market is at a crucial point in its development. With a renewed growth spurt and a total capacity of now 35.9 gigawatt hours at the end of 2023, it has been confirmed that battery systems will become an indispensable element of the energy transition. In the coming years, all segments - from home storage to commercial solutions to large systems - are expected to continue to gain in importance, with market shares likely to shift. According to optimistic estimates, around 78 gigawatt hours could be installed by 2028, and in the long term the industry is even calling for an EU-wide target of 200 gigawatts by 2030.

In order to develop the full potential, further political strategies and clear targets are required. Harmonization of regulation, elimination of double taxation and improved infrastructure for faster approvals are just a few points that could help advance the energy transition in Europe even faster. At the same time, technological development is advancing and promises even more efficient, cost-effective and sustainable battery storage, including new generations of high-performance batteries.

The growth of energy storage therefore reflects more than just a short-lived market movement. It is an expression of a fundamental change that is taking place across Europe: away from a fossil energy supply with central power plants, towards decentralized, intelligent networks based on renewable sources. This is where energy storage can fully demonstrate its strengths – as a pivotal point between generation and consumption. Europe has the opportunity to become a global leader in this area by combining innovation, sustainability and energy security. If the right framework conditions are created and the technological potential is exploited, the continent should move towards a future in which renewable energies and flexible storage systems work hand in hand to ensure a clean, secure and affordable energy supply.

☑️ SME support in strategy, consulting, planning and implementation

☑️ Creation or realignment of the digital strategy and digitalization

☑️ Expansion and optimization of international sales processes

☑️ Global & Digital B2B trading platforms

☑️ Pioneer Business Development

 

I would be happy to serve as your personal advisor.

You can contact me by filling out the contact form below or simply call me on +49 89 89 674 804 (Munich) .

I'm looking forward to our joint project.

 

 

Xpert.Digital is a hub for industry with a focus on digitalization, mechanical engineering, logistics/intralogistics and photovoltaics.

With our 360° business development solution, we support well-known companies from new business to after sales.

Market intelligence, smarketing, marketing automation, content development, PR, mail campaigns, personalized social media and lead nurturing are part of our digital tools.

You can find out more at: www.xpert.digital - www.xpert.solar - www.xpert.plus