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

The European energy storage market is experiencing dynamic growth, fueled by increased investment, technological innovation, and the expansion of renewable energies. In 2023, an impressive 17.2 gigawatt-hours of new battery storage systems were installed – a 94 percent increase compared to the previous year. This marks the third consecutive year that the market has nearly doubled. This development demonstrates not only the growing interest in energy storage but also its essential role in the energy transition.

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Market structure and dynamics

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

• Private photovoltaic home storage systems: This segment dominates newly installed capacity with a share of approximately 70 percent. Households in particular are increasingly relying on storage solutions to maximize their self-sufficiency in solar power.
• Large storage facilities: They contribute 21 percent to the total capacity and are becoming increasingly important due to the growing integration of renewable energies into the electricity grid.
• Commercial storage facilities: With a share of 9 percent, they play an important role, especially in stabilizing the grid and optimizing energy consumption in companies.

By the end of 2023, the total installed capacity of all battery storage systems in Europe had reached 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 the field of energy storage.

• 34 percent of the newly installed capacity in Europe is in Germany, which underlines the country's pioneering role.
• Storage capacity added in Germany increased by a remarkable 152 percent in 2023, reaching a total of 5.9 gigawatt hours.

Other countries, such as Italy and the United Kingdom, are also making considerable progress. Italy installed 3.7 gigawatt-hours, while the United Kingdom reached 2.7 gigawatt-hours. These figures illustrate that the entire European continent is embracing the trend toward energy storage, albeit at different speeds and in varying degrees.

Forecasts and future developments

Looking ahead, 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, so that the total capacity could increase to 78 gigawatt hours by 2028.
• EUPD Research expects an increase of approximately 11 gigawatt hours in the home storage segment alone for the year 2024.

In the long term, a shift in market segments is expected. While the share of private home storage systems could fall from the current 70 percent to 29 percent, the demand for large-scale storage will increase. By 2028, these are expected to account for 45 percent of annual new installations, while commercial storage is projected to grow to 25 percent. This reflects the increasing importance of large-scale solutions that address 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 lacking, particularly at the EU level. A binding strategy for energy storage could boost investment and innovation.
2. Double taxation: In some countries, energy storage systems are taxed twice, which reduces their economic viability.
3. Restrictive grid 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 provide a solution. "To fully exploit the potential of renewable energies, at least 200 gigawatts of installed storage capacity should be targeted 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 ecological 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 higher efficiency, longer lifespan and lower costs.
• Cost reductions: Prices for battery storage systems 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.

Significance for the energy transition

Energy storage systems are key to a successful energy transition. They make it possible to balance fluctuations in electricity generation from renewable energy sources and ensure grid stability. Furthermore, they contribute to the decarbonization of the energy sector by replacing fossil fuel backup solutions.

For households, energy storage offers the opportunity to reduce electricity costs and decrease dependence on the grid. Businesses benefit from lower energy costs and increased security of supply. Large-scale storage systems play 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 are paving 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 sets the right course to fully exploit the opportunities of the energy storage market. The signs point to growth, and the importance of energy storage will continue to increase in a world that increasingly relies on renewable energies.

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The European energy storage market has experienced remarkable growth for several years. Battery storage systems, in particular, have become a key pillar of the energy transition in the residential, commercial, and large-scale industrial sectors, as they support the integration of renewable energies into the electricity grid and contribute to reducing CO₂ emissions. "Battery storage is the engine for a decentralized and flexible energy supply that meets the needs of a modern, sustainable Europe," is a frequently expressed assessment by industry experts. Over the past three years, newly installed storage capacity in Europe has repeatedly doubled, demonstrating the outstanding growth potential of a market that will continue to gain importance in the future.

The following presentation examines the various segments of the European energy storage market, including technological developments, economic aspects, and political frameworks. The focus is on residential photovoltaic storage systems, large-scale battery storage, and commercial storage. Furthermore, it addresses the role of leading countries, anticipated trends, and necessary measures to create optimal conditions for further expansion. This comprehensive overview aims to illustrate the challenges Europe faces in realizing its significant potential on the path to a climate-neutral and secure energy supply.

Growth and market structure

According to current market analyses, approximately 17.2 gigawatt-hours of new battery storage capacity were installed in Europe in 2023 alone. This represents a 94 percent increase compared to the previous year and marks the third consecutive year in which the storage market has doubled in size. The newly installed capacity is distributed across three main sub-markets:

Private photovoltaic home storage

They account for roughly 70 percent of newly installed storage capacity. One reason for this is that more and more homeowners want to combine their photovoltaic system with a suitable storage unit to increase their self-consumption, reduce electricity costs, and simultaneously become somewhat more independent from grid operators.

Large storage facilities

This category includes large battery storage systems, often implemented on an industrial scale. They account for 21 percent of new installations and are becoming increasingly important because they can stabilize the power grid, mitigate bottlenecks, and provide electricity during peak demand.

Commercial storage

This sector, at 9 percent, is still a relatively manageable market segment, but it shows significant medium-term potential. Commercial storage systems supply, for example, office buildings, supermarkets, and other facilities with self-generated solar power. Commercial storage systems represent a particularly economical solution where energy consumption varies throughout the day and peak loads need to be buffered.

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, this figure is expected to continue rising in the coming years.

Leading countries and regional distribution

Germany ranks first among leading countries in the European energy storage market. Approximately 34 percent of newly installed capacity in 2023 was located in Germany, and storage capacity there increased by 152 percent to 5.9 gigawatt-hours. A key reason for this is the widespread adoption of photovoltaic systems in the private sector, promoted by various incentive programs and increased consumer demand. Furthermore, Germany has been heavily investing in renewable energies for years, thereby also driving the demand for storage systems.

Italy ranks second only to Germany in Europe, with an increase of approximately 3.7 gigawatt-hours of newly installed storage capacity. In addition to favorable solar irradiance conditions and the widespread use of photovoltaics across much of the country, Italian households and businesses benefit from subsidies specifically designed to improve the grid integration of solar power.

Another important market is the United Kingdom, where approximately 2.7 gigawatt-hours of new battery capacity were installed in 2023. As the country continues to reduce emissions in the electricity sector, the importance of large-scale storage projects for grid stability is increasing. In addition to these three leading countries, a growing number of countries are developing markets for energy and storage solutions. France, Spain, the Netherlands, and Austria are all experiencing rising storage capacities – particularly when considering their total photovoltaic output. Trends suggest that future growth will be more broadly distributed across various countries.

Expected developments and forecasts

Further growth in the European energy storage market is forecast for the coming years, although possibly at somewhat more moderate rates than in the past. Various market research institutes anticipate that the market will continue its positive development in the next few years. For example, SolarPower Europe predicts annual market growth of 30 to 40 percent. If this materializes, the total capacity across Europe could reach 78 gigawatt-hours by 2028.

A look at Germany reveals the growing importance of solar energy storage, particularly in the home storage market: According to estimates by EUPD Research, this sector alone could see an increase of approximately 11 gigawatt-hours in 2024. "The trend towards combined solar and storage solutions remains unbroken," is a recurring theme in industry commentary. Rising electricity prices, growing environmental awareness, and improved funding mechanisms are driving more and more private households to install battery storage systems, while businesses and commercial enterprises are also increasingly relying on their own storage solutions to reduce costs and achieve their climate goals.

New market structure: Shift in market share

While residential storage systems currently account for the largest share of the market, changes in the market structure are already becoming apparent. Parallel to the growing number of small storage systems, the large-scale storage segment is also developing rapidly. According to forecasts, the share of these large-scale battery storage systems in annual new installations could rise to 45 percent by 2028. At the same time, commercial storage systems could grow to a share of 25 percent, while residential storage systems could decline to 29 percent. This shift reflects the increasing interest in industrial and commercial applications, where electricity storage is also becoming economically attractive. This allows for the mitigation of peak loads, the reduction of electricity costs, and the provision of grid services.

Particular opportunities arise in the industrial sector, where production processes and logistics depend on a constant energy supply. Large storage systems make it possible to protect against power outages or to react flexibly to fluctuations in the grid at short notice. Furthermore, sectors such as transportation and data centers are also gaining importance, as they require enormous amounts of energy and, in many cases, want to increasingly cover their energy needs with renewable sources.

Political and regulatory framework

Although the energy storage market in Europe is developing very dynamically, challenges and barriers remain that could slow its expansion. Many countries lack concrete targets for storage development, meaning potential investors still have to consider uncertainties regarding economic viability and legal frameworks. "Our goal must be to create uniform market signals and reliable prospects 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 are currently subject to multiple charges, such as grid fees or levies, which makes them less economically viable. Furthermore, bureaucratic hurdles in permitting processes occasionally prove problematic. For example, obtaining swift and legally sound approval for hybrid renewable energy systems—such as combinations of PV systems with integrated storage systems—is often complicated. Those making investment decisions therefore desire simplified procedures and clear, reliable regulations.

For this reason, SolarPower Europe has proposed developing a comprehensive EU electricity storage strategy to improve the framework for the various storage technologies and segments. One proposed target is to achieve a total installed storage capacity of 200 gigawatts by 2030. This would better support the targeted expansion of renewable energies and adapt the electricity grid to the increasing share of fluctuating solar and wind power.

Technological developments and innovations

Technological developments in battery storage are progressing rapidly. In addition to the market-dominating lithium-ion systems, research areas such as solid-state batteries are also gaining relevance. Solid-state batteries are considered a potential key technology of the future, as they potentially offer higher energy density and are simultaneously safer than conventional lithium-ion batteries. However, these storage technologies are currently still in the research phase and are only available commercially to a very limited extent. Industry experts expect the first market-ready products in the coming years, although widespread market penetration is likely to take some time.

At the same time, the costs for battery storage systems are steadily declining. "In the last two years, prices for storage solutions have fallen by about 30 percent," according to industry sources. This trend is largely driven by economies of scale and advances in battery production. Furthermore, Europe is working diligently to build its own production capacity to reduce its dependence on Asia and stabilize supply chains. Investments in European gigafactories – large-scale production facilities for battery cells – are therefore continuously increasing.

While lithium-ion batteries form the backbone of the modern energy 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 highly reliable charging cycles are required. The further diversification of the energy storage market promises to optimally meet various requirements depending on the application. For example, hybrid solutions combining lithium-ion and redox flow systems could become a true unique selling point for flexible and reliable energy supply in the future.

Significance for the energy transition and grid integration

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

Furthermore, greater storage capacity within the system enables an increase in the share of self-sufficiency. For private households, this reduces electricity costs in the long term; for industry, it increases competitiveness; and for the entire energy system, it enhances supply stability. The expansion of storage capacities is not limited to national borders: "Close coordination is necessary at the European level so that individual member states can benefit from each other," representatives of regulatory authorities regularly emphasize. Many countries within the European Union already cooperate across borders on capacity reserves and electricity trading, and this cooperation is likely to intensify further in the future.

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

Despite rapid growth and technological advances, much remains to be done to fully realize the potential of energy storage. Obstacles such as a lack of targets and regulatory hurdles continue to delay rapid market development. Furthermore, while investments in European battery production are increasing, the question of raw material supply remains critical. Lithium, cobalt, and other rare metals are essential for modern battery systems, yet 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, enormous opportunities are emerging. The expansion of battery storage in Europe will create new jobs in research, production, and installation. Furthermore, energy security will increase because fewer fossil fuels will need to be imported. For private households, home storage systems offer the possibility of becoming less dependent on rising electricity prices and making an active contribution to climate protection. Commercial storage systems, in turn, play a crucial role when companies want to reduce their carbon footprint while simultaneously striving for flexible, predictable energy flows. Finally, large-scale storage systems demonstrate how the European electricity grid can be made more resilient: they stabilize frequencies, reduce peak loads, and support secondary control reserve – all 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 juncture in its development. With renewed growth and a total capacity of 35.9 gigawatt-hours by the end of 2023, it has become clear that battery systems are an indispensable element of the energy transition. In the coming years, all segments – from residential storage to commercial solutions and large-scale installations – are expected to gain further importance, with market shares likely to shift. Optimistic estimates suggest that 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.

To fully realize its potential, further political strategies and clear targets are needed. Harmonizing regulations, eliminating double taxation, and improving infrastructure for faster permitting are just some of the measures that could help accelerate the energy transition in Europe. At the same time, technological advancements are progressing, promising even more efficient, cost-effective, and sustainable battery storage solutions, including new generations of high-performance batteries.

The growth of energy storage thus reflects more than just a short-lived market trend. It is an expression of a fundamental shift taking place across Europe: away from a fossil fuel-based energy supply with centralized power plants, towards decentralized, smart grids based on renewable sources. Here, energy storage can fully demonstrate its strengths – as a crucial link between generation and consumption. Europe has the opportunity to become a global leader in this field by combining innovation, sustainability, and energy security. If the right framework is established and the technological potential is harnessed, the continent should be heading towards a future in which renewable energies and flexible storage systems work hand in hand to ensure a clean, secure, and affordable energy supply.

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