Eastern European Outdoor Power Supply BESS

The UK, Italy, Germany and Spain are the four largest markets for BESS in Europe. Figure 1. New capacity forecasts for top 10 European grid-scale energy storage markets 2022-2031 (GWh). Source: Wood Mackenzie.

It can also participate in the wholesale market, levelling out peaks in demand via peak shaving and avoiding congestion in the nodes, and therefore, curtailments. The three most important revenue sources for BESS in Europe are wholesale energy market arbitrage, ancillary services and long term capacity provision.

In this paper we will focus on Battery Energy Storage Systems (BESS), which are usually based on lithium-ion batteries and whose adoption is growing rapidly. Consultancy Wood Mackenzie forecasts that 89GWh of grid-scale BESS capacity will be installed in Europe by 2031 – a 20-fold increase over 2022.

These international players are placing cost pressure on European BESS OEMs by driving down prices. In early 2024, the price of residential BESS offered to end consumers in Europe ranged widely, from €400 to more than €1,200 per kilowatt-hour (kWh) (Exhibit 2).

In early 2024, the price of residential BESS offered to end consumers in Europe ranged widely, from €400 to more than €1,200 per kilowatt-hour (kWh) (Exhibit 2). Historically, European OEMs built trust-based brands by highlighting their “made in Europe” status and rode the first-mover wave over the past ten years.

After years of exponential growth, demand for BESS in Europe has temporarily flattened, with McKinsey research showing approximately 150 percent growth in the first half of 2023, which slowed to 10 percent in the second half of 2023 for Germany.