Green Innovation : The LCP Delta report highlights the latest advances in energy storage technologies. What do you think are the most promising innovations for improving performance and efficiency of storage systems?
Silvestros Vlachopoulos: Many technologies exist regarding energy storage. Li-ion batteries are currently dominating the market and has been the subject of constant technological improvements for ten years. They are indeed the most competitive option among their competitors. Technology can still be improved, but the progression margin is lower than for certain less advanced options on the commercial level, for example long -term storage. Regarding the chemical composition of batteries, the progress made in the field of sodium-ion batteries could make them more able to compete with lithium-ion in the future, in particular if the lithium offer fails to meet the ever increasing battery needs for stationary storage or electric cars.
What are the key figures on the storage capacity of batteries installed on the European electrical network at the end of 2023, and how do these data reflect the progress made by European countries in their energy transition?
At the end of 2023, battery storage in Europe was estimated at around 31 GWh. About 2/3 of this storage capacity were added during the period 2022–2023, mainly due to the energy crisis, as well as additional investments at the European and national levels, with the appearance of subsidies and support regimes for green energy, following the COVVID recovery strategy.
The increase in energy prices has improved the profitability analysis of storage behind the counter. Consumers have started to worry about energy and resilience costs and therefore invested more in photovoltaic facilities and home batteries.
At the same time, the policies put in place to energize the economy after the Covid crisis led to the arrival of important volumes on the market. In the most advanced storage markets, they increased the profitability of the company’s scale projects, which also created a rush to enter the market while it was still booming.
Does the report underlines significant disparities between European countries in terms of installation of batteries and storage technologies? If so, what are the factors explaining these differences?
In terms of technology, almost all of the storage systems connected to the European electricity network are Li-ion batteries, and the vast majority of them are currently LFP batteries. Other technologies and other batteries are present, but very little.
Regarding countries, there are enormous disparities between countries. Let us examine them in market segment:
Batteries Behind the meter (BTM) : Germany is a leading country in terms of battery capacity, due to the importance of the battery market behind the counter (installed with the customer). In 2023, around 540,000 domestic batteries were installed in Germany alone, about half of what was installed in all other European countries together. This domination is linked to high energy prices in this country, which improve the profitability analysis of the installation of a battery to ensure that all the production of domestic photovoltaic solar energy is self -consumed. Germany is also a large market for photovoltaic energy, and German customers are generally inclined to make such improvements to their home as part of a long -term investment.
In other European countries, subsidies have played an important role in the emergence of storage markets. The best example is Italy, which experienced a massive increase in battery facilities in 2022–2023 thanks to its grant program Superbon.
Great Britain occupies a preponderant place on the market, with an installed capacity equivalent to that of the rest of Europe united. It was one of the first countries to open markets for storage (such as their capacity market or their auxiliary services). The income generated by the supply of these services and the dimension of the market were enough to attract investments which ultimately allowed Great Britain to become a leader in Europe. From a macroeconomic point of view, the strong position of Great Britain on the market is explained by its relative isolation compared to European networks, which can potentially show greater resilience due to greater interconnection (at least in certain countries). However, in the future, at least for the FOM (system connected to the network), the market will be much more diverse because large pipeline projects are developed through the continent and in almost all countries, as is the case in Italy and Germany.
Is the European storage batteries market sufficiently supported by public policies, in particular in terms of regulation and subsidies, to achieve the climatic and decarbonation objectives of the energy sector?
Historically, storage (and flexibility) have been largely neglected by policy, which tended to focus more on technologies offering immediate advantages in terms of carbon (for example renewable energy production or electrification), without necessarily taking into account their integration into the energy system in the broad sense. However, this situation has evolved over the past two years: the new energy directive is a good example in this regard. The markets open up to storage throughout the continent, but at different rhythms. There are still differences with regard to the details of participation, but overall things are changing in the right direction.
Regarding direct political support, many programs exist in more than fifteen European countries which reward or subsidize in one way or another FOM projects. This is in my opinion a sign of the failures of the past, because in appropriate market structures and with limited political barriers, the need for storage should follow the development of renewable energies. In many countries, this has not happened and it is therefore necessary to intervene to guarantee the storage necessary for the operation of a decarbonized network. On the other hand, support for BTM storage (systems installed on the side of customers) is decreasing on the continent, because many programs have been interrupted and are not renewed.
How will storage technologies, in particular the batteries, contribute to the resilience of the electricity network in the face of the challenges linked to the intermittent renewable energies in Europe in the coming years?
They will play a key role! The future energy system simply collapses without flexibility, and the batteries are the flexible asset par excellence, because they can perform almost all the actions necessary to help support the network – with the exception of very long -term storage, 8 hours or more, for which other technologies will be more appropriate.
I simply point out that the effect of intermittent energies on the network is already apparent. You can already see the signs of the inflexibility of European networks by looking at the number of negative price periods on the continent in 2023 and especially in 2024.
