European battery markets to attract over €70bn investment by 2050 Financial freedom concept- 3D rendering
According to research from Aurora Energy, battery storage markets across the European continent will attract over €70 billion ($77 billion) in investment between now and 2050.
The vital role that batteries can play in the European power sector’s decarbonisation is set to drive a surge in installations over the next few decades — installed grid-scale capacity will rise to 42GW by 2030, and at least 95GW by 2050, compared to the 5GW installed across the continent today.
This is according to Aurora Energy Research’s latest European Battery Markets Attractiveness Report, released last week.
These capacity additions represent a cumulative investment opportunity of over €70 billion between 2023 and 2050. Over 40% of this capital will be deployed by the end of 2030, Aurora calculates.
According to their findings and modellings, the average battery duration will increase over time, due to growing demand for longer storage as renewable power generation increases. Batteries with over four hours’ storage capacity will account for 61% of total installed battery capacity in 2050, compared with 22% in 2025.
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Ryan Alexander, research lead of European Power Markets for Aurora Energy Research, commented: “Batteries represent an attractive investment opportunity in Europe’s energy sector—new projects are announced on a near-daily basis as developers seek to capitalise on the need for storage in the energy transition.
“There will undoubtedly be an early mover advantage for investors: the anticipated surge in demand for batteries over the next decades creates saturation risk, causing revenues to decline as markets become overcrowded. Aurora’s European Battery Markets Attractiveness Report helps investors navigate entry into new markets and maximise their competitive advantage in an increasingly crowded space.”
Market conditions
According to the report, to deploy batteries on the scale that Europe’s decarbonisation ambitions require, markets have to be attractive to investors; the five most attractive markets in Europe are, alphabetically, Germany, Great Britain, Greece, Ireland and Italy.
Specifically, ambitious deployment targets have boosted Greece and Italy’s market attractiveness — Greece aims to install 6GW of battery storage by 2030, the highest target in Europe — while good revenue stacking opportunities, where battery operators optimise between markets, supported Great Britain and Ireland’s rankings.
Battery developers can secure revenues through Britain’s Capacity Market auctions, for example, or Ireland’s DS3 programme.
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Germany’s position reflects the projected growth of its installed renewable power generation capacity over the next two decades, set to surpass all of the other 23 countries considered by Aurora.
However, the immense investment opportunity presented by Europe’s need for batteries has scope to grow further, their research adds. Despite the strict decarbonisation targets across the continent, 14 of the 24 countries assessed do not yet have a national strategy or targets for energy storage deployment.
Policy support
Anu Omojola, flexibility product lead of European Power Markets for Aurora Energy Research, commented on how European policymakers are needed to take urgent action to enable capacity deployment:
“Key regulatory challenges around grid connection, network charges, long-term contractability and ancillary services remuneration pose significant risks to the rapid buildout of battery capacity across the continent.”
Aurora considers only six of the countries assessed to have strong government commitments in place, such as Italy’s target to install 3GW of long-duration batteries by 2030, or Spain’s plan to deploy 2.5GW of battery storage by 2030.
Policy support is not a dealbreaker, the report finds, drawing on Germany as an example where the German government has not published a strategy or specific targets for deploying batteries. With this in mind, however, policy support can be an important driver of attractiveness, especially in markets with less favourable economics to support unsubsidised projects.
For example, policy to address network charges in the Netherlands, a significant obstacle to the viability of battery projects in the country, would be pivotal to battery market attractiveness. Buildout will also be shaped by the evolution of aggregated electric vehicle storage and innovation in long-duration energy storage technologies.
