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Increased EU support for energy storage policies, key to energy storage expansion in Europe

August 14, 2020

As European governments remove regulatory barriers and the European Union (EU) promises financial support for this emerging technology, European policy support for battery energy storage is increasing. In some countries, revised capacity markets now allow energy storage operators to compete with power plants for subsidy contracts on a more equal basis.

In 2020 alone, European Battery Union support and Euro1 billion loans from the European Investment Bank will help boost investor confidence. Battery energy storage will be a key component to support the development of solar photovoltaic, but the launch of the project must be accelerated to achieve this potential.

The EU and governments are beginning to recognize that battery energy storage will play a key role in solar photovoltaic and other renewable energy expansion throughout Europe.

The grid-scale battery remains a niche technology, and the launch of the project will have to speed up to its potential. As a result, more and more countries are removing regulatory barriers to create a fair competitive environment for energy storage equipment to compete with power plants, for example in capacity auctions, which is a boost for the industry.

Italy, the United Kingdom, Portugal and Ireland have designed capacity markets where storage operators can bid for contracts in auctions. this provides energy storage operators with a fixed and predictable revenue stream in return for a commitment to capacity in the coming years.

In Italy, battery energy storage operators first received capacity payments at an auction last November, totaling 95 megawatts delivered in 2022-23. It is worth noting that coal-fired power plants are excluded from the auction because of their high emission levels. In Portugal, the auction was postponed due to the outbreak, but the auction is expected to take place shortly after the registration deadline of July 31. Germany is also beginning to show more support for battery technology. Germany is planning to install 250 megawatts of batteries to strengthen the power grid in Baden-Württemberg.

The capacity auction, suspended for nearly a year, was restarted in the UK as Tempus Energy challenged the European Court of European Court of Justice. Court decisions put pressure on the British government to redesign the program to respond to demand-side (DSR) operators for longer-term contracts up to 15 years.

The recovery of the UK capacity auction is a boost to the energy storage industry. A new 2023-24 T-4 auction took place in March, with about 120 megawatts of contracts awarded for battery energy storage. battery energy storage operators in ireland received a 127 mw contract at a T-4 auction in april. the irish grid operator EirGrid, according to McCusker, is also making economic incentives for rapid response through grid services because it recognizes the value of the flexibility provided by energy storage.

Britain and Ireland are two examples of markets that require greater flexibility. Cross-border connectivity is limited, coal-fired power plants are offline, and renewable energy is developing rapidly. Ireland is an extreme example, with 70% of electricity coming from wind power on a given day and limited network connections.

In the UK, the current energy storage market is about 4 gigawatts, but most are pumped storage. Battery storage has only recently emerged, with an installed capacity of about 880 MW. According to the European Commission (European Commission), this is the largest market share in Europe, exceeding Germany with only 530 MW of installed capacity. According to data Taylor Hopkinson by energy recruitment companies ,13.5 million kilowatts of battery projects are waiting to be built in the UK, of which 30,000 kilowatts have received planning permission and grid connections.

At present, Europe’s grid-scale battery capacity is less than 2 gigawatts, about three quarters of which are lithium ion batteries. Other technologies include lead acids, redox flow and sodium-based batteries. Globally, the total capacity is about 13 gigawatts, and China, South Korea and the United States are the most advanced markets.

A study released by the european commission in march suggests that europe may see 67 gigawatts of installed battery capacity by 2030, according to the micro-lithium group, but warned that the development of distribution systems would reduce demand for energy storage in the long run. Batteries will also face competition for pumped storage. The cumulative pumped storage capacity in Europe is about 45 gigawatts.

 

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