Executive Summary
- Innovative long duration energy storage (LDES) technologies are set to become an ‘increasingly viable flexibility option in several European markets’, according to a report from Eurelectric and AFRY
- ‘Wind-rich’ countries, such as the UK and Germany, could see storage technologies with durations exceeded 24 hours reaching commercial viability around 2040
- The report analysed that Britain’s sweet spot was in multi-day energy shifting acting as backup capacity during low wind periods
A new analysis from trade association Eurelectric has found that innovative long duration energy storage (LDES) technologies are set to become an ‘increasingly viable flexibility option in several European markets’.
The report, put together alongside AFRY, a supplier of engineering, project management and advisory services, found that each GW of LDES could generate up to €250 million in annual variable operating cost savings at system level.
In the ‘wind-rich’ UK and Germany, some storage technologies with durations exceeding 24 hours could reach commercial viability after 2040, while in Spain and Portugal, storage technologies with durations between eight and 12 hours are favoured. This suggests a business case is ‘beginning to emerge’ for a range of solutions, the report adds.
Britain, the report notes in its executive summary, is in a strong place, with a dedicated framework and emerging LDES business case. The report outlines each region’s sweet spot, differentiator, and risks and upsides. For Britain, the sweet spot is in multi-day energy shifting acting as backup capacity during low wind periods; the differentiator is in a 25-year cap and floor scheme helping to de-risk projects; and the risk is in managing congestion, particularly at the England-Scotland boundary.
The report also analysed common routes to market contract types for battery assets. In Britain, revenue sharing contracts were the most common, ahead of revenue floor contracts and less common tolling agreements. An example of the latter was Octopus and Gresham House in June 2024, a two-year deal at approximately £57/kW/yr.
“Maximising revenue from flexible assets involves stacking revenues across multiple markets, with operators making daily decisions on whether to participate in ancillary services or wholesale energy markets,” the report note. “These decisions also consider technical constraints such as ramp rates and maintenance costs for gas engines, or cell degradation for batteries, making revenue stacking a complex task.
“Some battery owners may not have these optimisation and trading capabilities. Instead, they procure those services from specialised aggregators, who maximise the value of the project using a proprietary dispatch platform. An alternative may be to procure a specialised dispatch platform licence.
“In our view, utilities with deep pockets are most likely to offer tolls, which they can use as part of their trading and risk management strategy. They should be particularly useful to utilities with a large share of RES assets.”
For Eurectric, which is the voice for more than 3,500 electricity companies, the trend is clear. “Europe’s energy transition needs technologies that can cover the increasing need for flexibility in the power system,” said Kristian Ruby, secretary general at Eurelectric.“It is encouraging that a business case is beginning to emerge for innovative long-duration energy storage with substantial system benefits: less curtailment, lower operating costs, reduced congestion and greater security of supply.”
