Market and product

Battery storage deployment in the European Union soared by 45% in 2025 to 27.1 GWh largely driven by growth in utility-scale batteries, according to a recent report by industry group SolarPower Europe.

Installed EU battery capacity has risen tenfold since 2021 to 77.3 GWh and must continue this tenfold increase to hit 750 GWh by 2030 to meet the needs of the power market, SolarPower Europe said. Over half of the battery capacity installed in 2025 was in the utility-scale sector as rising renewable energy capacity drives up demand for dispatchable clean energy solutions and developers capitalize on long-term reductions in battery costs.

Utility-scale battery installations are set to rise again in 2026, driven by the EU's Recovery and Resilience facility that was introduced to boost growth following the Covid 19 pandemic, along with other support schemes, according to a recent report by industry group Energy Storage Europe.

Investment hotspots for utility-scale storage include Germany, Italy and the UK, due to a combination of “strong market fundamentals" and "supportive policy frameworks" designed to accommodate rising renewable energy capacity, Jacopo Tosoni, Deputy Secretary General at Energy Storage Europe told Reuters Events.

Italy, for example, has introduced supportive regulation and remuneration schemes, Sergio Arbeláez, Managing Director, Europe & Latam at developer Matrix Renewables, told Reuters Events. These include Italy's MACSE subsidy scheme implemented in 2024, which provides 15-year fixed price contracts for up to 100% capacity and eligibility to bid into the national capacity market.

Matrix plans to install 1 GW of battery storage capacity in Europe in the next two years and will start construction of its first 99MW/4 hour standalone plant in the Campania region of Italy later this year with more projects in the pipeline.

But annual EU installations are set to drop in 2027 before picking up to flat growth from 2028 as developers face challenges in delivering their pipelines of projects, Energy Storage Europe said in its report.

Battery development will spread across Europe as more countries implement EU legislation but developers continue to face challenges in permitting and grid connection that can delay projects by years, as well as changes to grid fees and market rules, a lack of uniform technical standards and shortages of skilled labour.

Developers also remain heavily dependent on Chinese battery suppliers. Chinese battery manufacturers are the only option for “reliable, cost-effective and proven product,” Mark Simon, CEO of Eelpower Energy, an investor and operator of battery storage assets, told Reuters Events.

EU manufacturing is not yet competitive and “we do not expect North American manufacturers to be ready to compete for some years, given their domestic market obligations and a continued strong dollar,” he said.

Storage hurdles

Energy storage developers are often delayed by permitting processes which are poorly adapted to battery storage, Tosoni said, along with long grid connection queues due to dwindling grid capacity and a high number of requests from renewable energy developers. Storage revenues can also be impacted by changes to grid fees, network tariffs or market rules, with storage sometimes “not fully remunerated for the system services it provides,” he said.

In Germany, for example, storage facilities "do not have priority access to the grid compared to renewable energies," Florian Antwerpen, Managing Director of Germany developer Kyon Energy, said. Kyon plans to connect at least 2 GW of its own plants to the German grid by 2030, plus 700 MW to be sold to third parties.

In Spain, “the system is saturated with grid access congestion and massive volatility in merchant prices requiring more complex offtake solutions," Arbeláez said.

Continued growth in the EU battery storage market requires “clear, consistent permitting and safety frameworks” as well as skills investment and harmonised technical standards, Thorvald Spanggaard, EVP and Head of Project Development at developer European Energy, told Reuters Events.

Energy Storage Europe expects co-location with solar and wind to increasingly dominate and average project sizes to increase.

Lithium-ion will "remain the dominant [storage] technology at least through the early 2030s” but there will also be greater diversification towards other technologies as business cases become stronger for long duration energy storage, Tosoni said.

Pumped hydro has seen "new momentum" in specific auction frameworks and the market for compressed air energy storage (CAES), thermal energy storage (TES), and certain chemical or electrochemical configurations, will also grow, he said.

Manufacturing gap

EU battery cell manufacturing capacity was 252 GWh in 2025 and over 90% of capacity is directed at electric vehicles rather than stationary storage, according to SolarPower Europe. The proportion of electric vehicles in total car sales is forecast to increase from 18% in 2025 to 25% by 2027 and 55% by 2030, industry group Transport and Environment said.

There is currently 1,141 GWh of battery cell manufacturing planned in the EU, according to the latest report from the Volta foundation.

Current gaps in the EU battery supply chain include cathode and anode production, with manufacturing capacities of just 52 gigawatt hours a year (GWheq/a) and 3 GWheq/a respectively, compared with 345 GWheq/a of electrolyte capacity.

Chinese battery manufacturers benefit from economies of scale and prices have fallen due to a number of factors, including lower raw materials prices, surplus of supply, and Chinese government subsidies, Antwerpen said.

The Chinese government plans to phase out export tax rebates of battery storage technology by January 2027 and this could push up prices for European buyers while raw material prices have also risen in recent months. Lithium carbonate prices increased from under $10,500/tonne in mid-October 2025 to over $14,100/tonne by the end of 2025, a 34% increase, according to Nasdaq data.

Meanwhile, the European Commission plans to impose minimum "made in Europe" requirements that from January 2027 would require battery systems bought through public procurement to be assembled inside the EU and within two years require a wide range of components and cells to be made in the region.

On February 5, Chinese firm Sungrow announced plans for its first battery storage factory in Europe, a 230 million euro ($271 million) plant in Walbrzych in Poland.

In contrast, “there is no competitive European battery cell manufacturer available at the moment," said Antwerpen.

European groups lack direct access to key raw materials such as lithium carbonate and graphite as mining and particularly processing is controlled by China and they must also contend with high electricity and labour costs, he said.

EU companies will find it hard to become competitive with Chinese suppliers “since battery production is a numbers game mainly driven by volume and scaling capacity," Antwerpen added.

The EU could introduce production or purchasing subsidies to aid this effort or companies could focus on emerging technologies such as sodium ion batteries or lithium batteries sourced from local raw material recycling, he said.

SolarPower Europe has called on the EU to strengthen supply chains as well as improve permitting, fix tariff barriers and support storage integration on the network.

“The strong uptake of utility-scale batteries in 2025 shows investors are ready, the technology is mature, and the system benefits are clear,” Walburga Hemetsberger, CEO of SolarPower Europe, said in a statement. “But we must now dramatically accelerate deployment."