ENTSO-EEurope’s decarbonisation requires a rapid, coordinated and system-optimised deployment of utility-scale energy storage. As the share of variable renewable energy increases, storage plays an increasingly important role in ensuring security of supply, efficient system operation and the integration of renewable generation.
This ENTSO-E policy paper analyses how Europe’s electricity market design can support the timely, cost-effective and system-aligned deployment and operation of utility-scale energy storage. It builds on recent EU electricity market design reforms (1) and assesses how different regulatory and market frameworks can enable storage to deliver value across all market timeframes.
The paper:
- Examines three investment frameworks for utility-scale storage: merchant investments, capacity mechanisms and non-fossil flexibility support schemes.
- Identifies key barriers to storage deployment, including regulatory uncertainty, limited long-term revenue visibility and insufficient locational signals.
- Provides recommendations to adapt capacity mechanisms to better enable the participation of energy storage on a level playing field.
- Explores the role of non-fossil flexibility support schemes as a complementary instrument to address system flexibility needs.
- Highlights operational enablers to ensure storage is used in a system-friendly manner, including improved locational signals and flexible connection arrangements.
- Presents national experiences and case studies illustrating emerging approaches across Europe.
By addressing both investment and operation, the paper sets out how utility-scale energy storage can be deployed where it delivers the highest system value and contribute effectively to a secure, efficient and decarbonised European electricity system.
Read the Short Summary here and the extended Policy Paper here.
(1) - Regulation (EU) 2024/1747