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New Energy World™
New Energy World™ embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low-carbon technologies.
Seasons in the sun: how solar power is changing Europe’s electricity markets
23/7/2025
10 min read
Feature
The flare of interest among northern Europeans in solar power over the last few years is sparking great demand for grid flexibility services, including battery storage, finds this year’s Observatory of Energy Transitions report from De Gaulle Fleurance. New Energy World Senior Editor Will Dalrymple reports.
Given the significant increase in the number of negative price hours in 2024 and 2025, flexibility has become a key word in electricity markets, according to Beatrice Boisnier, Lawyer at European law firm De Gaulle Fleurance. This means, she explains, that during periods of high production and low consumption, grid operators such as France’s RTE need stakeholders willing to reduce production or increase withdrawals. Conversely, when production is too low compared to consumption needs, they need stakeholders to inject more into the grid, and/or to reduce withdrawals.
Storage is therefore a key solution in this regard, as it allows both the withdrawal of electricity from the grid and the injection of electricity into the grid based on demand. Storage will thus be able to support the grid, for which storage operators will be compensated; this is called participation in system services, she adds.
However, these revenues alone cannot finance storage assets, due to their uncertainty. This is why storage operators supplement their activity with market arbitrage, which consists of buying and selling electricity on the market based on market prices. By storing electricity produced when it is abundant (and cheap) and feeding it back into the grid when demand is high (and therefore at higher prices), storage is becoming a strategic source of revenue.
This is a key finding of De Gaulle Fleurance’s sixth Observatory of Energy Transitions report on the state of electricity storage in France, Belgium, Poland and the UK, in partnership with Clean Horizon (France), Harmony Energy France, Liedekerke (Belgium), WKB (Poland) and Shakespeare Martineau (UK).
The report finds that needs for flexibility and methods of remuneration differ across France, Belgium, Poland and the UK. But storage providers in those countries all face legal and economic constraints. First, there are constraints regarding the qualification of storage providers, who are neither truly producers nor truly consumers. Then there are administrative constraints, since each project must obtain authorisations such as building permits, for example. Above all, there are connection constraints, which tend to increase with the saturation of connection requests relative to the network’s capacity, according to Boisnier.
In an early June webinar marking the publication, Corentin Baschet, Partner of battery storage consultancy Clean Horizon, said: ‘The big revenue for battery for stability and financing will be the capacity markets. Real state aid from a European point of view, for battery storage systems, is a mechanism that is being revised as we speak and will bring back long-term contracts, but no one has said how long they will be – they could be anything from 5–15 years.’
‘The big revenue for battery for stability and financing will be the capacity markets.’ – Corentin Baschet, Partner of Clean Horizon
Clément Girard, COO and Executive Manager of battery storage developer Harmony Energy France, contends that both the products and the financing models continue to evolve. On products, he says: ‘The first way to adapt to the changing market for BESS [battery energy storage systems] is to adapt the sizing. We are switching from power applications to energy applications. The first were one-hour batteries. Most projects under construction now are two hours, but they may switch to four or eight hours in the coming years. We adapt to the main opportunities for revenue.’
On financing models, he says that right now the best opportunities are in grid balancing services, but they are only expected to be profitable for BESS for a few years. For that reason, his company is also preparing revenue models for the wholesale markets for intraday and day-ahead markets, though they would still only account for about a quarter of revenue; the rest is merchant and uncertain. For more risk-averse investors, there are tolling arrangements from offtakers agreeing to a fixed price/MWh for a typical duration of 5–10 years. In that case, the revenues are almost 100% secured; the owner only bears the risk of availability of the asset. In between merchant and tolling arrangements are floor contracts, in which the offtaker commits to pay at least a part of the expected revenues of the batteries for a period of up to 10 years.
However, Sylvie Perrin, De Gaulle Fleurance Partner, complains that France does not yet have a direct national support scheme reserved for batteries, unlike other countries such as the UK, Italy and Germany, which have sometimes launched dedicated calls for tenders for storage.
On the other hand, France does have a long-term storage call for tenders, known as AOLT (Appel d’Offre Long Terme), which is intended for new capacity and allows for additional revenue after valuation of capacity guarantees. It is now on hold pending the proposed reform of the capacity mechanism, points out Boisnier.
And In Poland, the government organises public calls for electricity storage facility projects, such as the National Fund for Environmental Protection and Water Management’s spring 2025 call for electricity storage facilities to improve the stability of the Polish electricity grid.
Changes in Poland’s legal framework have contributed to the current BESS boom there, according to Maciej Szambelańczyk, Partner co-managing the energy practice at law firm WKB (Poland). He says that a change in the energy law has recognised storage as different than generation, which also means it’s not charged for distribution fees in the same way as are consumers or generators.
Meanwhile, in Belgium, BESS is booming, reports Damien Verhoeven, Partner, law firm Liedekerke. He predicts that BESS projects could achieve a total combined capacity of 3 GW in the next decade, up from nothing at all five years ago. The diversity of the sources of BESS revenue represents a paradox, he points out. They can participate in intraday or day-ahead markets, grid services, hedging, long-term flexibility. On one hand, a wide variety of sources is positive in spreading risk, but on the other it makes it difficult to have a clear view on profitability.
Speaking about the UK, Isaac Murdy, Solicitor at UK law firm Shakespeare Martineau, adds: ‘Our clients are interested in frequency response and reserve services for the grid, and arbitrage because of intermittency. We are also seeing co-location with constrained assets – wind farms. They store power and ship it out when it is non-constrained. They can also be a backup energy source as a security of supply for high-energy-using consumers, such as data centres, who put in their own battery storage as insurance if the power is cut, or if energy costs rise.’
Another driving force for batteries is to compensate for intermittency, points out Baschet from Clean Horizon. He says: ‘The capture price for solar PV has reduced a lot faster than people were expecting, in France and across Europe. Therefore, investors and developers of renewables projects are looking for ways to make projects work. We are discussing a hybrid storage tender in France, PV plus storage, because PV tenders in France today subsidise electricity during negative hours, which is a pity because it is what everyone pays for electricity.’
Boisnier concludes that state authorities in some European countries are recognising the importance of storage by offering subsidies, which can be a significant asset in reassuring investors who need security to finance projects.
Duck to canyon
The spread of solar power in Europe is changing demand curves across the continent, according to Eamonn Lannoye, European Head of the Electric Power Research Association (EPRI).
Over the course of a typical day, electricity demand tends to peak in the evening around dinnertime. Plots of that demand over time are known as a ‘duck curve’ because they resemble the bird’s profile from the side. However, with increasing amounts of solar power, the walls of the graph steepen and the middle flattens, changing the shape to resemble a canyon.
‘As the amount of solar power scales, there is more solar on the system than demand, creating very steep walls,’ he says. And this is becoming visible not only in summer, but also spring and autumn. As a result, ‘we are starting to see particular flexibility challenges where there is a lot of solar,’ he points out.
Asked if that means batteries, he replies: ‘Not necessarily, but probably. The imperative changes as a function of installed capacity. If you have little amounts of solar, you don’t need them. In fact, in the early days it reduces the flexibility needed. Then, as build-out increases, you move into the duck, and then into the canyon. At that stage, you need other resources to compensate; it might be interconnectors, or hydro that is already there, or gas plants. It just depends on what your starting hand is.’
Lannoye points to a number of different types of flexibility services, including those dealing with grid congestion, which are in demand in the UK, Belgium and the Netherlands, or balancing services using day-ahead and intraday markets, popular in Germany and Italy, or even faster balancing services using power electronics such as inverters, which are popular in eastern Europe, Ireland and the UK.
New EU battery lobby
Trade association SolarPower Europe has officially launched the Battery Storage Europe Platform, a dedicated advocacy organisation for battery storage technology at the EU level. The new platform seeks to fill the gap of specific representation for battery storage companies in the EU.
Juhi Dion Sud, newly appointed Head of the Battery Storage Europe Platform, said: ‘Battery storage is no longer optional – it is essential. Without urgent action, the EU risks stalling its energy transition. We are calling for a 10-fold increase in battery storage by 2030. This is vital to sustain the rapid growth of solar and other renewables, and to ensure the EU’s energy security, resilience and competitiveness.’
The move follows the May 2025 publication of SolarPower Europe’s annual European Market Outlook for Battery Storage. It found that 21.9 GWh of BESS was installed in Europe in 2024, marking the eleventh consecutive year of record breaking-installations and bringing Europe’s total battery fleet to 61.1 GWh. However, the annual growth rate slowed down to 15% in 2024, after three consecutive years of doubling newly added capacity.
- Further reading: ‘Plugged in balconies: how micro-PV devices bring green power into European flats’. As the renewable energy transition progresses, new technology is quickly enabling an additional demographic of energy consumers to take part in the decarbonisation of electricity production, like those living in urban apartment spaces. European countries such as Germany, Austria and France are already seeing substantial growth in the installation of plug-in solar devices fitted to balconies, garages and sheds. Is this is just a fad or symptomatic of a growing trend in Europe’s energy transition?
- Find details about the Piedmont town of Trino, which is now home to the largest operating solar farm in northern Italy; more on Plenitude growing its Spanish portfolio with a new 50 MW farm; and information about the new European Solar Academy.
