In conversation with Strategic Energy Europe, consultant Rosemary Colaert, a key figure at Clean Horizon for the Iberian region, warned that energy storage in Europe only progresses where conditions are clear, consolidated and tangible to ensure bankability.
“When we talk about a consolidation phase, we consider it country by country, not at the European level,” she explains. The turning point for that consolidation, according to Colaert, is the existence of accessible and sufficient revenues that enable investment decisions. “That’s when we start seeing contracts being signed,” she points out.
The United Kingdom led the way in 2020 and today has a consolidated storage market. Germany, Belgium and France follow, with revenues having opened and large volumes of operational projects.
The Nordic countries are close to reaching this consolidation stage, with recent developments on the rise. Poland is right behind with more projects seeing the light.
Spain and Portugal, on the other hand, face major bottlenecks. Colaert identifies obstacles in terms of regulation and the lack of stable revenue streams. “We need additional components to build a solid business case and attract investment,” she warns.
Real investment as a key indicator
To anticipate whether a country is consolidating its market, Clean Horizon observes the investors’ appetite. “It’s the appetite of investors that provides a good signal of the speed of storage rollout,” says Colaert. She adds, “Only when financial investment decisions are made can we say a market is consolidating. Before that, it is not tangible”.
Mechanisms that drive (or hinder) development
A clear regulatory framework is required to allow for storage deployment. Well-designed tenders and capacity mechanisms are also good incentives to kick-start or to boost storage deployment. Colaert provides several concrete examples: in Italy, the “fast reserve” tender held once offered multi-year contracts to provide fast but short-term response to grid variations.
In France, a specific scheme was held during one year in which the capacity mechanism was offered through seven-year contracts granting visibility on the accessible revenues of a BESS. Yet, apart from this “special year”, the French capacity mechanism operates through annual auctions. “It still provides good complementary revenues on top of other income sources,” she highlights.
In Poland, new storage systems can access 17-year contracts under the capacity mechanism. “It’s a very good revenue stream that gives visibility to investors. If you want to go and talk to the bank, it’s easier” she says.
For the capacity mechanism, “The longer the duration of the contract, the better. But they always provide good complementary income,” she adds.
She also points to tenders and subsidy schemes as clear development drivers. “We’ve seen this in Greece with a 1 GW tender, and recently in Bulgaria as well,” she says. “We also had auctions in Spain in 2023 and a new one closing this July. If we focus on Germany, we saw auctions for hybrid systems with feed-in tariffs,” she adds.
However, when these schemes are poorly designed, they can block progress. This was the case in Spain in 2021, where a hybrid tender resulted in no deployed storage.
“The submission deadlines were too short, and there was clearly no advantage in including storage compared to solar PV alone. So, in the end, there were no storage deployed through this auction,” she points out.
Costs, tariffs and investment conditions
In terms of BESS system prices in Europe, Clean Horizon sees AC costs below €110/kWh, with little difference between countries. The real difference lies in transformer, EPC and grid connection costs, which are highly country specific. “Transformers are more expensive in France for example,” she explains.
Grid tariffs also stand out. Belgium, Germany and Italy offer the most competitive rates. “Belgium has very low grid fees and 10-year exemptions; Germany provides exemptions as well if projects are developed before 2029; and Italy exempts storage systems from power-related grid charges, which are quite costly,” she says.
By contrast, “the worst cases for grid tariffs are the Netherlands and France,” she notes. “In the Netherlands, they are trying to change this; in France, not yet – tariffs remain very high.”
Another factor is banks’ familiarity with the storage sector. “In regions where many projects have already been developed, banks are aware of the risks, the markets, and the uncertainty. In early-stage areas, it’s harder to secure financing,” she adds.
Profitability trends and the case of Spain
Two elements have boosted profitability in European storage: the drop in CAPEX and the extension of system lifetime. “Between Q4 2024 and Q1 2025, we saw a significant price drop,” says Colaert. While such a sharp decline cannot be expected every quarter, “the trend is clearly downward,” she states.
System lifetime also increased: “Before, with 1.5 cycles per day, you’d reach 15 years; now it’s 18. That’s three more years of revenue, which makes a big difference,” she explains.
Regarding Spain, progress was made between the end of 2024 and the beginning of 2025. “We had a new draft on the capacity mechanism which suggests that contracts for new units might cover half of the assets’ lifetime,” Colaert says. Although key elements remain unclear, such as stress hours or derating factors, the new components help to build better assumptions to build business models.
“Without a subsidy scheme or a capacity mechanism, the business case for storage in Spain doesn’t work under current market conditions and with the considered BESS development pipeline,” she concludes. The government has recently launched a new subsidy scheme which should help bridge the revenue gap and boost storage deployment in the country.
Industry perspective
With over a decade of exclusive focus on energy storage, Clean Horizon has developed an expertise in market analysis, price forecasting and technical advisory services. The firm has supported the development of more than 21 GWh of storage systems worldwide, combining modelling, procurement and auditing capabilities.
Its proprietary simulation tool, COSMOS, allows profitability assessments based on market forecasts in 27 countries, with particular expertise lying on the European markets, and ongoing activity in regions such as the UK, Continental Europe, Brazil, the Middle East and South Africa.
