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It said that the total installed capacity in residential, utility scale, commercial and industrial (C&I) market segments in Europe, including European Union (EU) and non-EU countries, totaled approximately 10.1GW last year.
This is more than double the 4.5GW recorded across Europe in 2022, and significantly exceeds the 6GW predicted for 2023 by LCP Delta in last year’s EMMES 7.0 report, released this time last year.
LCP Delta said the “excellent results” were driven by a combination of support systems and improved storage market conditions.
There is one important point I made in my latest article. ESN Premium Friday’s briefing was divided into Front of the Meter (FTM, Utility Scale) and Behind the Meter (BTM, Residential and C&I). His FTM installation, completed in 2023, was approximately 2.7GW, while the BTM system was installed with approximately 7.3GW.
Last year, more than 500,000 residential systems were installed in Germany
In a webinar held earlier this month to preview and discuss the results, LCP Delta analyst Silvestros Vrakopoulos said the BTM figure is 2.5 times the total of 2.7GW predicted a year ago. said.
Vrakopoulos said the analysis was “significantly off the mark” because it underestimated demand in Italy and Germany, the main markets for residential storage systems in Europe.
In Italy, a “superbonus” subsidy scheme for energy technologies such as energy storage and renewable heat will be phased out, with lower tariffs due to be paid in 2023. LCP Delta thought this meant the high demand period was over, but consumer appetite for batteries is increasing. , usually used in conjunction with home solar power systems and lasted.
Meanwhile, demand has been rising in Germany for some time, particularly following Russia’s invasion of Ukraine and rising energy prices coupled with energy security concerns. However, in 2022, his chain of supply became constrained, with inventory shortages preventing him from selling and deploying storage systems fast enough to meet demand.
The situation has eased more than expected, with German households installing more than 500,000 residential battery storage systems in the past year, as “increased stock availability enabled us to meet market demand.” .
Residential dominates the BTM segment, another driver being that average system size across Europe continued to grow.
In the front-of-the-meter sector, the LCP delta forecast was conversely higher than the final tally, but the difference was much smaller than in the residential sector.
Projects expected to come online in 2023 have been delayed by factors such as grid connection latency and regulatory and policy uncertainty, leaving about half of the 1.7GW portfolio being built by Italy’s Enel. was scheduled to begin commercial operations last year but was postponed, but these projects are still underway and are expected to be completed soon, analysts said.
Over the next year or two, the outlook for FTM storage in some markets will improve significantly. Italy in particular stands out again. This is because grid operator TERNA predicts that by 2030 it will need to install 8GW/70GWh and aims to procure a portion of it. Through the upcoming MACSE capacity market auction.
In the Netherlands, improving market conditions will free up “significant capacity” in the medium term, while capacity market auctions in Belgium and Poland will accelerate deployment towards the end of the century.
The storage period for utility-scale FTM projects in Europe will “soon increase very rapidly,” Vlakopoulos said, with the average storage period for projects over 10MW installed in 2023 being around 1.5 hours. The number of 2-hour projects is also increasing. While the project is under construction, the “multi-country” development pipeline includes what he calls a 4-hour project.
There is a ‘mismatch’ between deployment speed and storage needs in Europe
Jacopo Topsoni, Head of Policy at EASE, said there was a recognition at both EU and national level that there was a mismatch between Member States’ adoption rates and the amount of renewable energy and storage needed to meet EU targets. He said that it is increasing. Power system flexibility.
EU national policymakers will have “several tools at their disposal” to address this discrepancy. This includes regulatory changes to remove barriers to storage adoption, the introduction or reform of capacity market mechanisms, the introduction of national targets and strategies, and the introduction of support schemes and storage-specific auctions.
Topsoni said European national policymakers have so far set the basic framework for increasing storage market participation by adding new revenue sources and opening the market to aggregation and other business models. He pointed out that a “change in policy trends” occurred in 2023 because of the emphasis placed on
This is changing again, Topsoni said, with the bottom line “there is a recognition that more needs to be deployed,” as more grid services products are rolled out, tariffs and grid charges are eliminated, and overall He pointed out that the tax system would be more favorable. .
There is also an electricity market design (EMD) reform process currently underway, and Topsoni said both the European Commission and the pan-European regulator ACER are “very vocal” about removing barriers to storage deployment through this process. He said there was.
Although still a work in progress, the EMD will introduce requirements for EU member states to regularly conduct electricity grid flexibility assessments. Effectively, this means that you also need to create goals for energy storage, which is an important tool for increasing flexibility. . EU countries will then be able to put in place support mechanisms to achieve those goals.
This is very different from the current situation, where only a few states, such as Spain and Italy, have implemented storage strategies and goals. Germany is also currently developing its own strategy.
However, member states are required to meet these national flexibility targets, which will not be introduced until 2027. Although countries are free to proceed sooner than mandated, it seems likely that the EMD will not significantly accelerate adoption until the second half of 2020. That’s been the case for the past 10 years, Topsoni said.
The EASE policy chief also said it was difficult to create a methodology for assessing flexibility needs and that it was difficult for grid operator association ENTSO-E and regulator ACER to get that part right. said that it is essential.
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