The deployment of battery energy storage systems in Europe is expected to reach 16 GW in 2025, a 45% increase compared to 2024, according to Wood Mackenzie.
The continent is experiencing a market maturation phase, with 11 GW already installed this year and expected to maintain an average annual growth of 9% over the next ten years.
This progress, however, faces structural challenges, especially in Germany, which remains the main center of demand.
O country It should accumulate 18 GW in large-scale projects over the decade, in addition to 8 GW in the commercial and industrial market. But pressure on the electricity grid and the risk of falling revenues intensify as the volume of new projects skyrockets.
The number of connection requests in the German market has risen from 300 GW to over 500 GW by 2025, creating an unprecedented bottleneck in the electricity infrastructure.
This scenario unfolds while the country decommissions nuclear power plants and prepares to phase out 29 GW of coal-fired capacity by 2030, without new gas-fired projects progressing at the same pace. Pressure on ancillary services and on supply security is likely to increase.
The analysis indicates that, even with favorable fundamentals today, the revenue outlook becomes more uncertain.
Increasing competition squeezes margins during peak periods and reduces price volatility, which is precisely the element that sustains the profitability of storage assets.
Markets such as the frequency market, which are already saturated, represent less than 1% of the peak demand of the German system.
To map this scenario, Wood Mackenzie uses a hybrid model that combines machine learning, historical data, and price projections.
The methodology generates revenue ranges between P1 and P99, helping investors assess long-term risks in a more competitive environment.
“The German storage market is at a critical juncture, where solid fundamentals are facing competitive pressures that will cannibalize price fluctuations over time,” stated Rory McCarthy, vice president of [company name]. wood mackenzie.
According to the consultancy, the accelerated growth of new systems should continue to reduce volatility and increase the need for optimization strategies to guarantee returns.
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