At the second edition of Energyear Investment Solar & Storage, held in London, energy industry experts discussed the challenges and opportunities in the transition to a more sustainable energy system. The event, which took place in the UK where renewable energy already accounts for 47% of electricity, highlighted the urgent need to accelerate investments in renewable energy and storage solutions to meet the growing demand for clean energy. 

A key topic during the discussions was the critical role of energy storage as a pillar of the energy transition. According to the International Energy Agency (IEA), 42 GW of batteries were deployed for storage in large-scale facilities, off-grid networks, and solar homes in 2023, making it the most invested energy technology. Furthermore, Wood Mackenzie projected that the global energy storage market will grow from 12 GWh to 158 GWh in 2024, reflecting a significant shift in how regulators and grid operators manage the balance of energy systems. However, looking towards 2025, Europe faces regulatory challenges and implementation issues related to storage systems that limit the pace of expansion for renewable projects. 

Analysis of European markets and the importance of storage 

During the event, experts such as Joost Bergsma (Nuveen Infrastructure), Sergio Arbeláez (Matrix Renewables), John Stuart (DRI), and Thomas Kneen (Ethical Power) shared insights on the most attractive markets for renewable investments across Europe, with a particular focus on the growing need for storage solutions. 

Emerging markets and regulatory challenges 

Italy emerged as a standout, with both Bergsma and Arbeláez highlighting its strong regulatory framework and growing government support for renewable energy. Bergsma specifically pointed to Italy’s potential for agrivoltaics (combining agriculture and solar energy), which has made the country an attractive destination for long-term infrastructure investments over the past decade. Arbeláez echoed this sentiment, emphasizing the optimism surrounding Italy’s evolving regulatory landscape, which is conducive to the development of clean energy projects. 

Poland was another country discussed as an emerging market with substantial potential, particularly in the capacity market. John Stuart noted that, historically, Poland and other Central and Eastern European nations such as Croatia and Romania have been underserved due to the collapse of support mechanisms like feed-in tariffs and CFDs. However, these markets are now recovering, offering new opportunities for renewable energy development, although challenges related to financing and market education remain. 

Germany and the UK were also identified as attractive investment destinations, with Kneen from Ethical Power pointing out that these countries offer significant opportunities from an economic standpoint. Both nations are established leaders in renewable energy investment, attracting considerable capital due to their strong asset markets. However, Kneen also highlighted a challenge that developers face in other countries such as Spain, Italy, and Greece. While there is great potential in these regions in terms of project pipelines, Kneen noted that translating this potential into actual construction has proven difficult. His company, which has offices in these countries, has not yet built any projects there due to uncertainties surrounding the "buildability" of projects, despite the abundant opportunities at the pipeline stage. These obstacles often stem from complex regulatory processes, permitting issues, and grid connectivity challenges, which can delay or prevent projects from moving forward. 

The crucial role of battery storage 

The conversation also emphasized the pivotal role of battery storage in enabling the transition to renewable energy. Joost Bergsma highlighted that as renewable energy generation increases, so too does the need for large-scale storage solutions to balance intermittent power sources like solar and wind. He referred to battery storage as the "missing link" in the renewable energy sector, allowing for the continued expansion of clean energy generation by addressing the limitations of grid capacity. Although the cost of storage technology remains an obstacle, Bergsma expressed optimism, believing that technological advancements and cost reductions will make storage more accessible in the near future. 

The idea of co-locating storage with renewable energy generation was also a major focus of the discussion. Bergsma noted that in the U.S., it has become standard practice for solar projects to be paired with storage, often at a ratio of 1:5 (one unit of storage for every five units of power generation). He believes that Europe, particularly markets like Italy, is beginning to adopt similar models, thanks to more favorable regulatory environments. However, Arbeláez pointed out that in countries like Spain, regulatory uncertainty still complicates the development of co-located storage projects, making standalone storage systems a more viable option in some southern European countries. In contrast, markets like Italy have clearer regulations, providing more clarity for the development of both co-located and standalone storage projects.  

Financing battery storage projects also emerged as a key challenge. Arbeláez explained how, in the past, many storage projects relied on merchant revenues, where the income generated from selling electricity in the open market was expected to cover costs. This approach, however, proved risky, particularly for lenders, as it led to significant uncertainty around returns. As the market matures, lenders are learning from successful projects in countries like the UK and the US, and are now applying these lessons to other European markets, particularly Italy, where the regulatory environment is becoming more stable. This shift is helping create a more predictable financing environment for storage projects. 

John Stuart expanded on the financing challenges by explaining that, in many emerging markets, renewable energy projects still struggle to secure financing, especially when relying on merchant-based revenue models. The collapse of support mechanisms in markets like Poland and others has led to a lack of activity, but these markets are beginning to offer new opportunities as they recover. Stuart emphasized that while capacity market prices have been falling and no longer cover the capital expenditure of projects as they once did, a more sophisticated understanding of the risks involved in battery storage projects is needed to attract lenders. 

The renewable energy sector in Europe is poised for significant growth, but several factors must align for this potential to be fully realized. Battery storage is key to unlocking the true power of renewable energy, and as technology advances, it will become an increasingly vital component of Europe’s energy future. However, developers and investors must navigate complex regulatory environments, address financing challenges, and overcome construction barriers to bring these projects to fruition. With the right support from governments, lenders, and technology providers, Europe can continue to lead the way in the global transition to a sustainable, renewable energy future.