This is how much the battery energy storage market in Europe is expected to grow each year
Development of the solar market in Europe
In 2023, Europe installed 70 gigawatts of new solar capacity, double the 2021 figure and triple the previous peak in 2011. One-third of this figure was made up of ground-mounted solar and two-thirds of roof-mounted systems.
The market growth momentum is expected to continue in 2024, when a further 10% growth is forecast.
Growth is also being driven by factors such as green policy targets in European countries for energy independence and a shift to renewable energy sources.
In Hungary, 1.6 gigawatts of new solar capacity was installed in 2023, but this is expected to peak in the near future as a number of challenges have emerged in the market. The abolition of net metering and the temporary restriction of feed-back to the grid have broken the growth in the installation of small-scale household power plants.
By 2024, installation numbers are expected to remain above 1 gigawatt, but there will be a significant decline in the small power plant segment.
The Hungarian market is expected to grow further in the coming years, but network capacity remains a major constraint.
Growth in battery storage
The European market for battery energy storage is also exploding, especially in the residential sector. In 2023, installed battery capacity doubled for the third consecutive year.
By the end of the year, Europe had installed 17 gigawatt-hours of batteries, 79% of which were installed "behind the meter", i.e. mainly for household systems. The rapid growth of the energy storage market is also being driven by market volatility and rising energy prices, as many users seek to cover their energy consumption or take advantage of market opportunities.
Although energy prices are expected to stabilise, the battery storage market will continue to grow by 30-40% per year.
It is projected that by 2028, 78 gigawatt-hours of battery capacity will be installed in Europe, a significant increase compared to the current situation. An important change, however, is that the share of residential systems, which have dominated so far, will decrease and industrial and utility-scale storage solutions will come to the fore. By 2028, 25% of battery capacity is expected to be connected to commercial and industrial buildings.
Long-term power purchase agreements (PPAs)
For industrial and commercial consumers, the use of long-term Power Purchase Agreements (PPAs), which offer pre-determined, stable energy prices, is becoming increasingly attractive. In 2020, only 3 gigawatts of PPAs were signed in Europe, but in 2023 this figure will reach 10 gigawatts.
And 2024 is expected to be another record year, with 8.7 gigawatts of PPAs signed before the end of the year.
The PPA market in Hungary is still in its infancy, but demand is growing, especially for virtual and cross-border PPAs. Increasing renewable capacity, expanding network capacity and removing regulatory barriers are essential for further market growth. Appropriate education is also important for companies to understand the potential of PPAs.
The benefits and future of roof-mounted solar panels
Roof-mounted solar panels are an attractive solution to stabilise energy prices and reduce costs, especially for the industrial and commercial sectors. Installation costs are forecast to fall by 25-35% by 2030, making these systems even more attractive.
Although high interest rates and rising insurance premiums have increased installation costs, these have been offset by reductions in equipment prices, such as inverters, mounting structures and solar modules.
New EU rules require new commercial buildings to be fitted with solar panels from 2026, and all renovated commercial buildings will be equipped with solar panels by 2028.
These measures create significant opportunities for the solar PV market, as it is expected that 150-200 gigawatts of new roof-mounted capacity could be installed in Europe by 2030.
The challenge of negative electricity prices and the importance of flexibility
Negative electricity prices pose a particular challenge for solar developers. In 2023, installed solar capacity in Europe reached 270 gigawatts, causing a significant price drop during daylight hours.
Negative prices may reduce the return on investment in solar PV, which may discourage new projects.
The solution is to increase flexibility and electrification. Studies show that combining solar panels with storage solutions and the use of electric vehicles, heat pumps and hydrogen-based systems can help reduce the risk of negative prices and increase the uptake of renewable energy sources. Developing electricity grids is also essential to manage growing renewable energy production.
Cover photo and photo in the article: Portfolio
