Most of the energy storage project revenue in Europe comes from frequency response services. With the gradual saturation of the frequency modulation market in the future, European energy storage projects will turn more to electricity price arbitrage and capacity markets. At present, the United Kingdom, Italy, Poland, Belgium and other countries have established The capacity market mechanism supports energy storage revenue through capacity contracts.
According to the 2022 Italian capacity market auction plan, it is expected that 1.1GW/6.6GWh battery energy storage systems will be added in 2024, and Italy will become the second largest energy storage market after the UK.
In 2020, the British government officially canceled the 50MW capacity limit for a single battery energy storage project, greatly shortening the approval cycle of large-scale energy storage projects, and the planning of large-scale battery energy storage projects has exploded. At present, 20.2GW projects have been approved in the planning (4.9GW has been connected to the grid), including 33 sites of 100MW or more, and these projects are expected to be completed in the next 3-4 years; 11GW projects have been submitted for planning, which is expected to Approvals in coming months; 28.1GW of projects in pre-application stage.
According to the statistics of Modo Energy, the superimposed average income of various types of energy storage projects in the UK from 2020 to 2022 will be 65, 131, and 156 pounds/KW/year respectively. In 2023, with the fall of natural gas prices, the income of the frequency modulation market will decline. We assume that in the future The annualized income of energy storage projects is maintained at 55-73 GBP/KW/year (excluding capacity market revenue), calculated based on the investment cost of UK energy storage power stations at 500 GBP/KW (equivalent to 640 USD/KW), the corresponding static investment payback period is 6.7-9.1 years, assuming that the capacity market revenue is 20 pounds/KW/year, the static payback period can be shortened to less than 7 years.
According to the forecast of the European Energy Storage Association, in 2023, the new installed capacity of large storage in Europe will reach 3.7GW, an increase of 95% year-on-year, of which the UK, Italy, France, Germany, Ireland, and Sweden are the main markets for installed capacity. It is expected that in 2024 Spain, Germany, Greece and other markets With the support of policies, the demand for large storage is expected to be released at an accelerated pace, driving the newly installed capacity in Europe to reach 5.3GW in 2024, a year-on-year increase of 41%.
Post time: Aug-10-2023
