Battery storage has grown from a niche, poorly understood corner of the energy transition into one of its most critical components.
But as the asset class matures, one question comes up more than any other from investors: where does the growth come from next?
It’s a fair question. The market has already come a long way. When we built our first project in Britain back in 2016, it was one of the largest privately owned lithium-ion facility in the country, and, by today’s standards, a tiny one.
Since then, storage has gone from an experimental technology to essential national infrastructure. But understanding where the next wave of investment is likely to go means understanding why storage took hold where it did in the first place.
What makes a market ready for storage?
Battery storage exists to solve a specific problem. Volatility.
Every energy system carries some degree of volatility, but three forces are making that volatility more pronounced almost everywhere. The first is the shift away from fossil fuels and nuclear towards intermittent renewables such as wind and solar, which by their nature don’t generate a steady, predictable output.
The second is climate change itself, which is producing more extreme weather, high winds, heatwaves, cold snaps, that in turn drives sharper swings in both supply and demand. The third is the changing shape of demand, from electrification of transport and heating through to the rapid growth in data centre and AI-related power consumption.
None of that volatility is a problem in itself. The problem arises when a grid has no way of absorbing it. No spare capacity, no flexibility, and, crucially, no easy way to import power from a neighbouring system when its own generation falls short. That’s where storage earns its keep, by soaking up excess power when it’s abundant and releasing it back onto the grid when it’s needed.
This is precisely why Britain became one the world’s most important storage market. It combined a rapid build-out of offshore wind with a limited number of interconnectors to mainland Europe.
The country had nowhere else to turn when the wind dropped or demand spiked, so storage became indispensable. Ireland developed along similar lines, for similar reasons: a fast-growing renewables base on an island grid with constrained connections to its neighbours.
Reading the same signals elsewhere
If those are the ingredients, a high, and rising, share of intermittent renewables, combined with limited ability to import power from elsewhere, then it becomes reasonably straightforward to identify where the next opportunities are likely to emerge.
Across continental Europe, several markets are following a similar trajectory to where Britain was several years ago, a substantial build-out of wind and solar capacity that has, so far, outpaced the corresponding investment in storage.
Spain, Italy and Poland stand out in this respect. Each is adding renewable generation at pace, and each will, over time, need the flexibility that storage provides to keep the lights on reliably and affordably.
Why this matters for investors
For investors and advisers, the lesson isn’t simply “storage is growing, therefore invest.” It’s that the opportunity in any given market can be assessed against a reasonably consistent set of fundamentals, the pace of renewables deployment, the flexibility (or otherwise) of the wider grid, and the degree of interconnection with other systems.
Markets that score highly against those measures, as Britain and Ireland did, and as parts of continental Europe and Asia are beginning to, are the ones where storage is likely to play an increasingly central role in keeping energy systems stable.
Volatility isn’t going away. If anything, the combination of accelerating renewables deployment, more extreme weather and rapidly growing electricity demand from data centres and electrification means it is likely to increase.
Understanding where that volatility is most acute, and where grids are least equipped to absorb it, remains the clearest guide to where battery storage will be needed next.
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