Top 3 European Markets for Battery Storage Installations in 2023
Germany, the U.K., and Italy emerged as the leading markets for battery storage installations in Europe during 2023. According to TrendForce statistics, Germany, the U.K., and Italy added capacities of 6.1GWh, 4.0GWh, and 3.9GWh, respectively, to their energy storage infrastructure.
In the first quarter of 2024, the global energy storage market continued to show positive growth trends. Specifically in Europe, Germany, Italy, and Spain sustained rapid growth in their energy storage sectors. Notably, Germany and Italy have both approved or announced new installation projects, each with a capacity exceeding 1GW.
TrendForce anticipates that in 2024, Germany, the U.K., and Italy will collectively add approximately 7.1GWh, 7.7GWh, and 6.2GWh of capacity, respectively, representing growth rates of 17%, 92%, and 62%. Italy, bolstered by supportive policies, is expected to further integrate renewable power generation devices into its energy infrastructure.
On February 27th, 2024, the Council of Ministers in Italy approved the National Recovery and Resilience Plan (NRRP). This comprehensive plan encompasses the implementation of Industry 5.0, a concept proposed by the EU, alongside a €6.3 billion package aimed at supporting the technological and green transition of Italian industries. Prior to this significant investment, Italy had committed €59 billion to advancing renewable energies between 2021 and 2026, as outlined in the NRRP.
European Countries Add Capacity of Energy Storage Installations from 2023 to 2024
Residential Installations Facing Slower Growth, While Utility-Scale Projects Show Promise
The growth trajectory of residential installations appears to be slowing down, whereas utility-scale installations are poised for positive expansion. Italy, ranking third in Europe for both electricity consumption and renewable energy generation, also leads the continent in electricity prices. This unique combination of high electricity demand and elevated prices, coupled with the longstanding government initiative known as the Superbonus scheme, established two decades ago, has propelled Italy to the forefront of the European market for residential storage, securing its position as the second-largest market. Additionally, Italy ranks third in Europe for overall ESS installations, further underlining its significance in the energy storage landscape.
Note: Italy introduced the Superbonus in May 2020 as a tax credit program, enabling residential users to deduct expenses associated with the installation of residential solar power facilities and battery storage systems. This scheme offers a subsidy of up to 110%.
According to ANIE data, as of 30 June 2023, a total of 3,045MW/ 4,893MWh of ESS capacity were installed in Italy, of which 776MWh of residential storage capacity were installed in Q2 of 2023, a 13% decline from the previous year. The reduction is mainly due to the retreat of Superbonus subsidy policy. Italy’s energy storage structure is also dominated by residential storage, which accounts for more than 80% of new installations. In December 2023, the EU greenlit Italy’s energy storage program, earmarking a hefty investment of €17.7 billion. This initiative is anticipated to facilitate the construction of over 9GW/71GWh of energy storage systems (ESS). The program is slated to run until the conclusion of 2033, with strategic plans in place for the establishment of utility storage facilities in the southern region and Sicily by 2030.
According to TrendForce statistics, Italy saw an impressive increase in storage capacity in 2023, adding around 2.4GW/3.9GWh, marking a significant rise of 117% and 90% from the previous year. Residential storage dominated this growth trend. TrendForce anticipates further expansion in 2024, with Italy projected to add 2.6GW/6.2GWh of ESS capacity.
Italy has added ESS capacity from 2022 to 2024
The current state of the Italian grid market suggests that it is still in the nascent stages of development. However, looking ahead, Italy's ESS markets are poised to become some of the most dynamic in Europe. Additionally, there are expectations for increased opportunities in the commercial and industrial (C&I) capacity market in Italy.
Energy Storage in Italy: Policy Dynamics Impact Residential Installations
Italy, renowned for its significant electricity consumption and abundant renewable energy generation, ranks third in Europe for both metrics, owing to its advantageous geographic location and ample sunshine. Consequently, Italy faces the imperative of deploying extensive energy storage systems to effectively integrate its vast renewable energy infrastructure.
Residential storage installations in Italy are particularly sensitive to policy changes. The country operates under a net metering policy for residential PV generation, where households with grid-connected solar panels can feed excess electricity production back to the grid at retail prices. This framework enables users to offset power costs during peak times by leveraging relatively inexpensive grid-connected green power. Additionally, households receive grid electricity equivalent to their feed-in at no cost. This policy framework plays a crucial role in incentivizing and sustaining residential storage projects in Italy.
Under this model, PV feed-in tariffs align with residential tariffs, rendering residential storage projects unable to recover their investment solely through electricity bill savings. Consequently, when tax credits fall below 100 percent, the economic viability of residential solar storage projects diminishes, making them less competitive.
Regarding Italy's Superbonus policy, high subsidies can stimulate market growth while also imposing significant financial strain. Consequently, the Italian government temporarily suspended the Superbonus subsidy from February to April 2023. Upon resuming the scheme, the government implemented reductions in subsidy levels for 2024 and 2025, resulting in numerous construction sites coming to a standstill. Residential installations were particularly impacted. In December 2023, the government extended the Superbonus on a limited basis.
Italy’s Local Energy Storage Installations: Current Conditions and Future Prospects
In 2023, residential energy storage continued to dominate Italy’s energy storage landscape, representing the largest application scenario for newly added installations. Residential PV systems retained their prominence, accounting for 82% and 73% of new installations, followed by utility-scale storage and commercial & industrial (C&I) energy storage.
Proportion of Italian Installations Types in 2023
Policy changes in Italy are expected to have a significant impact on the European energy storage market, potentially leading to changes in local energy storage installations in 2024. Firstly, the decline in subsidies under the Superbonus policy has resulted in reduced purchasing power among Italian residents, dampening the outlook for residential ESS installations this year. However, there is great development potential for utility-scale energy storage and C&I energy storage in 2024.
Despite these challenges, Italy's energy storage market is anticipated to experience considerable growth in 2024. Manufacturers must remain vigilant regarding policy changes and market trends, adjusting their business strategies promptly to mitigate risks. It is imperative to avoid excessive inventory, prudently devise marketing and sales plans, and flexibly adapt product and service supply to align with market demand and policy direction. By adopting these measures, manufacturers can ensure steady development even in the face of policy changes.
