The rapid expansion of renewable energy is driving a major increase in demand for large battery storage projects, as electricity systems across Europe seek ways to manage periods when solar and wind generation exceeds demand.
Renewable power can sometimes push wholesale electricity prices below zero when production is high and consumption is low. Battery Energy Storage Systems (BESS) can absorb electricity during these periods and release it when demand and prices increase, making storage an increasingly important part of the power market.
Italy has emerged as a major centre of activity. By the end of 2025, applications submitted to grid operator Terna for high- and extra-high-voltage storage connections had reached about 300 GW. However, only 56 GW had received approval and just 6.8 GW had reached the construction stage.
Installed storage systems in Italy had 7.4 GW of power and 17.9 GWh of capacity. Terna estimates the country could require about 72 GWh of storage by 2030, with demand expected to increase further by 2040.
Germany has seen an even larger wave of applications. Grid operators received 18,158 applications for large storage facilities in 2025, representing a combined 573.5 GW. Connection offers covered 54.2 GW, while operational facilities at medium voltage and above totalled only 3.6 GW.
Germany’s Federal Network Agency has warned that some applications represent duplicate projects, with developers seeking connections at several locations before deciding where to build.
The growing financial value of storage projects is also attracting major investors. German battery developer Kyon Energy was acquired by TotalEnergies in 2024 for €90 million upfront, with additional payments linked to future performance. Kyon had developed 770 MW at the time and had another 2 GW in its pipeline.
By 2026, financing conditions had changed significantly. TotalEnergies sold Allianz Global Investors a 50% stake in 11 Kyon projects with a combined capacity of 789 MW and 1,628 MWh. A project financing package worth about €440 million was later announced, backed by 10 financial institutions.
Structured tolling agreements, under which customers pay to use battery capacity, can provide more predictable revenue and make large storage projects easier to finance.
Italy’s first MACSE storage auction in September 2025 attracted bids for more than four times the 10 GWh offered. Terna awarded the full volume to lithium-ion battery projects, with the weighted average price falling to €12,959 per MWh per year from a reserve premium of €37,000.
Across Europe, Modo Energy recorded 82 BESS transactions in 2025, compared with 25 in 2024. Disclosed deal value reached €8.6 billion, while reported debt increased from €1.4 billion to €6.1 billion.
The rapid growth has also raised concerns about speculative grid applications. European Commission guidelines have identified projects that fail to progress, duplicate applications and the hoarding of connection capacity as factors contributing to lengthy grid queues.
Italy has responded with measures aimed at addressing what authorities describe as “virtual saturation” of the grid. New rules require capacity to be assigned more firmly to authorised projects, while some connections linked to immature projects could expire.
The changes may reduce speculative applications, but they could also favour utilities, investment funds and larger developers with enough capital to manage lengthy permitting and development processes.
Competition for suitable land is adding another dimension. Solar, wind, agrivoltaic projects and BESS facilities are competing for sites and grid connections, while data centres are creating additional electricity demand.
As a result, land that was previously valued mainly for agricultural use can become significantly more valuable when it offers access to electricity infrastructure and the possibility of hosting future energy projects.
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