Study on energy storage : contribution to the security of the electricity supply in Europe.
Date: 2020-05-08
Institutions: Directorate-General for Energy
Subjects: EU Member State, data collection, electrical energy, electricity supply, energy law, energy policy, energy storage, energy supply, energy technology, industrial infrastructure, report, security of supply

Study on energy storage – 
Contribution to the security of 
the electricity supply in 
Europe 

Final Report 
March 2020 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directorate-General for Energy 
Directorate B — Internal Energy Market 
Unit B4 — Security of Supply 

Contact : Yolanda Garcia Mezquita 

E-mail: Yolanda.Garcia-Mezquita@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
EUROPEAN COMMISSION 

Study on energy storage – 
Contribution to the security of 
the electricity supply in 
Europe 

2020 

Directorate-General for Energy  
Internal Energy Market 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Authors: 

Christopher Andrey (Artelys) 
Paul Barberi (Artelys) 
Luiza Lacombe (Artelys) 

Luc van Nuffel (Trinomics) 
Frank Gérard (Trinomics) 
João Gorenstein Dedecca (Trinomics) 
Koen Rademaekers (Trinomics) 

Yacine El Idrissi (Enerdata) 
Morgan Crenes (Enerdata) 

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This document has been prepared for the European Commission however, it reflects the views only of the 
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Luxembourg: Publications Office of the European Union, 2020 

ISBN 978-92-76-03377-6 
doi: 10.2833/077257 

© European Union, 2020 
Reproduction is authorised provided the source is acknowledged. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Table of Contents 

Executive summary ........................................................................... 7 

1.  Data collection of energy storage and database for the EU-28....... 14 

1.1.  Data collection methodology .................................................................. 14 

Sources classification .......................................................................14 

Technologies database .....................................................................16 

Facilities database ...........................................................................17 

Behind the meter database ..............................................................18 

1.2.  Database results .................................................................................. 19 

Technologies database .....................................................................19 

Facilities database ...........................................................................19 

Analysis .........................................................................................21 

Behind the meter database ..............................................................25 

1.3.  Conclusion and key messages related to the database .............................. 26 

2.  Quantification of the contribution of energy storage to the security of 
electricity supply in the EU-28 .......................................................... 27 

2.1. 

Introduction ........................................................................................ 27 

2.2.  Design of the different scenarios ............................................................ 29 

Description of the scenarios ..............................................................29 

Evolution of the flexibility needs ........................................................33 

2.3.  Characterisation of the different flexibility solutions .................................. 40 

2.4.  Design of the optimal flexibility protfolio.................................................. 44 

Description of the model used to optimise the flexibility portfolio ..........44 

Optimal portfolio for the 3 scenarios ..................................................47 

2.5.  Contribution to the provision of flexibility ................................................ 55 

Definition of the contribution to the provision of flexibility ....................55 

Evaluation of the contribution to the provision of flexibility in the different 

scenarios  56 

2.6.  Contribution to electricity security of supply ............................................ 59 

Definition of the contribution to electricity security of supply ................59 

Evaluation of the contribution to electricity security of supply in the different 

scenarios  59 

2.7.  Sensitivities: capture the uncertainties of the future scenarios ................... 60 

Description of the different sensitivities ..............................................60 

Installed capacities for the different sensitivities .................................63 

2.8.  Conclusion  to  the  quantification  of  the  contribution  of  energy  storage  to  the 
security of supply .......................................................................................... 70 

3. 

Assessment of energy storage policies, barriers and best practices 72 

3.1. 

Introduction ........................................................................................ 72 

3.2.  Background on energy policies impacting storage ..................................... 73 

3.3.  Barriers for energy storage .................................................................... 75 

Public support and strategy (plan) for storage ....................................75 

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Permitting & standardisation .............................................................78 

Wholesale energy markets and capacity mechanisms ..........................80 

Ancillary and grid management services ............................................82 

Grid aspects ...................................................................................84 

Taxes & other levies ........................................................................88 

Involvement of network operators .....................................................89 

Storage definition, financing, sector coupling and other aspects ............91 

3.4.  The EU electricity market design and other legislation related to energy storage

95 

Impact of the new electricity market design on storage .......................95 

Other EU initiatives related to energy storage ................................... 103 

4. 

Conclusions and policy recommendations for energy storage ...... 116 

1. Energy storage requires a clear strategy addressing system flexibility and stability needs as well as policy 
barriers, accompanied by support adapted to the different technological maturities ...................... 118 

2. Member States should address permitting barriers, while further action at the EU level is warranted for 
standardisation, such as regarding safety and EV interoperability ......................................... 120 

3. Member States should prioritize the full implementation of the new electricity market design, and address 
remaining  barriers,  especially  regarding adequate  price  signals  and  access  to ancillary  services  markets
 .................................................................................................................. 120 

4. Double charging of network tariffs and net metering (partially tackled by the new electricity market design) 
as well as network codes (to a lesser extent) are still a major barrier to storage .......................... 122 

5.  The  revision  of  the  taxation,  principally  through  the  Energy  Taxation  Directive  (ETD),  is  pivotal  to 
eliminating  undue  burdens  to  stored  energy,  such  as  double  taxation,  and  reducing  cross-energy  vector 
distortions ...................................................................................................... 123 

6. Competitive flexibility resources should be considered on an equal footing to network investments, across 
all energy vectors .............................................................................................. 124 

Annex 1: Installed capacities of current storage facilities ................... 128 

Annex 2: Review of selected documents on electricity policy barriers, best 
practices and recommendations ...................................................... 131 

Annex 3: Provisions on the Electricity Directive (2019/944) and Regulation 
(2019/943) related to energy storage ............................................. 137 

Annex 4: Member state storage policies fiches ................................. 141 

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EUROPEAN COMMISSION 

EXECUTIVE SUMMARY 

Context 

At the Paris climate conference (UNFCCC COP21) in December 2015, 195 countries adopted 
the first-ever universal, legally binding global climate deal. The deal has been ratified by 
over 180 countries, and has entered into force in November 2016. The EU has been a key 
player  in  reaching  this  agreement,  which  aims  at  keeping  temperature  increase  to  well 
below  2°C  above  pre-industrial  levels  and  pursue  efforts  to  keep  it  to  1.5°C.  The  EU’s 
nationally determined contribution (NDC) reflects its objective to reduce EU’s greenhouse 
gas emissions by 40% by 2030 compared to 1990, and is consistent with the then-objective 
to reduce emissions by 80 to 95% by 2050 (in the context of necessary reductions of the 
developed countries as a group). 

As a response to its commitments under the Paris Agreement, and in order to pursue its 
objectives of modernising the design of electricity markets, the European Commission has 
published  a  number  of  policy  proposals  in  November  2016,  the  so-called  Clean  Energy 
Package for all Europeans (CEP). The political compromise that has been reached, which 
includes  updated  objectives  for  2030  (at  least  32%  renewable  energy  target,  at  least 
32.5% energy efficiency target) and governance mechanisms to plan, report and monitor 
as well as coordinate how the efforts shall be distributed and objectives achieved amongst 
Member States through National Energy and Climate Plans (NECPs), results in new rules 
that progressively enter into force from 2019 on. 

In December 2019, the European Commission has presented the “European Green Deal”1, 
a set of policy initiatives aiming at ensuring the EU becomes climate neutral by 2050. In 
March 2020, the  EC has proposed to  enshrine  this  objective into the  “European  Climate 
Law”2. The Climate Law includes measures to keep track of progress of the decarbonisation 
of Member States and includes proposals on the way to analyse the pathway to meet the 
2050 target. 

In  line  with  the  objective  of  reaching  carbon  neutrality  by  2050,  the  European 
Commission’s Long-Term Strategy3 describes a number of pathways that reach between 
80% and 100% decarbonisation levels. All of them have strong implications for the energy 
sector, and for the electricity sector in particular. Indeed, in every pathway, a high level of 
direct and indirect electrification is envisaged, supported by a large-scale deployment of 
RES. The level of renewable energy sources (RES) varies considerably from one pathway 
to  the  next  since  indirect  electrification,  enabled  by  power-to-gas  (P2G)  technologies, 
requires  substantial  amounts  of  electricity  to  produce  hydrogen  and/or  methane  to 
decarbonise sectors such as industry, heating and some mobility applications. All pathways 
have  in  common  that  they  require  a  more  flexible  energy  system,  in  order  to  integrate 
variable  RES  technologies  (mostly  solar  photovoltaic,  and  onshore  and  offshore  wind 
power) cost-efficiently while maintaining adequate levels of security of supply. 

A strong deployment of flexibility solutions is required  to provide the power system with 
the ability to adapt to the dynamics of the residual load, on all timescales: from frequency 
response  to  inter-year  flexibility.  The  main  candidate  solutions  to  provide  flexibility  are 
networks, demand-response, dispatchable and flexible power generation technologies, and 
energy  storage.  Furthermore,  the  very  coupling  of  the  industry,  heating  and  mobility 
sectors  to  the  power  sector  makes  their  flexibility  potentials  available  to  the  power 
markets. These new flexibility sources are the flexibility of the demand of the various end-
uses  and  of  the  processes  involved  in  their  direct  and  indirect  electrification  (e.g. 
electrolysis, interaction between gas and electricity infrastructure, etc.). 

1 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en 
2 https://ec.europa.eu/info/files/commission-proposal-regulation-european-climate-law_en 
3 https://ec.europa.eu/clima/policies/strategies/2050_en 

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Energy storage will participate in the provision of flexibility on all timescales. Indeed, the 
typical discharge time of batteries is measured in hours, the one of pumped-hydro storage 
and  seasonal  hydro  storage  in  a  few  hours  to  several  months,  and  system  integration 
(when seen as a storage solution) has a discharge time allowing it to contribute to meeting 
seasonal flexibility needs. 

Therefore,  an  appropriate  deployment  of  energy  storage  technologies  is  of  primary 
importance for the transition towards an energy system that heavily relies on variable RES 
technologies  to  be  a  success.  It  is  key  to  understand  which  of  the  technologies  are  the 
most likely to have an important role to play in the future, to detect the potential barriers 
to  their  development  (regulatory,  lack  of  innovation  programmes,  etc.),  and  finally  to 
propose an updated regulatory framework and policy actions to allow the relevant flexibility 
solutions to successfully penetrate the market. 

Objectives of the study 

The study is organised in three main parts: we begin by presenting the current state of 
play of storage technologies (deployment in Member States and key characteristics), then 
proceed to identify the need for various types of flexibility solutions at the 2030 and 2050 
horizons, and finally examine the regulatory conditions that should be put in place to enable 
the market to deliver the appropriate level of energy storage technologies.  

The three objectives can be summarised as: 

  The first objective of this study is to provide a picture of the European energy 

storage environment, in terms of (i) existing facilities and projects and (ii) policies 
and regulatory frameworks so as to identify barriers and best practices. 

  The second objective is to explore deployment potentials and actual needs for 

energy storage, at EU and Member State level, in order to design a cost-efficient 
flexibility portfolio to ensure adequate levels of security of supply for all Member 
States at the 2030 and 2050 horizons, in the context of a total decarbonisation of 
the energy sector by 2050. 

  Finally, based on the identified barriers and best practices, given the role for 
energy storage in the decarbonisation of the electricity sector of the Member 
States, a set of recommendations are proposed to update the regulatory 
framework that applies to energy storage technologies and to design a set of 
policy actions to speed up the market penetration of storage technologies, at EU 
and national level. 

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EUROPEAN COMMISSION 

Main findings of the study 

1.  Data collection of current energy storage facilities and future projects4 

Throughout our data collection work, we have noticed some important points that can be 
summarised as follows: 

  The main energy storage reservoir in the EU is currently, and by, far Pumped 
Hydro Storage. As their prices plummet, new batteries projects are rising. 

  Lithium-ion  batteries  represent  most  of  electrochemical  storage  projects.  The 
recycling of such systems should be strongly taken into consideration, as well as 
their  effective  lifetime:  such  theoretical  specifications  submitted  to  grids  may  be 
relatively optimistic compared with their use at nominal conditions. 

 

In  the  EU,  the  segment  of  operational  electrochemical  facilities  is  led  by  UK  and 
Germany. We have noticed an important  number of projects in the UK, and to a 
lesser extent in Ireland. 

  Behind-the-meter storage is still growing. It is quite heterogeneous, depending on 
local markets and countries: as a new market, it is still driven by political aspects 
and/or subsidies. Overall data availability is relatively poor. 

A  recommendation  emerging  from  our  work  is  to  ensure  an  appropriate  monitoring  and 
follow-up of storage facilities at both Member States and European level is put in place. 
We have noticed through the study that data about energy storage are sometimes difficult 
to  obtain  or  with  a  level  of  precision  lower  than  for  power  generation  databases.  A 
convergence, both in terms of quality and coverage, of storage facilities public data and 
databases towards power plant existing public data could be define as a key objective. 

2.  Quantification of the contribution of energy storage to the electricity security of 

supply  

The objective of the quantitative assessment was to determine what would be the optimal 
flexibility portfolio for the power system in different prospective scenarios, and analyse the 
place  of  storage  technologies  among  other  flexibility  solutions,  taking  into  account  the 
specificities of the power system in each Member State. Three different scenarios adapted 
from the pathways designed by the EC in the context of its Long-Term Strategy are used: 
one 2030 scenario (METIS-Baseline ) which is in line with the policies already agreed as 
today,  and  two  long-term  scenarios  for  2050  (METIS-1.5C  and  METIS-2C-P2X),  with  an 
objective of a deep decarbonization, in order to keep the temperature “well below 2°C by 
2100”. 

In  order  to  determine  the  optimal  flexibility  portfolio,  the  methodology  proposed  in  the 
Mainstreaming RES study5 has been extended to cases with system integration (and thus 
P2G) and applied to the three aforementioned scenarios. It consists in the following steps: 

4 Stakeholders have been consulted regarding the national and EU-level data and analysis. A number of national 
stakeholders, including national contact points of the European Commission Electricity Coordination Group 
(ECG), have provided inputs for the storage project database and the Member States storage policy fiches. A 
stakeholder policy workshop was held in December 2019, and further comments on the policy analysis draft and 
national policy fiches were received through written feedback afterwards, including from the ECG national 
contact points. 
5 https://ec.europa.eu/energy/sites/ener/files/mainstreaming_res_-_artelys_-_final_report_-_version_33.pdf 

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  Quantification the flexibility needs on different timescales (hour, week, season), 

 

Identification and characterisation of potential flexibility solutions, 

  Determination of the optimal deployment of energy storage capacities and other 
flexibility solutions at the MS level in light of the Long-Term Strategy scenarios, 

  Quantitative assessment of the contribution to the provision of flexibility and 

security of supply by energy storage technologies and other flexibility solutions on 
different timescales at the MS level. 

Our results reveal that in 2030 a large share of the required levels of flexibility can still be 
provided by conventional power plants and by using the power networks to trade electricity 
between the different  European countries.  However,  for the provision of daily flexibility, 
storage technologies such as batteries or pumped storage appear to be relevant solutions 
in our scenarios. Up to 108 GW of electricity storage (batteries and pumped hydro storage) 
would  be  necessary  for  the  EU-28  (97  GW  for  EU-27),  with  a  large  development  of 
stationary  batteries.  At  the  2030  horizon,  electrolysers  do  not  appear  to  be  competitive 
solutions  to  provide  flexibility  to  the  power  system.  However,  if  a  deployment  of 
electrolysers were to materialise already in 2030 (e.g. driven by indirect electrification of 
end-uses in the industry or heating sectors), they could provide flexibility on all timescales. 

In the assessed 2050 scenarios, the deep decarbonisation of the different sectors, such as 
industry, mobility and heating, the Long-Term Strategy assumes that an important amount 
of “decarbonised” hydrogen (produced by water electrolysis with decarbonised electricity), 
and synthetic fuels6 will be produced. This hydrogen is generated from electricity coming 
for  large-scale  wind  and  solar  power  plants,  and  then  converted  into  hydrogen  with 
electrolysers. To satisfy this demand, around 550 GW of electrolysers would be required in 
our  different  2050  scenarios.  Combined  with  the  flexibility  offered  by  the  end-users’  of 
hydrogen and e-fuels, or with direct use of hydrogen or gas storage facilities, electrolysers 
will  able  to  provide  important  levels  of  flexibility  to  the  power  system.  The  potential 
deployment  of  electric  vehicles  using  smart  charging  strategies  and  of  space  heating 
combined with short-term thermal storage also enable the demand-side to provide daily 
flexibility to the power system. Due to the competition between various flexibility sources, 
the need for pumped hydro storage and batteries is found to be lower in 2050 than it is in 
2030, and reaches around 50 GW in our 2050 scenarios. 

To recognise the high level of uncertainty surrounding the configuration of the 2030 and 
even  more  so,  of  the  2050  energy  systems,  different  sensitivity  analyses  have  been 
designed to assess the impacts of some of the assumptions on the deployment of flexibility 
technologies. Based on the analysis of the results of the three scenarios (METIS-Baseline, 
METIS-1.5C and METIS-2C-P2X), three topics have been selected for further analysis since 
they might substantially impact the optimal mix of flexibility solutions: 

  Demand-response:  Electricity  storage  technologies  compete  with  demand-side 
response, since they both provide daily flexibility services to the power system. In 
2030, an optimal use of the flexibility of electric vehicles and of decentralised space 
heating could reduce the need for stationary batteries by half (67 GW vs 34 GW). 

  Costs of electrolysers: In the 2050 scenarios, the large deployment of electrolyser 
leads  to  an  important  drop  of  their  investment  costs.  In  a  sensitivity  where  the 
prices of electrolysers are significantly higher, the need for pumped hydro storage 
and batteries rise from 50 GW to 73 GW. 

  Flexibility of hydrogen demand: the 2050 scenarios assume an important flexibility 
of end-uses on the P2X side (hydrogen and e-fuels), that can be provided by direct 

6 e-gas and e-liquids, produced from hydrogen with methanation plants and the Fischer-Tropsch process. 

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EUROPEAN COMMISSION 

hydrogen  storage  but  also  via  some  flexibility  in  the  end-users  consumption  (for 
example for the e-liquids provision for vehicles can be flexible, thanks to  current 
infrastructure for petrol). In a sensitivity with lower flexibility on the hydrogen side, 
additional investments in methanation plants would be required to benefit from the 
flexibility offered by the current gas infrastructure. 

3.  Policy recommendations for energy storage 

In  order  to  enable  storage  technologies  to  effectively  deliver  this  contribution, 
different  barriers  should  be  addressed,  for  example  regarding  public  guidance  and 
support, the design of electricity markets  or grid aspects. The most important barrier is 
the lack of a viable business case for many energy storage projects. The cost and technical 
performance of storage technologies gradually improve their viability, which in the long-
term will significantly improve the business case, and already has for several technologies. 
But  in  the  shorter  term,  various  policy  barriers  still  hamper  the  development  of  energy 
storage in the EU and lead to uncertainty concerning the revenues streams to cover the 
project costs and risks. 

The  main  responsibility  of  policymakers  is  to  provide  an  enabling  environment 
and level playing field to storage. The adequate implementation of the  clean energy 
package  should  be  a  priority,  in  order  to  enable  storage  to  participate  in  energy  and 
ancillary  services  markets  as  well  as  in  eventual  capacity  mechanisms,  and  to  be 
remunerated in a transparent, non-discriminatory way. Positive externalities provided by 
storage, such as system flexibility and stability, as well as environmental benefits, should 
be adequately valued, primarily through appropriate remuneration in the different markets, 
and  through  cost-reflective  network  charges  and  appropriate  taxation  rules  (discussed 
further  below).  Adequate  energy  price  signals  should  also  guide  the  investment  and 
operational decisions of private actors. 

The European Commission, ACER and other EU authorities should prioritise policy 
measures that address barriers to storage identified in the majority or all Member 
States, and that hinder the deployment of several storage technologies and applications. 
Relevant barriers specific to only a few Member States should be addressed at the national 
level. At the EU level, upcoming revisions of EU instruments relevant for energy storage 
provide  an  opportunity to  address  barriers  where  EU  action  would  be  adequate.  Actions 
under the European Green Deal should also consider storage, where appropriate. 

Measures  addressed  by  the  CEP,  but  requiring  monitoring  at  EU  level  to  ensure 
adequate and timely implementation by Member States: 
  Member States should  ensure that  storage  is coherently defined across the 
national  legal  framework.  An  appropriate  definition  of  storage  is  provided  in  the 
new Electricity Directive. But at present, most EU Member States do not have yet a 
coherent  definition  of  storage  nor  have  transposed  the  Directive,  and  definitions  in 
secondary legislation often are not aligned with the rest of the legal framework.  
  Member  States  should  eliminate  the  double  charging  of  grid  tariffs.  Double 
imposition  of  grid  tariffs  (that  is,  during  storage  charge  and  discharge)  on  stored 
energy are especially detrimental and should be eliminated. The current  tariffication 
practices across Member States are still quite diverging, and even if eliminating double 
charging, do not address all possible cases. For example, concerning the application 
to existing and new storage facilities, the inclusion of conversion losses, whether the 
energy  is  traded  in  wholesale  markets  or  supplied  to  end  consumers,  and  the 
application  of  tariff  rebates  on  all  volumes  or  only  for  electricity  providing  specific 
services (e.g. balancing). 

Measures partially addressed by the CEP, and requiring further actions at EU and/or 
MS level:  
  Member  States  should  assess  barriers  and  develop  a  policy  strategy  for 
storage. National (or regional where applicable) authorities should develop a policy 
strategy for storage based on an assessment of the system flexibility, adequacy and 

11 

 
  
 
 
 
 
stability needs, and of gaps in national regulatory frameworks. Such assessments of 
policy  gaps  have  been  developed  by  some  Member  States.  An  appropriate 
identification of the flexibility needs per country and per timescale is key to assess the 
possible contribution of storage technologies in the future. However, there is still the 
need to develop robust methodologies to assess and differentiate short- to medium-
term  flexibility  from  long-term  adequacy  needs,  complementing  the  methodology 
being developed by the ENTSO-E for the European Resource Adequacy Assessment 
  Organisations  at  the  EU  level  and  Member  States  should  weigh  network 
investments vs the procurement of flexibility from other resources. Additional 
efforts will be required to develop appropriate methodologies for this, as there is not 
a  robust  and  widely  accepted  method  at  the  moment.  Network  investments  and 
security of supply standards (e.g. N-1 requirements) should be assessed considering 
the  possibility  of  storage  deployment.  The  procurement  of  ancillary  services  should 
also be conducted in a non-discriminatory way, starting with (more mature) balancing 
markets  and  moving  onto  non-frequency  ancillary  services.  It  is  also  needed  to 
improve 
in  National 
Development  Plans,  the  TYNDP  and  the  PCI  selection  process,  and  to  ensure  that 
investment options are equally considered across sectors. 

the  consideration  of  electricity-gas-heat 

interlinkages 

  EU organisations (especially the Commission,  ACER and ENTSOs) as well as 
Member  States  should  develop  non-discriminatory  procurement  of  non-
frequency ancillary services. At the moment, the possibility of storage to provide 
non-frequency ancillary services is rare across Europe, especially batteries, which in 
most  Member  States  cannot  provide  voltage  control  nor  black-start  services. 
Participation of storage in grid congestion management is at present limited to pilot 
projects  focusing  on  battery  systems,  but  albeit  limited  in  scale,  these  projects  are 
taking place in multiple countries. Member States need to provide a level playing field 
for the procurement of such services. The Commission and Member States should also 
guarantee  locational  information  in  congestion  management  and  other  products  to 
foster market-based procurement. 

  Member States should foster dynamic electricity prices and time-of-use grid 
tariffs.  These  are  crucial  to  increase  the  responsiveness  of  consumers  and  the 
development  of  behind-the-meter  storage,  including  electric  vehicles.  Presently, 
locational grid tariff signals are limited given the zonal approach for European energy 
markets, while the use of time-of-use grid tariffs or dynamic electricity price signals 
for  residential  consumers  are  still  also  limited.  However,  demand-response  to 
electricity  prices  enabled  by  heat  storage  (in  e.g.  CHP,  water  gas  boilers  and  heat 
pumps) is relevant in an increasing number of Member States. 

  Member States should phase out net metering, in other words, to fully account 
separately for the electricity fed into the grid and the electricity consumed from the 
grid. Net metering is another important grid-related barrier to the deployment of small-
scale storage, still existing in at least 9 Member States. There is also an opportunity 
for  improving  price  signals  through  network  tariffs.  The  EU  could  further  assess 
approaches  to  develop  locational  grid  tariff  signals,  and  weigh  the  advantages  and 
disadvantages of such signals at transmission and/or distribution level. 

  EU organisations and Member States should guarantee the interoperability of 
flexibility resources and access to data.  Specific EU action is to be considered to 
encourage/develop  EU-wide  harmonised  standards  for  device  communication  and 
system operation. Currently, the digital layer of battery management systems, notably 
application  programming  interfaces,  is  often  based  on  proprietary  solutions,  and  a 
move  to  open  interfaces  would  be  desirable.  In  addition,  access  to  data  of  battery 
management systems is often limited, depending, among other things, on how data 
encryption  is  done.  The  standards  or  protocols  currently  being  developed  for  data 
encryption  and  communication  (so-called  Public  Key  Infrastructure)  between  the 
vehicle  and  the  charging  point  are  proprietary,  and  created  according  to  specific 
interests. The relevant developments should be followed to prevent data hoarding and 
ensure EVs and stationary batteries can be used in “plug-and-play mode”.  

Finally,  energy  taxation  was  not  addressed  by  the  Clean  Energy  Package.  EU 
increase  the  energy  and  GHG-
institutions  and  Member  States  should 
reflectiveness  of  taxation,  and  eliminate  the  double  taxation  of  stored  energy 

12 

 
 
 
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(that is, when the energy is stored and again when it is consumed). The upcoming revision 
of the Energy Taxation Directive (ETD) is pivotal, not only for the development of energy 
storage,  but  also  to  foster  low-carbon  energy  technologies  in  general.  The  increasing 
system  integration  will  also  require  the  elimination  of  diverging  taxation  levels  across 
energy sectors and carriers, in order to avoid cross-sectoral distortions regarding taxation 
or the internalization of carbon costs, and to seize the synergies between the electricity, 
heat and gas sectors. Full or partial imposition of electricity consumption taxes and other 
levies to stored energy is still common in a majority of Member States. Only storage losses 
should be subject to taxes (as well as losses in energy production and transport across all 
energy carriers), in order to stimulate highly energy-efficient processes. 

Structure of the report 

Section 1: Data collection of energy storage and database for the EU-28  

Based on a literature review, this section describes the methodology and the key results 
of the creation of a database on energy storage. This database is divided in three different 
parts:  the characterisation of the different energy storage technologies, the description of 
“front of the meter” facilities, and some insights for behind the meter energy storage. The 
database itself is provided in an accompanying spreadsheet. 

Section 2: Quantification of the contribution of energy storage to the security of 
electricity supply in the EU-28 

Based on selected pathways of the European Commission Long-term Strategy, this section 
details the role of various flexibility solutions at the 2030 and 2050 horizons. A dedicated 
modelling work at the Member State level and using an hourly time resolution is used to 
determine the optimal flexibility portfolio for different scenarios. The analysis also provides 
quantitative results on the contribution of the relevant flexibility solutions to the provision 
of flexibility, and the contribution to security of electricity supply in Europe. 

Section 3: Assessment of energy storage policies, barriers and best practices 

This  section  identifies  current  barriers  and  best  practices  for  the  deployment  of  energy 
storage  technologies  and  assesses  the  impact  of  the  new  market  design  at  the  EU  and 
Member States levels. It also provides complementary measures to address the barriers 
which remain even after the implementation of EU legislation. 

Section 4: Policy recommendations for energy storage 

Finally, the study provides conclusions and policy recommendations for energy storage at 
the EU and MS levels to address the identified policy barriers. 

Disclaimer 

The  current  study  has  been  elaborated  without  taking  into  account  the  effects  of  the 
Coronavirus disease (COVID-19), first identified in December 2019 and resulting in the 
ongoing worldwide 2019-20 health crisis. However, in view of the results presented in 
this  study,  it  is  important  to  highlight  the  relevance  of  storage  as  regards  security  of 
supply  issues  that  could  arise  in  unforeseeable  circumstances,  for  instance  crisis 
situations  such  as  COVID-19.  In  addition,  the  strong  investment  needs  for  storage 
identified in this study could be considered as a supporting element for the recovery of 
the economy and the creation of high-quality employment. 

13 

 
 
 
 
 
 
 
 
1.  DATA COLLECTION OF ENERGY STORAGE AND DATABASE FOR THE 

EU-28  

1.1.  DATA COLLECTION METHODOLOGY 

  SOURCES CLASSIFICATION 

The first step of the task was the classification of the sources: it consisted in collecting all 
the reports about energy storage that could add some value to the study. The Terms of 
Reference  (ToR)  provided  a  large  range  of  documents,  and  an  additional  bibliographical 
research has been led to gather potentially interesting documents. 

On this basis, a deep literature review (including all the references mentioned in the ToR) 
has then been conducted. The data contained in these documents were classified in a table, 
that list for each report the source, title and date and the technical data that were useful 
for the development of the various databases. These technical data are:  

  The type of energy storage technologies treated. 
  The type of data, either general data on technologies, or factual data about 

energy storage facilities. 

  The geographical area covered. 

14 

 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Figure 1 - Extract of the literature review table 

15 

 
 
This first step allows us to summarize the content of the various sources and to prepare 
the development of databases on energy storage technologies and facilities. 

Based  on  this  initial  step,  it  has  been  decided  to  split  all  the  data  into  three  different 
databases dealing with: 

  Energy storage technologies: All existing energy storage technologies with their 

characteristics. 

  Front  of  the  meter  facilities:  List  of  all  energy  storage  facilities  in  the  EU-28, 
operational or in project, that are connected to the generation and the transmission 
grid with their characteristics. 

  Behind the meter energy storage: Installed capacity per country of all energy 

storage systems in the residential, commercial and industrial infrastructures. 

  TECHNOLOGIES DATABASE 

The purpose of this database is to give a global view of all energy storage technologies. 
They are sorted in five categories, depending on the type of energy acting as a reservoir, 
and are listed below:  

Mechanical

Electrochemical

Electrical

Chemical

Thermal

By  crossing  various  data  sources,  all  types  of  energy  storage  technologies  have  been 
covered. Moreover, relevant types of data for each technology have been highlighted: 

  Sub-technology. 
  Energy  capacity  (in  kWh,  represents  the  maximum  of  energy  storable  in  the 

system). 

  Power  capacity  (in  kW,  represents  the  maximum  power  output  of  the  storage 

system). 

  Storage duration at full power.  
  Capex / Opex (€/kW & €/kWh). 
  Round-trip Efficiency (in %, represents the ratio of the energy input in the storage 
facility (before storage) and the energy output of the storage facility (after storage). 
  Conversion efficiency (in %, represents the efficiency of the transformation from an 

energy vector to another). 

  Services provided. 
  Major technological issues experienced. 

Following DG ENER first feedbacks, additional research activities have been carried out, to 
add characteristics about response time and level of maturity of storage technologies. 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

  FACILITIES DATABASE 

The purpose of this database is to register all storage facilities across Member States of 
the European Union, both operational and in project. 

The parameters implemented in the database allow an exhaustive description of an Energy 
Storage System and include data availability limitations. Each facility is described by the 
following characteristics:  

  Country 
  City 
  Facility name 
  Status (Operational, Under Construction, Project) 
  Technology 
  Sub-technology 
  Power installed capacity (MW) 
  Energy capacity (MWh) 
  Grid connection level 
  Grid operator  
  Date of commissioning  
  Operator  

Front of the meter facilities that were targeted for this database are facilities that have a 
power installed capacity higher than 100 kW. This limit has been set in relation to the lack 
of data about systems under 100 kW.  

Data  collection  has  been  conducted  through  three  major  steps:  first,  an  integration  of 
national  sources  &  existing  databases  has  been  conducted.  When  they  exist,  national 
registers of energy storage facilities have been added to the database. Furthermore, we’ve 
used datasets covering a worldwide perimeter, such as the Global Energy Storage database 
of  the  US  DoE,  or  Power  Plant  Tracker,  which  is  one  of  the  main  products  proposed  by 
Enerdata,  and  lists  power  plants  (Operational  and  Projects)  across  the  world,  including 
Pumped Hydro Storage infrastructures. 

The second step was a country-by-country follow up on press updates & articles, in order 
to have a database that is the most complete possible, by including the last updates on 
projects, or new facilities that were not included in the previously mentioned databases. 
This  is  a  well-known  process  for  Enerdata,  which  is  used  to  conduct  power  markets 
monitoring:  this  methodology  has  been  replicated  to  track  information  about  energy 
storage facilities. 

Finally, the third step has been to contact ministries and/or TSO for each Member State7, 
on the base of a contacts list provided by DG ENER. An extract of the database has been 
sent  to  each  country,  for  cross-checking  and  validation  purposes.  We  have  received 
numerous feedbacks8 and added them to the facilities database.  

The main issue faced for this dataset was the creation of duplicates in the database that 
results from gathering data from multiple sources. To avoid such duplicates, a verification 
work has been carried out. 

7 Norway and Switzerland have been contacted later in the process, in order to get a global overview on 
European countries. 
8 The feedback rate is 85% (26 out of 30 countries: 28 Member States + Norway + Switzerland). Only Bulgaria, 
Denmark, Netherlands and Switzerland have not answered as of 2020-03-13. 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                           
  BEHIND THE METER DATABASE 

The purpose of this database is to give an overview of  Behind-the-Meter storage across 
Member States of the European Union. 

Behind the meter energy storage regroups all energy storage systems that are connected 
to the residential, commercial and industrial infrastructures. As the name indicates, these 
systems are placed behind energy meters, and are used to maximise self-use of energy. 
Because  of  the  diffuse  nature  of  this  kind  of  storage,  consisting  in  very  small 
infrastructures, it is very difficult to compile data and only a few sources are available. As 
a result, it has been decided to focus on installed capacity at country level.  

The data collection has been completed by contacting directly Energy Storage experts and 
Ministries / TSO of Member States. 

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EUROPEAN COMMISSION 

1.2.  DATABASE RESULTS 

Access dataset at the EU Open Data Portal: http://data.europa.eu/88u/dataset/database-
of-the-european-energy-storage-technologies-and-facilities     

  TECHNOLOGIES DATABASE 

The final deliverable for the Technologies database is a table that gathers all technologies 
/ sub-technologies with all relevant characteristics. 

Figure 2 - Extract of the Technologies database 

  FACILITIES DATABASE 

The  final  deliverable  for  the  Facilities  database  gathers  more  than  800  energy  storage 
facilities.  

19 

 
 
 
 
 
 
 
 
Figure 3 - Extract of the Facilities database 

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EUROPEAN COMMISSION 

The  energy  capacity  is  rarely  mentioned:  it  can  be  explained  by  a  possible  general 
unawareness of the data describing an energy storage system. Facilities must be described 
by their power and their energy capacity. A description using only one of these two values 
is incomplete. 

In  the  Facilities  database,  we  have  added  a  section  on  “Key  Projects”,  gathering  a  few 
facilities that are remarkable by their technology, size, or geographical locations: 

-  Huntorf, Germany, 290 MW / 580 MWh: this is the first Compressed Air Energy 

Storage (CAES) operational facility, and still the only one in Europe. 

-  Cottbus (BigBattery Lausitz), Germany, 50 MW / 53 MWh: this is a recent and major 
Li-ion  battery  project,  to  be  commissioned  in  July  2020.  Located  next  to  the 
Schwarze  Pumpe  power  plant,  it  will  help  to  protect  the  power  grid  against 
fluctuations. 

-  Drax  Re-Power,  United  Kingdom,  200MW  /  Capacity  TBD:  this  Li-ion  project, 
authorized in 2019, presents an important power capacity. It is associated with 
the repowering of a power plant which would be switched from coal to gas. 

-  Cremzow, Germany, 22 MW / 31.6 MWh: this is a recent battery project, 
commissioned in May 2019. It provides frequency regulation services. 

-  Wartsila  (Budapest),  Hungary,  6  MW  /  4  MWh:  one  of  the  few  Li-ion  projects  in 

eastern Europe and outside big European countries. 

  ANALYSIS 

Figure 4 - Power capacity by technology and country (Operational + Projects) 
(values in Annex 1) 

21 

 
 
 
 
 
 
 
 
 
 
As expected, the majority of energy storage in the EU (90+% of Power Installed) 
is brought by the Pumped Hydro Storage (PHS, in blue on this histogram): indeed, 
these systems present huge capacity and power, due to their mechanical characteristics 
(size, water volumes). 

As  shown  in  Figure  5,  the  number  of  entries  in  the  database  by  country  is  quite 
heterogeneous.  In  terms  of  capacities,  pumped  hydro  storage  dominates  the 
database but the total amount of facilities per country depends also on smaller facilities, 
typically  electrochemical  facilities.  In  Figure  6  we  can  see  that  more  than  half  of  the 
facilities in the database are electrochemical and for UK electrochemical accounts for more 
90% of the total facilities. 

Figure 5 - Entries in the database (Operational + Projects), by country 
(values in Annex 1) 

Figure 6 - Entries in the database (Operational + Projects, PHS excluded), by country 
(values in Annex 1) 

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EUROPEAN COMMISSION 

The  figure  below  focuses  on  electrochemical  facilities  (both  operational  and  in  project), 
which  are  a  rising  energy  storage  alternative.  United  Kingdom  presents  the  most 
important Power Capacity, followed by Ireland and Germany. 

Figure 7 - Electrochemical Storage - Power capacity by country (Operational + Projects) 
(values in Annex 1) 

The  analysis  of  the  data  collected  reveals  that  Germany  &  United  Kingdom  lead  the 
Batteries  Energy  Storage  Systems  (BESS)  current  market  in  Europe  (Figure  8). 
Furthermore,  the  UK  has  a  very  important  BESS  projects  pipeline  compared  to  other 
countries (followed by Ireland, Figure 9). 

23 

 
 
 
 
 
 
 
Figure 8 - Electrochemical storage - Operational Capacities by Country 
(values in Annex 1) 

Figure 9 - Electrochemical storage - Planned Capacities by Country 

24 

 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

  BEHIND THE METER DATABASE 

The final deliverable for the Behind the Meter database displays the installed capacity per 
country, when available, based  on numbers and assumptions, provided by experts from 
Ministries and Energy Storage associations. 

It is important to note here that behind-the-meter storage is a growing market with 
important mid-term potential, but currently presents very poor data availability. 
Indeed, we were unable to provide data for an important number of countries, due to lack 
of data. However, this should be possible to do in the future, with a more mature market. 

25 

 
 
 
 
 
 
1.3.  CONCLUSION AND KEY MESSAGES RELATED TO THE DATABASE 

Energy  transition  and  deep  decarbonisation  of  the  power  mix  will  require  a  strong 
integration  of  intermittent  renewable  sources  of  power  generation.  More  generally,  the 
main constraint of electricity as an energy vector is that it has always been technically very 
difficult and relatively costly to store it compared to other vectors such as liquid (oil) or 
gas. As a result, development of power sector and electricity consumption have been based 
on massive transmission and distribution networks that account for around one third of the 
end user bill in most countries. 

However, things are changing as batteries technologies becoming more and more mature 
with significant reduction in their costs. This could facilitate the integration of intermittent 
power generation and create a large market for electricity storage.  

Throughout this data collection work, we have noticed some important points that we would 
like to summarise with these key messages: 

  The main energy storage reservoir in the EU is currently and by far Pumped Hydro 
Storage. As their prices plummet, new batteries projects are rising. This type 
of facilities can be coupled with renewable (wind or solar) farms. 

  Li-ion batteries represent most of electrochemical storage projects. The recycling 
of  such  systems  should  be  strongly  taken  into  consideration,  as  well  as  their 
effective  lifetime:  such  theoretical  specifications  submitted  to  grids  may  be 
relatively optimistic compared with their use at nominal conditions. 

 

In  the  EU,  the  segment  of  operational  electrochemical  facilities  is  led  by  UK 
and Germany. We have noticed an important number of projects in the UK, and 
to a lesser extent in Ireland. 

  Behind-the-meter  storage  is  still  growing.  It  is  quite  heterogeneous, 
depending  on  local  markets  and  countries:  as  a  new  market,  it  is  still  driven  by 
political aspects and/or subsidies. Overall data availability is relatively poor. 

A recommendation from this study would be to ensure a monitoring and follow-up of 
storage  facilities  at  both  Member  States  and  European  Commission  level.    We  have 
noticed through our study that data about energy storage are sometimes difficult to obtain 
or  with  a  level  of  precision  lower  than  for  power  generation  databases.  A  convergence, 
both  in  terms  of  quality  and  coverage,  of  storage  facilities  public  data  and  databases 
towards power plant existing public data could be define as a key objective. 

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2.  QUANTIFICATION  OF  THE  CONTRIBUTION  OF  ENERGY  STORAGE 

TO THE SECURITY OF ELECTRICITY SUPPLY IN THE EU-28 

2.1.  INTRODUCTION 

In December 2019, the  Commission has presented the “European Green Deal”, a set  of 
policy  initiatives  aiming  at  achieving  a  climate-neutral  Europe  by  2050.  In  early  March 
2020, this objective has been addressed by a proposition of the Commission: the European 
Climate Law. The draft Climate Law includes measures to keep track of progress and  to 
define and update the pathway to get to the 2050 target. 

Today, the European Union energy system still heavily relies on fossil energies, and is the 
main contributor to the overall greenhouse gases emissions (with around 80%9 of the total 
emissions, the rest being caused by agriculture emissions, industrial processes and waste 
management). In order to reach a net-zero system by 2050, the whole energy system will 
have to be radically transformed. This includes important efforts to increase the level of 
energy  efficiency  (e.g.  in  buildings)  and  a  large-scale  deployment  of  renewable  energy 
sources to enable the direct and indirect electrification of all sectors of the economy. 

Ahead of this objective, the European Commission had set out its vision for climate-neutral 
EU  in  November  2018,  looking  at  all  the  key  sectors  and  exploring  pathways  for  the 
transition. The 2050 visions  reflect different possible orientations for the  energy  system 
(circular economy, deep electrification, important development of hydrogen), but share a 
common  element  to  decarbonise  the  energy  system  of  the  European  Union:  relying  on 
direct and indirect electrification technologies, supported by an important development of 
electricity generation from renewable energy sources such as solar photovoltaics (PV) and 
wind power. 

The  large  share  of  variable  energy  sources  (vRES)  in  the  production  will  significantly 
change the dynamics of the power system. The way the flexibility currently being provided 
by conventional thermal generation technologies (that currently provide a large part of the 
flexibility on all timescales) will be replaced while ensuring a secure provision of electricity 
is one of the key questions that has to be addressed. In order to keep the balance between 
the production and consumption and avoid RES curtailment, additional flexibility solutions 
will  be  needed.  In  this  context,  storage  solutions  could  play  a  key  role  to  ensure  the 
integration of renewable energy sources can materialise at the lowest cost, by shifting the 
consumption to the moment when electricity is available.  

The objective of this section is to provide a quantitative assessment of the role of different 
energy storage technologies at different stages of  the  energy transition. This analysis  is 
grounded  on  power  systems  development  plans  consistent  with  the  European 
Commission’s Long-Term Strategy and considers all available flexibility solutions (demand 
and  supply  sides,  storage,  interconnectors)  in  order  to  robustly  meet  security  of  supply 
criteria. 

The methodology of this assessment is based on the recommended framework to establish 
flexibility portfolios defined in the Mainstreaming RES study of the European Commission10. 
The first step is the definition of the different scenarios and the evaluation of the flexibility 
needs, then the identification of the possible flexibility solutions and finally the description 
of  the  optimal  portfolio  for  each  scenario.  Three  scenarios  have  been  considered  in  this 
study,  one  for  2030  (METIS-Baseline)  and  two  for  the  2050  horizons  (METIS-1.5C  and 
METIS-2C-P2X).  All  of  them  are  derived  from  the  pathways  described  in  the  Long-Term 
Strategy, and include the energy and climate objectives of the EU. 

9 Source : Eurostat : https://ec.europa.eu/eurostat/statistics-explained/pdfscache/1180.pdf 
10 European Commission, “Mainstreaming RES - Flexibility portfolios”, 2017. 

27 

 
 
 
 
 
                                           
Figure 10 - Recommended framework to establish flexibility portfolios (source: Mainstreaming RES 
study11) 

In addition to the results of the three central scenarios, different sensitivities have been 
designed and performed to capture the uncertainties of the evolution of some key elements 
of the European energy system. Three topics have been selected, based on their potential 
impacts on the deployment of storage technologies: 

  Demand-response: different assumptions were evaluated for the flexibility offered 
by electric vehicles and smart heating for buildings, since this short-term flexibility 
directly competes with storage technologies such as batteries. 

  Cost of electrolysers: electrolysers were found to provide an important share of the 
required  flexibility  services.  This  sensitivity  is  designed  to  understand  how  the 
landscape would change if electrolysers were to be more expensive. 

Flexibility offered by P2X: this final sensitivity assumption aims at capturing the effect of 
various levels of flexibility in the consumption of hydrogen (and derived gases and fuels). 

11 https://ec.europa.eu/energy/sites/ener/files/mainstreaming_res_-_artelys_-_final_report_-_version_33.pdf 

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2.2.  DESIGN OF THE DIFFERENT SCENARIOS 

  DESCRIPTION OF THE SCENARIOS 

2.2.1.1. 

Three scenarios adapted from the EC’s Long-Term Strategy 

The EC Long-Term Strategy has analysed different pathways that can lead the European 
Union’s economy to reach the Paris agreement target of keeping the temperature increase 
since the pre-industrial era “well below 2°C by 2100”12.  

A first pathway called Baseline includes the recently agreed policies, such as a reformed 
EU  emissions  trading  system  and  different  target  for  energy  efficiency  and  renewable 
production. In 2050, this pathway reaches a 60% reduction of greenhouse gas emissions, 
which  is  not  sufficient  to  meet  the  objectives  of  the  Paris  Agreement.  Five  different 
pathways have been created to meet the objectives of the Paris Agreement, each of them 
being based on different technological choices on how to decarbonise the EU economy: 

  Energy efficiency (EE): Pursuing deep energy efficiency in all sectors, with higher 

rates of building renovation. 

  Circular economy (CIRC): Increased resource and material efficiency, with lower 

demand for industry thanks to higher recycling rate and circular measures. 

  Electrification (ELEC): deep electrification in all sectors, with large deployment 
of heat pumps for building heating and faster electrification of all transport modes 
  Hydrogen (H2): Hydrogen is used in all sectors, and injected into the distribution 

grids to be used in the building for heating, and for freight transport. 

  Power-to-X  (P2X):  Large  development  of  e-gas  and  e-fuels  to  decarbonise  the 

different vectors without changing the energy supply type 

Based on these different options, three additional pathways are described in the LTS. The 
first one, COMBO, is a cost-efficient combination of the five options described above.  

The  two  additional  ones  are  more  ambitious,  with  a  goal  of  keeping  the  temperature 
increase  to  “around  1.5°C  by  2100”.  Including  carbon  sinks,  these  two  scenarios  reach 
carbon neutrality by 2050. The 1.5TECH scenario combines the technologies used in the 
five  different  pathways  defined  above  to  reach  net  zero  greenhouse  gases  emissions  in 
2050. The 1.5LIFE scenario is also based on the different technological pathways, but with 
a stronger focus on lifestyle changes leading to a lower energy consumption.  

Figure 11 - Power installed capacities in the different pathways of the Long-term Strategy 

12 For more information about the Long term strategy, please refer to the available documentation on the EC 
website : https://ec.europa.eu/clima/policies/strategies/2050_en 

29 

 
 
 
 
                                           
 
For this study, three scenarios have been selected at different time horizons: 

  Baseline (year 2030) 
  1.5TECH (year 2050) 
  P2X (year 2050) 

The  rationale  behind  this  choice  was  to  have  a  first  2050  scenario  that  reaches  carbon 
neutrality  in  2050.  1.5TECH  scenario  was  selected  against  1.5LIFE  since  it  was  more 
conservative in terms of behavioural change. P2X was then selected because it was the 
most ambitious pathway in terms of storage potential according to the modelling exercise 
realized for the definition of these different scenarios. Finally, Baseline was selected for 
the year 2030 since it reflects the currently agreed policies, allowing a comparison of the 
power flexibility needs between 2030 and 205013.   

2.2.1.2. 

Evolution of the energy mix in 2030 and 2050 

In the Long-Term Strategy pathways, the decarbonisation of the EU energy system 
mainly results from a large integration of power renewable energy sources, such as solar 
and wind capacities, that enable direct and indirect electrification of end-uses. As can be 
seen on 

Figure 11, solar and wind capacities soar between 2030 and 2050, rising from 670 GW to 
2 140 GW in the P2X scenario and 2 240 GW in the 1.5TECH scenario. 

This important decarbonised power production is used to switch from burning fossil fuels 
to using electricity, both in a direct way and via an indirect electrification route (i.e. via 
power-to-gas  technologies  and  end-uses  using  decarbonised  gases  and  fuels).  Between 
today and 2030, this fossil-to-RES switch is driven by direct electrification leading to an 
increase of the total power production from 2750 TWh in 2015 to 3030 TWh in 2030. From 
2030  onwards,  the  Long-Term  Strategy  considers  an  important  development  of  P2X 
technologies for indirect electrification, leading to the production of synthetic fuels such as 
e-gases14  and  e-liquids15  from  electrolysis,  replacing  their  fossil  counterparts  in  the 
industry, heating and mobility sectors. 

13 At the time of writing, the impact assessment of the 50 to 55% reduction of GHG emissions by 2030 was not 
available. This scenario has therefore not been included in this analysis. 
14 e-gas refers to e-CH4, which can be used instead of natural gas in all its applications 
15 e-liquids refers to a large range of complex synthetic hydrocarbons, that could be used instead conventional 
fuels derived from petrol (gasoline, unleaded, oil, kerosene, etc.) 

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Figure 12 - Share of energy carriers in final energy consumption (TWh) 

As  a  consequence  of  the  large  volumes  of  e-gases  and  e-liquids  being  required  to 
decarbonise these sectors, the demand for electricity drastically increases between 2030 
and 2050. In 2050, more than a third of the power production is dedicated to electrolysis, 
in order to produce carbon free fuels (hydrogen, e-gas and e-liquids). Direct electrification 
also  contributes  to  an  increase  of  the  total  power  demand,  raising  above  4  000  TWh  in 
both P2X and 1.5TECH scenarios. The combination of direct and indirect electrification leads 
to a total power demand that will be more than twice higher in 2050 than it is projected to 
be in 2030. The demand in the 1.5TECH scenario is a little higher than the one of the P2X 
scenario, since the more ambitious target in terms of reduction of greenhouse emissions 
requires a deeper decarbonisation of the energy sector. 

)
h
W
T
(

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

0

Non-flexible
power demand
Electric vehicles
and Heat pumps
P2X

2030 - Baseline

2050 - 1.5TECH

2050 - P2X

Figure 13 - Power demand of the different scenarios16 (TWh) 

2.2.1.3. 

Integration of the LTS scenarios in METIS  

In  order  to  assess  the  optimal  flexibility  portfolio  of  the  European  power  sector  for  the 
different scenarios of the Long-Term Strategy, the main characteristics of these scenarios 

16 The power demand includes the losses of the transmission and distribution grids 

31 

 
 
 
 
 
 
 
 
                                           
have  been  taken  into  account  in  the  modelling  exercise,  carried  out  using  METIS17.  We 
present below the list of assumptions that have been directly taken from the LTS scenarios: 

 

Installed capacities 
-  Solar fleet 
-  Wind fleet 
-  Nuclear 
-  Lignite and Coal 
-  Geothermal 
-  Biomass and waste 
-  Other renewables 

  Power demand 

-  Direct power demand, with a specific distinction of electric vehicles and 
heat pumps consumption (which can provide flexibility and demand 
response) 
Indirect power demand (i.e. electricity dedicated to P2X, in order to 
produce synthetic hydrogen, e-gas and e-fuels) 

- 

  Commodity prices 

-  Fuel prices (gas, coal, oil) 
-  EU-ETS carbon price 

The LTS pathways have been developed and published at the EU level. This study follows 
this approach, providing EU-wide aggregations of assumptions and results in the following 
sections. 

Note on the scenarios used in the modelling 

As explained above, the scenarios that we have built to assess the role of storage are 
partly based on the LTS pathways, and some structural datasets are directly taken from 
the  LTS  assumptions  (see  list  above).  However,  the  modelling  of  the  power  system 
behaviour  (described  in  Section  2.4.1)  and  the  identification  of  the  optimal  flexibility 
portfolio relies on additional assumptions (e.g. potential, capital costs, etc.). Therefore, 
results can differ from those of the Long-Term Strategy pathways, especially in terms 
of installed capacities of the flexibility solutions that are optimised in our work (gas-fired 
power plants, pumped hydro storage, batteries, interconnectors, P2X facilities). 

To distinguish the scenarios created during this study from the underlying LTS scenarios, 
we adopt the following convention throughout this report: 

Scenario 

Underlying LTS scenario 

METIS-Baseline (2030) 

2030 - Baseline 

METIS-1.5C (2050) 

2050 – 1.5TECH 

METIS-2C-P2X (2050) 

2050 – P2X 

In addition to the European Union, 7 neighbouring countries have also been modelled to 
capture their interactions with the EU member states. These 7 countries are the following: 

  Bosnia-Herzegovina 
  Montenegro 
  Norway 
  North Macedonia 
  Serbia 

17 https://ec.europa.eu/energy/data-analysis/energy-modelling/metis_en 

32 

 
 
 
 
 
 
 
 
 
                                           
EUROPEAN COMMISSION 

  Switzerland 
  United-Kingdom 

For all these countries, their power production capacities and demand are extracted from 
scenarios developed by the  ENTSOs in the context of the  elaboration of their respective 
TYNDP 2018 .  

The following scenarios have been selected, as they were assessed to be the closest to the 
selected EC pathways: 

  METIS-Baseline (2030): “Sustainable Transition” (ST) 2030 scenario has been 
selected, as it was in line with the 2030 objectives of the European Union  

  METIS-1.5C and METIS-2C-P2X (2050): “Global Climate Action” (GCA) 2040 has 
been selected, since it relies as the LTS scenario in large-scale power renewable 
for both direct and indirect electrification of the EU energy system 

  EVOLUTION OF THE FLEXIBILITY NEEDS 

As mentioned above, we have adopted the flexibility framework developed in the context 
of the Mainstreaming RES study18. The first step is to assess the flexibility needs of the 
power system, on different timescales. The daily, weekly and seasonal flexibility metrics of 
the study are used here to evaluate the needs in 2030 and 2050 scenarios. 

2.2.2.1. 

Flexibility needs definition 

In  the  following  we  define  daily,  weekly  and  seasonal  flexibility  needs  by  analysing  the 
dynamics  of  the  residual  load  on  several  timescales,  so  as  to  take  into  account  all  the 
underlying phenomena that drive the need for flexibility. 

Flexibility is defined as the ability of the power system to cope with the variability of the 
residual load curve at all times. Hence, flexibility needs can be characterised by analysing 
the residual load curve. 

Daily flexibility needs  

On a daily basis, if the residual load were to be flat, no flexibility would be required from 
the dispatchable units. Indeed, in such a situation, the residual demand could be met by 
baseload units with a constant power output during the whole day. In other words, a flat 
residual load does not require any flexibility to be provided by dispatchable technologies.  
We therefore define the daily flexibility needs of a given day by measuring by how much 
the residual load differs from a flat residual load. The daily flexibility needs computed in 
this report are obtained by applying the following procedure:  

1.  Compute  the  residual  load  over  the  whole  year  by  subtracting  variable  RES-e 

generation and must-run generation from the demand.  

2.  Compute the daily average of the residual load (365 values per year). 
3.  For each day of the year, compute the difference between the residual load and its 
daily  average  (the  light  green  area  shown  on  the  figure  below).  The  result  is 
expressed as a volume of energy per day (TWh per day) 

4.  Sum the result obtained over the 365 days. The result is expressed as a volume of 

energy per year (TWh per year). 

18 Source : European Commission, “Mainstreaming RES - Flexibility portfolios,” 2017. 

33 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                           
Figure 14 - Illustration of daily flexibility needs (the solid purple line measures the deviation of the 
residual load from its daily average for a given day). Source: RTE, Bilan prévisionnel de l’équilibre 
offre-demande, 2015 

Weekly flexibility needs  

The same reasoning is applied to evaluate the weekly flexibility needs. However, in order 
not  to  re-capture  the  daily  phenomena  that  are  already  taken  into  account  by  the  daily 
flexibility needs indicator, we define weekly flexibility needs as follows:  

1.  Compute  the  residual  load  over  the  whole  year  by  subtracting  variable  RES-e 
generation and must-run generation from the demand with a daily resolution  

2.  Compute the weekly average of the residual load (52 values per year)  
3.  For each week of the year, compute the difference between the residual load (with 
a daily resolution) and its weekly average (the light green area shown on  Figure 
15). The result is expressed as a volume of energy per week (TWh per week).  
4.  Sum  the  result  obtained  over  52  weeks.  The  result  is  expressed  as  a  volume  of 

energy per year (TWh per year).  

Figure 15 - Illustration of weekly flexibility needs (the solid purple line measures the deviation of 
the residual load from its daily average for a given week). Source: RTE, Bilan prévisionnel de 
l’équilibre offre-demande, 2015 

Seasonal flexibility needs 

Finally, the seasonal flexibility needs are defined in a similar way: 

1.  Compute  the  residual  load  over  the  whole  year  by  subtracting  variable  RES-e 
generation  and  must-run  generation  from  the  demand  with  a  monthly  time 
resolution  

2.  Compute the annual average of the residual load  
3.  Compute the difference between the residual load (with a monthly time resolution) 
and  its  annual  average.  The  result  is  expressed  as  a  volume  of  energy  per  year 
(TWh per year). 

34 

 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

2.2.2.2. 

Evaluation of the flexibility needs 

Daily flexibility assessment 

The daily flexibility needs at the EU28 level are shown for the three reference scenarios on 
Figure 16 below. From METIS-Baseline in 2030 to METIS-1.5C in 2050 the flexibility needs 
almost triple, going from 270 TWh in 2030 to 780 TWh in 2050. A small difference can be 
seen between the two 2050 scenarios, the flexibility needs vary from 780 TWh in METIS-
1.5C to 730 TWh in METIS-2C-P2X. 

This  significant  increase  from  2030  to  2050  is  directly  related  to  the  increase  of  RES 
installed capacity, in particularly solar power. In all three scenarios most of the flexibility 
needs is concentrated in a few countries, who have the highest  RES installed capacities. 
Together Germany, France, Spain, United-Kingdom and Italy account for the majority of 
the daily flexibility needs in all scenarios. The slight difference between the daily flexibility 
needs  in  METIS-1.5C  and  METIS-2C-P2X  can  be  explained  by  the  difference  in  solar 
installed capacity in the two scenarios, 1055 GW in METIS-1.5C and 1000 GW in METIS-
2C-P2X.  

Figure 16 - Daily flexibility needs at EU28 level 

A  high  penetration  of  solar  power  can  substantially increase  the  flexibility  needs  due  to 
hourly generation variability during the day. However, in some cases a smaller amount of 
solar generation can in fact help decrease the flexibility needs as the daily production is 
generally correlated to the demand and thus tends to smoothen the residual demand curve 
throughout  the  day.  This  phenomenon,  also  known  as  the  duck  curve,  is  illustrated  by 
Figure 17, which shows the demand (solid blue line) and residual loads for different solar 
capacity deployment. 

35 

 
 
 
 
 
 
 
 
 
Figure 17 - Illustration of the impact of solar capacity deployment on the residual load19 

Figure  18  below  illustrates  the  net  demand  and  total  generation  from  a  typical  summer 
week in a country with high solar installed capacity. 

Figure 18 Residual demand and hourly generation 
(total load in blue, and residual load in red) 

It is possible to see the effects of solar installed capacity on the daily flexibility needs by 
further analysing a few countries individually. Figure 19 shows the installed capacity of two 
countries with high solar penetration and two with lower solar capacity and below, Figure 
20 shows their respective daily flexibility needs. We can see the correlation between solar 

19 Source: Mainstreaming RES study 

36 

 
 
 
  
 
 
 
 
                                           
EUROPEAN COMMISSION 

capacity  and  daily  flexibility  needs,  countries  with  higher  solar  production  have 
proportionally higher daily flexibility needs. 

Figure 19 - Solar installed capacities for countries with high and low solar capacity 

Figure 20 - Daily flexibility needs for countries with high and low solar capacity 

Weekly flexibility assessment 

Similarly, weekly flexibility needs are also found to be substantially higher in both 2050 
scenarios when compared to the METIS-Baseline 2030 scenario. Below, Figure 21 shows 
the  total  weekly  flexibility  needs  for  all  EU28  countries  for  the  three  scenarios  METIS-
Baseline, 1.5TECH and METIS-2C-P2X. The weekly flexibility needs increase from 210 TWh 
in  2030  to  610  TWh  and  600  TWh  in  the  METIS-1.5C  and  METIS-2C-P2X  scenarios 
respectively at the 2050 horizon.  

In this case too, the overall increase of flexibility needs can be explained by the increase 
of RES capacity from 2030 to 2050. When analysing weekly flexibility needs, one finds that 
solar  capacity  has  much  less  impact  than  wind  power  since  the  generation  of  PV  varies 

37 

 
 
 
 
 
 
 
 
 
 
mainly throughout the day and show a less important variation from one day to another. 
Wind power, in contrast, has a significant effect on weekly flexibility, since wind generation 
tends to have wind regimes that can last a few days, showing a substantial variation during 
the week. 

Figure 21 - Weekly flexibility needs at EU28 level 

By analysing representative countries, it is possible to assess the impact of wind installed 
capacity on weekly flexibility needs. Figure 22 shows the installed capacity in two countries 
with  high  level  of  wind  installed  capacity  and  two  with  lower  wind  capacity  and  below, 
Figure 23 shows their respective weekly flexibility needs. 

Figure 22 - Wind installed capacities for countries with high and low wind capacity 

38 

 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Figure 23 - Weekly flexibility needs for countries with high and low wind capacity 

Seasonal flexibility assessment 

Whereas  solar  PV  and  wind  power  are  clear  drivers  of  the  increase  of  daily  and  weekly 
flexibility needs, the seasonal flexibility needs depend on several factors that might have 
different and sometimes opposing impacts on its value: 

  The thermo-sensitivity of power demand (which may vary by country depending on 
the portfolio of heating technologies, the importance of air conditioning, etc.) 

  Solar  production  (which  varies  during  seasons  and  therefore  can  increase  or 
decrease flexibility needs depending on the demand profile of each country). For a 
country with high demand during summer, solar production can decrease seasonal 
flexibility needs whereas for countries with lower summer demand it will increase 
these seasonal flexibility needs. 

  Wind  production  (usually  higher  during  winter  so  it  tends  to  reduce  seasonal 
flexibility needs for most countries, who typically have higher demand during this 
time of the year). 

The total seasonal flexibility needs of all EU28 countries are shown on Figure 24 for each 
of  the  considered  scenarios.  Compared  to  the  daily  and  weekly  needs,  the  growth  from 
2030 to 2050 is found to be less important.  

From  the  METIS-Baseline  (2030)  to  the  METIS-1.5C  scenario  (2050),  the  seasonal 
flexibility needs increase by 42%, going from 340 TWh in 2030 to 490 TWh in 2050. A 6% 
difference  can  be  seen  between  the  2050  scenarios,  with  490  TWh  in  the  METIS-1.5C 
scenario  and  460  TWh  in  the  METIS-2C-P2X  scenario.  The  difference  of  solar  installed 
capacities between the two 2050 scenarios is the main driver explaining that difference: 
the 55 GW of additional solar capacity in the METIS-1.5C scenario increase the production 
during summer, while in most countries the power demand is higher in winter. 

39 

 
 
 
 
 
 
 
 
 
 
Figure 24 - Seasonal flexibility needs at EU28 level 

2.3.  CHARACTERISATION OF THE DIFFERENT FLEXIBILITY SOLUTIONS 

The  second  step  of  the  methodology  is  to  characterise  the  different  flexibility  solutions. 
Flexibility  can  be  provided  by  different  technologies,  conventional  ones  such  as  flexible 
generation,  interconnectors  or  pumped  storage  but  also  less  widespread  today  such  as 
batteries or system integration (via electrolysers and the flexibility of the coupled sectors). 
This section presents the characteristics of the different technologies that can . 

Pumped hydro storage 

Pumped  Hydro  Storage  (PHS)  is  one  of  the  most  conventional  storage  solutions,  but  its 
potential is limited by the availability of sites and might therefore vary considerably from 
one country to another. For all scenarios, PHS were separated in two categories: 

  Existing  PHS:  with  existing  capacities  given  by  ENTSO-E’s  TYNDP  2018  scenario 

“Best Estimate” scenario for the year 2020. 

  New PHS: potentials are built from ENTSO-E’s TYNDP 2018 Global Climate Action 
for  scenarios  METIS-2C-P2X  and  METIS-1.5C  (30  GW)  and  from  TYNDP  2018 
Sustainable Transition for METIS-Baseline (15 GW). 

A  storage  of  24  hours  is  assumed  for  all  added  capacities.  All  technical  parameters  are 
listed on Table 1 and Table 2. Below, Figure 25 provides a breakdown of the existing and 
potential PHS capacity for each country. 

40 

 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Figure 25 - Pumped hydro storage potential in 2030 and 2050 

Batteries 

Batteries can be used to provide short-term flexibility to the system. For all scenarios, four 
types  of  battery  have  been  considered  as  potential  investment  options,  with  storage 
duration of respectively 1, 2, 4 and 8 hours. No capacity limit is considered for these assets. 
Their CAPEX and other technical parameters are specified in Table 1 and Table 2. 

Gas-fired plants 

Both open-cycle gas turbines (OCGT) and combined-cycle gas turbines (CCGT) can provide 
additional flexibility and help balance the highly variable generation of RES.  While OCGT 
can provide a quicker response, they have lower efficiency than CCGTs. CCGT with carbon 
capture and storage (CCS) are also considered, with a capture rate of 90%. All gas-fired 
plants capacities are optimised without any capacity limits. Their technical parameters are 
listed in Table 1 and Table 2. 

The LTS scenarios foresee limited amount of biogas being available for power production20 
in 2050, but that amount is found to be sufficient to produce electricity with conventional 
gas-fired  units  during  the  hours  where  the  power  system  is  found  to  be  needing  such 
flexibility services. Gas turbines running on hydrogen instead of natural gas did not appear 
to be economically relevant in our results21. 

Electrolysis and Methanation 

Electrolysers and methanation  plants are investment options, without limitation on their 
potentials.  The  whole  power-to-X  chain  has  an  important  role  in  enhancing  overall 
flexibility, as electrolysers can serve not only to directly supply hydrogen demand enabling 
the indirect electrification of a set of end-uses, but also convert the excess of renewable 
generation into hydrogen that can be stored and later converted to synthetic fuels. In this 
context, methanation completes the power-to-gas-to-power loop, allowing the production 

20 C.f. 2.4.1 for the potentials considered in the study 
21 This hypothesis has been tested in the sensitivities, with possible investments in hydrogen powered 
OCGT/CCGT whose CAPEX were assumed to be 20% higher than conventional turbines powered with natural 
gas. In all three scenarios, the model did not invest in hydrogen OCGTs or CCGTs. 

41 

 
 
 
 
 
 
 
 
                                           
of  synthetic  gas  that  can  fuel  gas-fired  plants  during  peak  residual  load  episodes.  All 
technical parameters of both electrolysers and methanation plants are listed below in Table 
1 and Table 2. 

Only one type of technology was considered in the  modelling. The CAPEX and efficiency 
are equivalent to the Alkaline Electrolyser, the cheapest technology considered in the Long-
Term  Strategy.  A  scenario  with  higher  CAPEX  for  electrolysers  is  considered  in  the 
sensitivity analysis (see Section 2.7). 

Interconnectors 

Interconnectors  have  a  significant  role  to  play  in  the  provision  of  flexibility,  allowing 
countries  to  benefit  from  each  other’s  resources.  They  enable  exports  and  imports  of 
energy between countries with different energy prices and levels of RES shares, ensuring 
the  balance  between  supply  and  demand  can  be  met  at  the  lowest  cost,  avoiding 
curtailments and better exploiting generation and storage technologies. 

In all scenarios, interconnectors capacities are optimised based on ENTSO-E’s TYNDP 2018 
Project  List.  The  existing  capacity  is  based  on  interconnectors  from  TYNDP  2018  BE  for 
2020  and  the  potential  for  additional  capacities  are  based  on  TYNDP  2018  GCA  2040 
scenario for scenarios METIS-2C-P2X and METIS-1.5C (170 GW potential) and on TYNDP 
2018  ST  2030  for  METIS-Baseline  (74  GW  potential)22.  Figure  26  shows  the  existing 
installed capacities and the potential for additional capacity for each country. 

Figure 26 - Interconnectors potential for EU countries 

22 Please note that the capacity of a transmission is counted in this total for each direction of the interconnexion 
flow. Then, if an interconnexion has an NTC value of 1 GW in one side and 2 GW in the other side, the total 
capacity would be 3 GW. 

42 

 
 
 
 
 
 
 
 
 
 
                                           
EUROPEAN COMMISSION 

Table 1 - Technical parameters for flexibility solutions used for METIS-Baseline 2030 

Additional 
capacities 
OCGT 
CCGT 
CCGT with 
CCS 
Pumped 
Hydro 

Interconnectors 

Back-up power 
plants 

Storage 
capacities 

Power-to-X 
technologies 

Batteries 
Electrolysis 
Methanation 

Potential 

Optimised 
capacity 

Investment 
cost (€/kW) 

Fixed O&M costs 
(% CAPEX) 

Efficiency 

Lifetime 

+ 74 GW 
- 
- 

- 

+ 15 GW 

- 

- 
- 

 
 
 

 

 

 
 
 

Based on line-by-line projects 

700 
770 

1625 

1212 
120€/kW + 
120€/kWh 
300 
633 

3% 
2% 

2% 

1,20% 

4,30% 
6,50% 
3,50% 

- 

40% 
63% 

49% 

81% 

90% 
82% 
79% 

50 
25 
30 

30 

60 

10 
20 
25 

Table 2 - Technical parameters for flexibility solutions used for 2050 scenarios 

Additional 
capacities 
OCGT 
CCGT 
CCGT with 
CCS 
Pumped 
Hydro  

Interconnectors 

Back-up power 
plants 

Storage 
capacities 

Power-to-X 
technologies 

Batteries 
Electrolysis 
Methanation 

Potential 

Optimised 
capacity 

Investment 
cost (€/kW) 

Fixed O&M costs 
(% CAPEX) 

Efficiency 

Lifetime 

+ 170 
GW 
- 
- 

- 

+ 30 GW 

- 

- 
- 

 
 
 

 

 

 
 
 

Based on line-by-line projects 

60023 
750 

1500 

121224 
120€/kW + 
120€/kWh25 
18026 
263 

3% 
2% 

2% 

1,20% 

4,30% 
6,50% 
3,50% 

- 

40% 
63% 

49% 

81% 

90% 
82% 
79% 

50 
25 
30 

30 

60 

10 
20 
25 

Electric Vehicles and Heat Pumps 

Electric vehicles and heat-pumps can play an important role in the provision of short-term 
flexibility.  The  behaviour  of  electric  vehicles  with  smart  charging  or  vehicle-to-grid 
capabilities,  and  heat-pumps  combined  with  short-term  storage  (2  hours  in  the  model), 
can  be  optimised  as  a    hours  with  highest  renewable  generations  and  lower  demand, 
therefore smoothing the residual demand profile. 

At the 2030 horizon, 30% of electric vehicles and heat pumps are considered as being able 
to offer flexibility services, while in 2050 this percentage is assumed to rise to 70%. 

23 CAPEX source: “Technology pathways in decarbonisation scenarios”, 2018 
24 CAPEX source: ETRI and METIS S8 
25 Sources: ETRI and METIS S8 
26 CAPEX and efficiency sources: “Technology pathways in decarbonisation scenarios” and METIS S8 

43 

 
 
  
  
 
 
  
  
 
 
 
 
 
                                           
 
 
2.4.  DESIGN OF THE OPTIMAL FLEXIBILITY PROTFOLIO 

The last step of the methodology is the optimisation of the flexibility portfolio. For each of 
the 3 scenarios described in the previous sections, the objective is to jointly optimise the 
investments in each of the different flexibility solutions described in section 2.3, and the 
hourly operations of the whole power system (flexible generation, demand response, P2X, 
exchanges).  Thereby,  the  optimisation  takes  into  account  the  interrelation  between 
electricity prices and profitability of the different flexibility solutions. 

The next section describes the results obtained for the 3 different scenarios, in terms of 
installed  capacities  focusing  on  the  selected  flexibility  solutions.  We  complement  the 
analysis with deep dives on the hourly dynamics of the different flexibility solutions. 

  DESCRIPTION  OF  THE  MODEL  USED  TO  OPTIMISE  THE  FLEXIBILITY 
PORTFOLIO 

The METIS model 

The METIS model is developed by Artelys on behalf of the European Commission.  METIS 
is a multi-energy model covering in high granularity (in time and technological detail, as 
well as representing each Member State  of the EU and relevant neighbouring countries) 
the whole European power system and markets. 

METIS  includes  its  own  modelling  assumptions,  datasets  and  comes  with  a  set  of  pre-
configured  scenarios.  These  scenarios  usually  rely  on  the  inputs  and  results  from  the 
European Commission’s projections of the energy system, for instance with respect to the 
capacity mix or annual demand. Based on this information, METIS allows to jointly perform 
capacity expansion and hourly dispatch simulations (typically over entire years, i.e. 8760 
consecutive  time-steps  per  year).  The  result  consists  in  the  investments  in  selected 
technologies  (flexibility  solutions  in  this  case,  but  METIS  can  also  optimise  RES 
investments, etc.) and the hourly utilisation of all technologies: generation, storage and 
cross-border capacities as well as demand side response facilities. 

Modelling of the different scenarios 

The modelling of the different scenarios is based on the METIS power system models and 
its  capacity  expansion  module.  Each  scenario  represents  the  projection  of  the  power 
system for a given year in the future (2030 or 2050), at the Member State level with an 
hourly  time  resolution.  Exchanges  between  countries  are  represent  by  interconnections, 
whose flows are bounded by NTC values. The adequacy between the power demand (and 
P2X  demand  in  the  2050  scenarios)  and  the  power  production  is  ensured  by  a  joint 
optimisation of the hourly power supply and investments in flexibility solutions, with the 
objective  of  minimising  the  total  costs  of  the  European  system27.  For  more  information 
about 
: 
https://ec.europa.eu/energy/data-analysis/energy-modelling/metis_en.  

the  METIS  model,  please 

the  EC  METIS  website 

refer 

to 

Assumptions from the Long-Term Strategy 

The three scenarios (METIS-Baseline, METIS-1.5C and METIS-2C-P2X) are partially based 
on the pathways elaborated in the context of the EC Long-Term Strategy. We provide below 

27 The total costs of the system include annualised investment costs (for optimised capacities), fixed operation 
and maintenance costs, variable operation and maintenance costs, fuel costs and carbon taxes. 

44 

 
 
 
 
 
                                           
EUROPEAN COMMISSION 

the  main  input  data  from  the  LTS  scenarios  that  have  been  integrated  into  the  METIS 
model: 

  Power demand, with the following end-use decomposition: 

-  Direct power consumption: 
  Heat pumps 
  Electric vehicles 
  Other 

-  P2X (hydrogen, e-gases and e-fuels) 

  Power installed capacities: 

-  Variable renewable energy sources (wind and solar) 
-  Other renewables (mainly hydro, biomass and waste) 
-  Nuclear 
-  Coal/lignite 
  Carbon taxes projection: 

-  METIS-Baseline 2030: 28 €/tCO2 
-  METIS-1.5C 2050 and METIS-2C-P2X 2050: 350 €/tCO2 

  Biogas potential dedicated to power production: 
-  METIS-Baseline 2030: 280 TWh 
-  METIS-2C-P2X 2050: 450 TWh 
-  1.5TECH 2050: 560 TWh 

To  represent the variability of the wind and solar production and  of the power demand, 
3 different climatic years have been used: a cold year, a warm year and a year with an 
average  temperature  profile.  The  optimisation  is  performed  jointly  for  these  3  climatic 
years, in order to obtain a flexibility portfolio that is robust to the different possible climatic 
configurations. 

Optimised investments 

The model performs a joint optimisation of the operations of the whole power system, and 
of 
solutions.  The  optimised 
capacities/investments are the ones described in section 2.3: 

investments 

considered 

flexibility 

the 

the 

in 

Interconnectors 

  Back-up power plants: gas capacities (OCGT, CCGT, CCGT+CCS) 
 
  Storage capacities (Pumped hydro and stationary batteries) 
  Power-to-X technologies (electrolysers and methanation) 

The  flexibility  of  the  power  systems  can  be  provided  by  these  additional  capacities,  but 
also by the other flexible technologies whose capacities are directly coming from the LTS 
scenario  (nuclear,  hydropower,  coal/lignite,  biomass)  or  demand-side  response  (smart 
charging of electric vehicles and heat pumps with thermal storage). 

The following figure illustrates the interactions between the different parts of the system 
we have modelled, and highlights the technologies in which the model is allowed to invest 
Since it is central to the analysis at hand, we emphasise the power-to-gas-to-power loop. 

It should be noted that, in our scenario, the whole P2X demand (hydrogen, e-gas and e-
liquids) is represented by an aggregated hydrogen demand. Since the possible flexibility 
on the end-user side is difficult to predict (possible storage of hydrogen, refurbishment of 
existing network and storage to be compatible with e-gases, flexibility of the fuel supply 
for vehicles, etc.), we have assumed a large flexibility on the demand-side of hydrogen, e-
gas and e-fuels, with limitations on the annual volume that should be provided, in line with 
the values  of the  Long-Term Strategy pathways. Several sensitivity analyses have been 
performed to assess the impacts of a lower flexibility of the hydrogen demand.  

In the different scenarios, hydrogen production from electrolysis can be complemented by 
hydrogen  produced  by  SMR  (steam  methane  reforming)  combined  with  CCS  (carbon 

45 

 
 
 
 
capture  storage)  when  RES  generation  is  not  high  enough  to  produce  all  the  required 
hydrogen. The associated production cost is 90€/MWh. 

Figure 27 - Description of the model used in the study28 

28 Source: adapted from METIS study S1 

46 

 
 
 
 
 
 
 
 
 
                                           
EUROPEAN COMMISSION 

  OPTIMAL PORTFOLIO FOR THE 3 SCENARIOS 

In  this  section  we  present  the  results  of  the  optimised  flexibility  portfolio  for  the  three 
considered scenarios, with different illustrative examples to more precisely assess how the 
different flexibility solutions interact to deliver a secure source of electricity. 

2.4.2.1. 

METIS-Baseline 2030 

Installed capacities 

Figure 28 - Total installed capacities for EU-28 for power production, storage and METIS-2C-P2X for 
METIS-Baseline 2030 

In 2017, 279 GW of variable renewable energy sources (109 GW of solar and 169 GW of 
wind) were installed in EU-2829. In the METIS-Baseline scenario of the Long-Term Strategy 
these  capacities more than double by 2030, reaching 320 GW for solar and 352 GW for 
wind. This important increase of variable generation technologies requires an evolution of 
the flexibility solutions to enable the system to match the demand at all times. The optimal 
portfolio of flexibility solutions enabling a least-cost integration of these RES capacities is 
described in the following paragraph. 

Focus on the optimal flexibility portfolio 

Figure 29 shows the installed capacities of all optimised flexibility solutions in the METIS-
Baseline 2030 scenario.  A large part of the  optimised flexibility portfolio is composed  of 
gas capacities, with 285 GW of CCGTs and 63 GW of OCGTs. There is also a substantial 
investment in batteries that reach a total capacity of around 67 GW (31 GW with a 4-hour 
discharge time, 36 GW with a 2-hour discharge time). In this scenario, there are limited 
investments in new PHS capacity, as they are generally found not to be competitive with 
batteries for a few hours of storage. In 2030, electrolysers and methanation plants do not 
appear to be competitive flexibility solutions, mainly because of their capital costs, which 
are higher than those of other technologies that can provide similar flexibility services. 

29 Source : Eursotat (online data code : nrg_in_epc) 

47 

 
 
 
 
 
 
                                           
Figure 29 Installed capacities for EU-28 optimised flexibility solutions for METIS-Baseline 203030 

Batteries provide short-term flexibility 

When looking at the detailed results, one can notice that the investments in batteries are 
concentrated in a few countries, more specifically countries with the highest PV installed 
capacities. This result is in line with the analysis of flexibility needs that has been presented 
in the previous section: solar  PV drives the need for short-term flexibility, and batteries 
are well adapted technologies to provide such services. 

A  thorough  analysis  of  the  hourly  results  reveals  how  batteries  can  supply  short-term 
flexibility. Figure 30 and Figure 31 below show respectively the residual demand and hourly 
generation for a country with high vRES share during a week. Typically, batteries are used 
the most during the hours of peak residual load. The surplus of renewable generation is 
stored throughout the day and then used during the morning and evening peaks, when the 
total RES production tends to be low and demand tends to be high. 

Figure 30 Example of residual load in third week of May for METIS-Baseline 2030 scenario 

30 METIS-Baseline (2030) - CCGT: 285 GW; OCGT: 63 GW; Batteries: 67 GW; Pumped storage: 41 GW; 
Electrolysers and methanation: 0 GW 

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EUROPEAN COMMISSION 

Figure 31 Example of cumulative production in third May for METIS-Baseline 2030 scenario 

Figure  32  shows  the  average  daily  profiles  for  batteries  with  4-hour  discharge  time. 
Batteries are consuming power around midday when the solar production is the  highest 
and releasing energy at later times, to meet the early evening power demand peak. To a 
lower extent, batteries are also used to store energy during the night in order to release 
energy during the morning demand peak.  

Figure 32 Daily utilisation profiles of 4-hour batteries 
The blue curve represents the power production and the red curve the power consumption of the batteries 

In  METIS-Baseline  2030  scenario,  demand-response  plays  a  limited  role  as  a  source  of 
flexibility,  since  only  30%  of  electric  vehicles  and  heat  pumps  are  considered  as  being 
flexible. Figure 33 shows a comparison between the power demand, as it would be without 
demand-side response, and the power demand after the use of electric vehicles and heat-
pumps has been optimised. Demand-side response helps reduce evening demand peaks, 
by shifting it to hours with lower demand during the day, when the PV production is higher.  

49 

 
 
 
 
 
 
 
 
Figure 33 Demand without demand-response (in blue) and optimised demand (in red) during four 
days in April 

In the 2030 scenario, investments in interconnectors were found to add 41 GW to the 2020 
grid. Typically, interconnectors are used to export exceeding PV production from countries 
with  high  solar  generation  or  to  balance  wind  generation  from  countries  with  extremely 
different profiles. Figure 34 shows on the left the total installed capacity in 2030 and on 
the right, the detailed results per member state. Some countries like France, Italy, Spain 
and the UK invest almost up to the maximum of the available capacity. This behaviour is 
mainly driven by their high shares of vRES, that require flexibility services such as those 
that can be brought by interconnectors. 

Figure 34 Installed capacities of transmissions31 in EU-28 in METIS-Baseline 2030 with minimum 
and maximum bounds 

Figure 35 and Figure 36 illustrate a situation of cooperation from a country with high wind 
generation  combined  with  the  use  of  storage.  The  exceeding  production  is  stored  in 
batteries  during  periods  of  high  wind  generation  and  then  exported  to  a  neighbouring 
country with a different generation profile. In this case we can see that the use of storage 
solutions  can  be  useful  even  when  the  national  demand  has  already  been  met  by  the 
national production. The interconnections combined with batteries help balance generation 

31 Please note that the capacity of a transmission is counted in this total for each direction of the interconnexion 
flow. Then, if an interconnexion has an NTC value of 1 GW in one side and 2 GW in the other side, the total 
capacity would be 3 GW. 

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EUROPEAN COMMISSION 

in  countries  with  different  wind  profiles,  smoothing  surpluses  and  shortages  in  both 
countries. 

Figure 35 Example of cumulative generation of country A in a period of RES surplus 

Figure 36 Cumulative generation of country B with moment of imports from country A (cf. Figure 
35) 

51 

 
 
 
 
 
 
 
 
 
2.4.2.2. 

2050 scenarios: METIS-1.5C AND METIS-2C-P2X 

Installed capacities 

Figure 37 - Total installed capacities for power production, storage and P2X for METIS-1.5C, 
METIS-2C-P2X and METIS-Baseline scenarios 

In  both  the  considered  2050  scenarios,  the  power  generation  mix  is  considerably 
transformed compared to the 2030 METIS-Baseline scenario. Variable renewable capacities 
(solar and wind) rise to 2 302 GW for METIS-1.5C, and 2 227 GW for METIS-2C-P2X, to be 
compared with 672 GW in 2030 METIS-Baseline. Most of the power production in 2050 is 
coming  from  wind  and  solar  capacities,  for  direct  production  of  electricity  but  also  for 
indirect electrification of end-uses via P2X processes. 

Focus on the optimal flexibility portfolio 

At the 2050 horizon, the flexibility portfolio changes drastically compared to the one found 
for  the  2030  horizon.  With  almost  half  of  the  power  production  dedicated  for  P2X, 
electrolysers become the first flexibility solution in term of installed capacity. Electrolysers 
are not only used to supply the demand of hydrogen, e-gases and e-fuels but also provide 
flexibility to the electricity system. 

In 2050, gas-fired plants continue to have an important role in the provision of flexibility. 
Their fuel supply is however totally different than the one of 2030: while in 2030 gas-fired 
plants were mainly using natural gas32, in 2050 gas-fired plants are mainly using biogas, 
and  to  a  lower  extent  e-gases  coming  from  the  power-to-gas-to-power  loop.  Another 
important difference is the split between  CCGTs and OCGTs: while CCGTs represent the 
largest share of gas-fired power plants in 2030, they only represent a small fraction of the 
plants in 2050 (Figure 38). This is mainly due to the small number of full load hours during 
which these units run at the 2050 horizon. As a consequence, the model favours not paying 
for  the  extra  cost  of  a  combined  cycle  compared  to  an  open  cycle.  In  2050,  CCGT  with 
carbon  capture  storage  are  found  to  emerge.  Indeed,  with  a  CO2  prices  reaching 
350 €/tonneCO2, the lower efficiency of these plants and their greater costs is often offset 
by the savings in term of carbon taxes.  

32 A limited potential of biogas is also present in 2030 (c.f. section 2.2.1.3), but only covers a small fraction of 
the total consumption of gas. 

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EUROPEAN COMMISSION 

Figure 38 Installed capacities for flexibility solutions for METIS-1.5C33 and METIS-2C-P2X34 in 2050 

Investments in batteries and pumped-storage capacities are rather low in 2050, since they 
directly compete with electrolysers that are needed for the provision of hydrogen, e-gases 
and e-liquids. Indeed, electrolysers connected to power markets can be operated in a smart 
manner to provide flexibility to these markets. Therefore, the capacity of pumped hydro 
storage  is  found  to  remain  close  to  its  current  value,  and  investments  in  batteries  are 
limited to 6 GW in METIS-2C-P2X scenario, and below 1 GW for METIS-1.5C scenario. Since 
electrolysers emerge as the most important flexibility solution (in terms of capacity), we 
devote the next paragraphs to the analysis of their operational behaviour. 

Electrolysers 

The flexibility provided by the hydrogen demand35 allows electrolysers production to adapt 
to different situations. A country with high wind share, for example, will be able to produce 
hydrogen in moments of power surplus that are correlated with its wind profile. In Figure 
39  and  Figure  40  we  can  see  how  the  electrolysers’  operations  adapt  to  the  generation 
pattern of wind power, producing to their maximum during these moments. 

The daily pattern of the electrolysers’ operation is mainly driven by the solar production. 
Electrolysers will produce most in moments of low demand, typically during the day when 
solar production is at its maximum and residual demand is negative. 

Figure 39 Example of electrolysers usage during the second week of May for METIS-1.5C 2050 

33 METIS-1.5C (2050) – CCGT with CCS: 37 GW; CCGT: 33 GW; OCGT: 129 GW; Electrolysers: 560 GW; 
Methanation: 12 GW; Batteries: <1 GW; Pumped storage: 40 GW 
34 METIS-2C-P2X (2050) – CCGT with CCS: 30 GW; CCGT: 22 GW; OCGT: 140 GW; Electrolysers: 537 
GW; Methanation: 11 GW; Batteries: 6 GW; Pumped storage: 40 GW 
35 We remind here that the flexibility on the P2X side (hydrogen, e-gas and e-liquids) is modelled as an annual 
demand of hydrogen that can be supplied without any additional constraint. 

53 

 
 
 
 
 
 
 
                                           
Figure 40 Example of cumulative generation during the second week of May for METIS-1.5C 2050 

Methanation36 (for power-to-gas-to-power) 

Electrolysers are found to provide a large part of the flexibility in 2050 scenarios, thanks 
to the important flexibility offered  by the hydrogen demand side (for direct use, and for 
the production of e-gases and e-liquids). In this context, methanation plants allowing to 
close the power-to-gas-to-power loop do not appear to be an important flexibility solution, 
since electrolysers can already absorb the power surplus of variable RES, and limit or stop 
their production of hydrogen when the residual load is positive. 

Even though methanation plants are not providing much additional flexibility, in both the 
METIS-1.5C  and  METIS-2C-P2X  scenarios,  investments  in  these  plants  appear  to  be 
relevant for some countries with significant RES surpluses. In total the installed capacities 
dedicated to power-to-gas-to-power loop37  is 12 GW in METIS-1.5C scenario, and 11 GW 
in METIS-2C-P2X scenario. 

Interconnectors 

Interconnectors  appear  as  an  even  more  important  provider  of  flexibility  at  the  2050 
horizon  that  it  was  at  the  2030  horizon.  The  total  investments  in  interconnectors 
represented a total of 142 GW in both METIS-1.5C and METIS-2C-P2X, three times higher 
than in 2030, where the added capacity was only 47 GW. Interconnectors are an important 
source  of  flexibility  as  they  help  balance  generation  from  countries  with  different  RES 
generation patterns. Figure 41 shows on the left the total installed capacity for both METIS-
1.5C and METIS-2C-P2X and on the right, the detailed results per country.  

36 Conversion of hydrogen to e-CH4 
37 Please note that these capacities only refer to additional methanation plants used to provide flexibility on the 
power system via the production of e-gas used in gas-fired plants. Capacities used for the production of e-gas for 
other sectors are not counted here and are not represented directly in this study (the associated hydrogen 
consumption is however taken into account in the modelling, please refer to section 2.4.1 for more information). 
54 

 
 
 
 
 
 
 
 
 
                                           
EUROPEAN COMMISSION 

Figure 41 Installed capacities of transmissions38 in EU-28 in 2050 with minimum and maximum 
bounds 

Western European countries like France, Belgium and Germany are found to invest heavily 
in interconnection capacities. In countries with a highly renewable mix, imports and exports 
prove  to  be  essential  to  balance  supply  and  demand,  in  a  way  that  avoids  over-
dimensioning local flexibility solutions such as thermal plants or storage units. 

2.5.  CONTRIBUTION TO THE PROVISION OF FLEXIBILITY  

In other to quantify how each flexibility solution provides flexibility on different timescales, 
we  present  in  the  following  section  an  indicator  that  characterises  the  contribution  of  a 
given technology to the provision of daily, weekly and seasonal flexibility.  

  DEFINITION OF THE CONTRIBUTION TO THE PROVISION OF FLEXIBILITY  

The provision of flexibility of a given technology is calculated by comparing the flexibility 
needs  based  on  the  residual  load  (as  explained  in  section  2.2.2.1)  to  residual  flexibility 
needs. The latter are based on the residual load minus the specific technology generation 
profile.  

Figure 42 illustrates the computation of the provision of flexibility by a given technology. 

Step A – Compute the daily flexibility needs based on the residual load  
Step B – Compute the residual daily flexibility needs based on the residual load – 
technology X generation profile 

The  difference  between  the  two  quantities  is  the  contribution  of  technology  X  in  the 
provision of flexibility. The contribution of each technology is then computed by iteratively 
removing all technologies to the residual load. 

38 As mentioned in the last sub-section, the capacity of a transmission is counted in this total for each direction of 
the interconnexion flow. 

55 

 
 
 
 
 
 
 
                                           
Figure 42 - Methodology to assess the contribution of a technology to flexibility needs 

  EVALUATION OF THE CONTRIBUTION TO THE PROVISION OF FLEXIBILITY IN 
THE DIFFERENT SCENARIOS 

Provision of daily flexibility  

As daily flexibility needs typically originate from the variation of PV generation during the 
day, short-term flexibility solutions (such as batteries, PHS, CCGTs and demand flexibility 
of HP and EVs) are the technologies that are best suited to respond to this need. Figure 43 
shows the contribution to daily flexibility needs for each of the three scenarios. 

In  METIS-Baseline  2030,  most  of  the  daily  flexibility  is  provided  by  CCGT  plants  and 
interconnections. Batteries are also an important provider of short-term flexibility in 2030, 
since they enable to shift PV production to hours with higher demand, smoothing demand 
peaks. Although there was only little investments in PHS in this scenario, the existing PHS 
also prove to be an important provider of daily flexibility.  

At the 2050 horizon, batteries are mostly substituted by other flexibility solutions  in the 
provision of daily flexibility services. As expected from the previous results, electrolysers 
become the main daily flexibility provider, followed by interconnections. In both the METIS-
1.5C and METIS-2C-P2X scenarios, the flexibility in heat-pumps demand and EVs charging 
becomes  essential  in  the  provision  of  daily  flexibility.  Gas-fired  plants  continue  to  help 
meeting the needs for daily flexibility, but to a much lesser extent than at the 2030 horizon. 

Figure 43 Contributions to daily flexibility needs in Europe 

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EUROPEAN COMMISSION 

Figure 44 compares the normalised39 daily flexibility needs of countries with different levels 
of  PV  shares.  In  countries  with  high  solar  penetration  such  as  Ctry1  and  Ctry3,  daily 
flexibility  needs  are  particularly  high  and  in  these  cases  batteries,  CCGTs  and 
interconnections  appear  as  the  main  flexibility  providers  in  2030.  In  2050  electrolysers 
provide a large part of the flexibility for almost all countries, especially for countries with 
high share of PV such as Ctry1, Ctry2 and Ctry3. 

Figure 44 Normalised contributions to daily flexibility for 4 different EU countries 

Provision of weekly flexibility  

Weekly  flexibility  needs  typically  derives  from  the  wind  power  variations  between  days. 
Interconnections in this case, are important flexibility providers, since they allow countries 
with different wind patterns to exploit synergies between their electricity systems. 

Figure 45 Contributions to weekly flexibility needs in Europe 

39 This normalization is based on the annual demand of the given country 

57 

 
 
 
 
 
 
 
 
 
 
 
                                           
In 2030, as was the case for the daily flexibility needs, most of the flexibility is provided 
by  CCGT  plants  and  interconnections.  Batteries,  however,  have  a  less  significant 
contribution  to  weekly  flexibility  needs,  as  they  have  at  maximum  an  8-hour  discharge 
time. By 2050, once again, electrolysers substitute gas and batteries as the main flexibility 
provider.  Interconnections  are  also  a  key  provider  of  weekly  flexibility  and  demand 
flexibility  (EVs  and  HPs)  become  less  significant  for  weekly  flexibility,  as  they  typically 
enable flexibility within a day. 

Provision of seasonal flexibility  

Seasonal  flexibility  needs  are  a  result  of  different  factors  and  it  captures  mostly  inter-
seasonal  variations  in  demand  and  RES  generation  profiles.  Figure  46  shows  the 
contributions  of  each  technology  to  the  seasonal  flexibility  needs  in  the  three  central 
scenarios. 

As  explained  in  section  2.2.2.2  the  total  difference  between  2030  and  2050  is  less 
important  than  for  daily  and  weekly  needs.  However,  the  flexibility  providers  differ 
substantially  between  the  METIS-Baseline  scenario  and  the  two  scenarios  at  the  2050 
horizon. In 2030, thermal plants are the primary providers of seasonal flexibility (mostly 
CCGT  plants,  followed  by  nuclear,  coal  and  biomass  plants).  Interconnectors  and  hydro 
plants provide the rest of the seasonal flexibility services. By 2050, electrolysers are found 
to be the main seasonal flexibility providers, followed by curtailment and thermal plants 
(CCGT, nuclear and biomass). 

Figure 46 - Contribution to seasonal flexibility needs 

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EUROPEAN COMMISSION 

2.6.  CONTRIBUTION TO ELECTRICITY SECURITY OF SUPPLY 

  DEFINITION OF THE CONTRIBUTION TO ELECTRICITY SECURITY OF SUPPLY 

In order to analyse the potential contribution of storage technologies to security of supply 
we have analysed the  operational behaviour of these technologies  during the periods of 
stress of the electricity system. 

For  each  scenario  and  Member  State,  the  100,  200  and  400  hours  where  the  residual 
demand is the highest are identified. Then, the production of each technology is calculated 
during these hours. The three sets of hours (100, 200 and 400 hours of highest residual 
load) were selected in order to identify the contribution of the various technologies as a 
function of the stress on the system. 

Finally, the contribution is calculated by averaging the hourly contribution over the 100, 
200  and  400  hours  of  stress  of  the  given  scenario.  This  result  of  this  calculation  is 
interpreted as the contribution of each technology to the electricity security of supply at 
the Member State level. 

  EVALUATION OF THE CONTRIBUTION TO ELECTRICITY SECURITY OF SUPPLY 
IN THE DIFFERENT SCENARIOS 

Figure  47  illustrates  the  contribution  to  security  of  supply  of  European  countries  for  the 
three scenarios, and for the three set of hours defined in the previous sub-section. In 2030 
METIS-Baseline scenario, during the hours of stress of the power systems, CCGT capacities 
provide  most  of  the  power  production.  However,  when  comparing  the  contributions 
between  the  400  and  100  hours  sets,  it  is  possible  to  see  the  large  increase  of  the 
participation of three technologies: OCGT, batteries and pumped hydro storage. During the 
hours  with  the  highest  power  demand  and  the  lowest  variable  renewable  generation, 
storage  technologies  along  with  open  cycle  gas  turbines  appear  to  be  crucial  for  the 
adequacy of the power system.  

Figure 47 - Contributions to electricity security of supply in EU-28 

In the two 2050 scenarios, the production during the hours of stress of the power 
systems is more balanced than in the 2030 METIS-Baseline scenario, with the notable 
importance of electricity transmissions that represent around a third of the provision of 
security of supply. This evolution is correlated to the important development of 
interconnections in the 2050 scenarios (see optimisation results in section  2.4.2.2), and 

59 

 
 
 
of the high level of assistance between different countries to achieve the desired levels of 
security of electricity supply. 

2.7.  SENSITIVITIES: CAPTURE THE UNCERTAINTIES OF THE FUTURE SCENARIOS 

Considering  the  high level  of  uncertainty  surrounding  the  configuration  of  the  2030  and 
2050  energy  systems,  different  sensitivity  analyses  have  been  designed  to  assess  the 
impacts of some of the assumptions on the deployment of storage technologies. Based on 
the analysis of the results of the three central scenarios, three topics have been selected: 

Demand-response 

Storage  technologies  such  as  batteries  and  pumped  hydro  storage  are  mainly  providing 
flexibility to the system on a daily timescale, as shown in Section 2.5.2. These technologies 
therefore directly compete with demand-side response (smart charging of electric vehicle 
and  smart  heating  for  buildings).  Different  sensitivities  have  been  created  to  test  the 
influence  of  higher/lower  level  of  demand-side  response  on  the  role  of  storage 
technologies. 

Cost of electrolysers 

In 2050 scenarios, electrolysers provide most of the flexibility of the power system.  This 
sensitivity  aims  at  testing  the  influence  of  a  higher  capital  costs  of  electrolysers  on  the 
installed capacities of power storage technologies. 

Hydrogen flexibility 

In 2050 scenarios, the flexibility of electrolysers is coming from the possibility to modulate 
the production of hydrogen for the end-users (direct hydrogen consumption, or e-gas and 
e-liquids production). Some sensitivities were then created to limit this flexibility and see 
the influence in term of installed capacities of power storage. 

For  each topic, one  or  several variants were created,  with for example  different level of 
demand-response in the power system. These variants are presented in section 2.7.1, and 
the results in section 2.7.2.3.  

  DESCRIPTION OF THE DIFFERENT SENSITIVITIES 

Demand-response 

Our analysis has shown that additional sources of flexibility are required in order to balance 
the increasing share of RES in the energy mix. In this context, demand-response appears 
to be a complement to traditional storage solutions, bringing short-term flexibility to the 
system. The smart use of flexible demand will help shift demand peaks to hours with lower 
demand  and  higher  RES  generation.  In  our  study,  demand-response  is  represented  by 
electric  vehicles  (EVs)  with  dynamic  charging  and  heat-pumps  (HPs)  combined  with 
thermal storage. 

As the number of EVs is expected to increase significantly in the coming decades, EVs can 
become a significant source of flexibility  depending on the availability of smart charging 
strategies that can  help smoothen residual demand peaks. Likewise,  the optimisation of 
heat-pumps’  consumption  patterns  (when  coupled  with  thermal  storage)  can  also  shift 
residual demand peaks, bringing more flexibility to the electricity system. 

In  the  2030  METIS-Baseline  scenario,  30%  of  the  demand  of  EVs  and  heat-pumps  are 
assumed to be flexible. In the 2050 scenarios, 70% of these demands are considered to 
be  flexible.  In  both  2030  and  2050  scenarios,  EVs  can  only  optimise  their  charging 

60 

 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

behaviour, without the ability to inject power back into the grid. Power-to-grid behaviour 
is explored in one of the sensitivity analyses. 

In other to capture the impacts of different levels of demand flexibility, three variants have 
been created: 

Low demand-response 
In  this  sensitivity  analysis,  we  consider  a  scenario  where  there  is  no  demand  flexibility, 
meaning that electric vehicles are recharged as soon as they arrive at the charging location, 
and heat pumps do not have any thermal storage. 

High demand-response 
In this sensitivity, 100% of EVs and heat-pumps have flexible demand. This means that 
the charging of electric vehicles is optimised for all electric vehicles, and that all heat pumps 
have a short-term thermal storage. 

High demand-response + V2G 
In this sensitivity, in addition to 100% flexible demand of EVs and heat-pumps, we also 
consider that EVs can use the energy stored in their batteries to inject electricity back into 
the electricity grid (vehicle-to-grid capability).   

Cost of electrolysers 

As  can  be  seen  in  the  results  presented  above,  electrolysers  are  expected  to  play  an 
important role in the considered 2050 scenarios. They are a key element in the European 
transition towards full decarbonisation, as they enable indirect electrification of end-uses 
in sectors such as industry, heating and mobility. In our scenarios, they have been found 
to be one of the main flexibility providers.  

Electrolysers  are  a  rather  mature  technology,  but  the  evolution  of  their  costs  and 
efficiencies  is  rather  uncertain,  since  it  mainly  depends  on  the  overall  deployment  of 
electrolysers  (in  particular  outside  Europe).  Since  the  provision  of  flexibility in  the  2050 
scenarios displays a high dependence  on electrolysers, a sensitivity  analysis considering 
different techno-economic parameters for this technology has been performed. 

High electrolysers CAPEX 
In  this  sensitivity  all  electrolysers  are  considered  to  have  a  higher  CAPEX  but  their 
efficiency is assumed to remains the same. The new CAPEX of 600 €/kW and 5% of fixed 
O&M  costs  is  comparable  to  the  ones  of  Solid  Oxide  Electrolysers  cell  (SOEC)  from  the 
Long-Term Strategy. This CAPEX is around three times higher than the  one used in the 
central scenarios. 

Hydrogen flexibility 

As the demands for hydrogen, e-gases and e-liquids (P2X)  are  central elements in both 
2050 scenarios, three sensitivities have been carried out to better assess how the dynamics 
of the P2X demand can affect the investments in different flexibility solutions. 

P2X  demand  is  driven  mainly  by  the  industrial  and  transportation  sectors.  At  the  2050 
horizon,  the  use  of  power-to-hydrogen  technologies  can  be  an  effective  solution  to 
decarbonise fuels consumed in these sectors.  However,  substantial uncertainties remain 
concerning the extent of the flexibility of the hydrogen demand.  

In  the  model,  the  whole  demand  for  hydrogen,  e-gas  and  e-liquids  is  represented  by  a 
common  demand  for  hydrogen,  with  an  annual  volume  to  be  supplied,  without  further 
constraints  on  the  dynamics  of  the  hydrogen  demand.  The  flexibility  of  the  hydrogen 
demand can be used to balance RES generation throughout the year, since electrolysers 

61 

 
 
 
 
 
 
 
 
 
 
production can adapt to residual load profiles. Below, we provide the definitions of three 
other scenarios with different levels of flexibility that  have been considered with various 
levels of flexibility of the hydrogen demand. 

Monthly hydrogen demand 
In this sensitivity we consider the annual hydrogen demand to be equally spread between 
months  throughout  the  year.  We  also  consider  that  no  storage  of  hydrogen  would  be 
possible  between  months.  The  hydrogen  demand  can  therefore  only  offer  intra-monthly 
flexibility.  

Hourly hydrogen demand 
In this sensitivity, the volume of hydrogen to be supplied is supposed constant throughout 
the year. We also assume that no storage of hydrogen is possible. This sensitivity should 
be seen as a rather extreme scenario where no flexibility would be possible on the hydrogen 
side, i.e. without any conversion of current gas storage infrastructure.  

Dedicated off-grid hydrogen production 
In this sensitivity, a part of RES capacity is assumed to be directly connected to power-to-
hydrogen installations and separated from the rest of the electricity grid. This configuration 
is similar to what is proposed in some of the ENTSOs’ TYNDP 2020 scenarios. 

In this scenario we considered that 15% of the solar PV fleet, 22% of wind onshore fleet 
and 59% of wind offshore fleet total capacities are solely dedicated to the production of 
hydrogen.  These  percentages  of  RES  dedicated  to  hydrogen  production  are  inspired  by 
ratios  used  in  TYNDP  2020  scenarios.  The  equivalent  hydrogen  production  was  then 
subtracted from the total hydrogen demand. 

In  such  a  configuration,  the  lower  hydrogen  demand  will  require  fewer  electrolysers 
connected  to  the  electricity  grid40.  This  lower  capacity  will  decrease  the  ability  of 
electrolysers  to  adapt  their  hydrogen  production,  and  thereby  the  flexibility  that  can  be 
offered to the power system. 

Figure 48 Schematic representation of sensitivities applied to central scenarios 

40 The remainder of the hydrogen demand being supplied by off-grid RES capacity connected to electrolysers as 
explained above. 

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  INSTALLED CAPACITIES FOR THE DIFFERENT SENSITIVITIES 

2.7.2.1. 

Demand-response sensitivities 

In  order  to  evaluate  the  effect  of  different  levels  of  demand-side  flexibility  in  the  2030 
METIS-Baseline and METIS-1.5C central scenarios, three different sensitivities have been 
performed.  The  three  scenarios  include  different  levels  of  flexibility  for  EVs  and  heat-
pumps. 

Figure 49 shows the installed capacities of the central  METIS-Baseline scenario in 2030, 
where  only  30%  of  EV  and  HP  demand  are  flexible,  compared  to  the  three  sensitivities 
applied to demand flexibility: 

  Low demand response (EVs and HPs’ demand are inflexible); 
  High  demand  response,  with  completely  flexible  demand  (100%  of  EVs  and  HP 

demand is flexible); 

  High  demand  response,  with  completely  flexible  demand  plus  vehicle-to-grid 
capbility (100% of EVs and HP demand is flexible and V2G is possible for all EVs). 

Figure  49  Flexibility  solutions  installed  capacities  in  METIS-Baseline  with  demand-response 
sensitivities 

By  reducing  demand-response  availability,  the  main  consequence  is  an  increase  in 
investments in batteries, to compensate for the corresponding loss of flexibility on short 
timescales. In METIS-Baseline Low Demand Response, we can see an addition of 12 GW 
(2-hour and 4-hour discharge time batteries only) in comparison with the central METIS-
Baseline scenario. The reduction of demand-response also leads to an increase of 7 GW of 
OCGT capacity. 

In the two other sensitivities, which assume higher levels of demand-response, the effect 
is  in  the  opposite  direction.  In  the  scenario  with  high  demand-response,  only  34  GW  of 
batteries are required, corresponding to half of the installed capacity in the central METIS-
Baseline scenario. In the scenario which assumes that vehicle-to-grid is available, we see 
a much more drastic reduction of the deployment of batteries, with only 4 GW of batteries 
remaining. Furthermore, V2G reduces the investments in PHS by 4 GW and in OCGT by 
17 GW. As EVs and HPs mainly provide short-term flexibility, investments in short-duration 
batteries are the most affected in these sensitivities. 

Figure  50  shows,  for  a  given  country,  the  hourly  EV  charging  demand  if  EVs  were  to 
recharge when plugged at home (blue solid line) and the actual charging behaviour when 
EVs  can  adapt  to  price  signals  (either  with  smart  charging  behaviour  or  including  V2G 
capabilities). In a case without flexibility, charging follows exactly the EVs charging demand 
while in the cases where  charging is flexible, charging happens mainly in early-morning 

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before vehicles leave home and the total demand is lower, or in early afternoon, when EVs 
return home and can still profit from PV generation. By optimising EVs charging, the system 
can reduce demand night peaks and shift consumption to hours when the sun still shines. 

Figure 50 – Average recharge of electric vehicles at home per hour of day 
Blue in the three graphs: immediate charging at arrivals 
Red in the centre: smart charging 
Red on the right: smart charging + V2G 

Similar patterns can also be noticed in the usage of heat-pumps. Figure 51 shows the daily 
utilisation of heat pumps in a scenario where the demand is flexible. It is possible to see 
how their consumption is adjusted to hours with lower demand and of high PV production, 
which allows night and early-morning demand peaks to be reduced. 

Figure 51 – Average Heat pumps electricity consumption per hour of day 

Figure  52  shows  the  original  and  optimised  demands  in  the  scenario  with  high  demand 
response, during a week in November. In this case, the flexibility offered by batteries can 
be replaced by demand-side flexibility. By optimising the use of demand-response, peak 
demand, that previously required the use of batteries, can be shifted to hours with lower 
demand.  This  reduces  the  need  for  batteries  since  they  are  providing  the  same  kind  of 
services. 

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Figure 52 - Comparison between the optimised demand (in red) and the power demand as it would 
be without demand-response (blue) 

The same three sensitivities were also applied to the METIS-1.5C scenarios in 2050. The 
installed capacities of all scenarios  compared to  the central METIS-1.5C can be  seen  on 
Figure 53.  

Figure 53 - Installed capacities for the different demand-response sensitivities 

In 2050 METIS-1.5C scenario, 70% of electric vehicles and heat pumps are assumed to be 
flexible, providing a significant part of the daily flexibility. In  the Low Demand Response 
variant,  demand-response  is  assumed  to  develop  in  rather  limited  way,  therefore  the 
flexibility offered by the demand has to be compensated by other technologies. This leads 
to  an  important  increase  of  investments  in  batteries  (70  GW,  with  2-hour  and  4-hour 
discharge time batteries only), and an increase of 60 GW of investments in gas-fired plants. 
Marginally, a small growth of 16 GW in electrolysers installed capacities can also be seen 
in this scenario to benefit from the flexibility offered by the hydrogen demand. 

In the two other sensitivities with higher demand-response the effect is the opposite. The 
demand flexibility replaces the need for alternative solutions providing short-term flexibility 
services, reducing investments in batteries, gas-fired plants and even electrolysers. In the 
scenario with high demand response the total gas-fired installed capacity is 169 GW, 30 
GW  lower  than  in  the  central  scenario,  while  in  the  scenario  with  vehicle-to-grid  the 
reduction  is  even  higher  (50  GW).  No  batteries  remain  in  either  scenario.  Moreover, 
vehicle-to-grid provides even more flexibility, reducing investments in PHS by 1 GW. The 
decrease  in  electrolysis  capacity  is  not  very  significant  (10  GW  in  the  high  demand-
response scenario and 16 GW in the sensitivity with vehicle-to-grid). 

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2.7.2.2. 

Electrolysers sensitivities 

Figure 54 shows the comparison between the installed capacities of flexibility solutions in 
the central METIS-1.5C scenario and the METIS-1.5C scenario with higher capital cost for 
electrolysers. The main difference is, as anticipated, a decrease in the total investment in 
electrolysers.  With  an  investment  cost  almost  three  times  higher,  investments  in  this 
technology are considerably reduced, the total capacity in now 451 GW, 19% lower than 
in the central METIS-1.5C scenario. Although electrolysers still act as the main flexibility 
provider in this sensitivity, with the decrease in electrolysers capacity, the need for other 
sources of flexibility to complement the contribution of electrolysers appears. 

In this sensitivity, investments in batteries rise to 11 GW as opposed to the 1 GW in the 
central scenario. A significant increase in PHS installed capacity can also be noticed, the 
total PHS capacity now rises to 63 GW of which 46 correspond to existing PHS and 17 GW 
correspond to new added capacity. 

Figure 54 Flexibility solutions installed capacities in METIS-1.5C with high electrolysers Capex 

In  both  scenarios,  hydrogen  production  from  electrolysis  is  complemented  by  hydrogen 
produced by SMR  combined with CCS plants. The share  of hydrogen being produced by 
SMR  combined  with  CCS  is  found  to  be  more  important  in  the  scenario  with  higher 
electrolysers  costs.  Indeed,  exploiting  the  last  MW  of  RES  production  during  high  RES 
generation episodes will not be economically profitable in a situation with higher cost of 
capital for electrolysers. 

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Figure 55 Hydrogen supply in METIS-1.5C with high electrolysers CAPEX41 

Also,  to  compensate  for  the  difference  in  electrolysers  installed  capacities,  as  shown  in 
Figure 56, we can see that they have a higher capacity factor throughout the year. In the 
central scenario capacity factors average at around 56% (even though a part of production 
is also used for methanation) while in the sensitivity with higher electrolysers capital cost 
this average is 65%. 

Figure 56 Monthly capacity factors for electrolysers in Europe for scenario with high capex 
electrolysers 

41 The slight difference in term of hydrogen supply between the two scenarios is driven by the power-to-gas-to-
power loop : for METIS-1.5C central scenario, additional hydrogen is produced to be converted in e-gas by 
methanation plants, and then used later in time by gas-fired plants when the renewable production is low. 

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2.7.2.3. 

Hydrogen demand sensitivities 

In  order  to  assess  the  effect  of  hydrogen  demand  in  the  provision  of  flexibility,  three 
different  sensitivities  have  been  carried  out.  The  three  scenarios  assume  limitations,  at 
different levels, of the flexibility that the hydrogen demand can bring to the system. 

Figure 57 shows the installed capacities of the central METIS-1.5C scenario compared to 
the three sensitivities applied to hydrogen demand: 

  Monthly hydrogen demand; 
  Hourly hydrogen demand; 
  Dedicated off-grid hydrogen production 

In  the  central  METIS-1.5C  scenario,  hydrogen  demand  is  considered  to  be  completely 
flexible  and  can  adapt  to  different  residual  demand  profiles.  On  the  three  sensitivities 
proposed  here,  hydrogen  demand  flexibility  is  limited,  which  causes  the  need  for 
alternative flexibility providers. 

Figure 57 Flexibility solutions installed capacities in METIS-1.5C with hydrogen demand sensitivities 

The hourly hydrogen demand scenario is the one with the most constrained flexibility, here 
we assume an extreme case where hydrogen demand is constant during the whole year. 
As a result, this is the variant where investments in storage solutions are highest. We can 
see a total installed capacity of 20 GW in batteries (mostly 4-hour and 8-hour discharge 
time  batteries)  and  a  total  of  73  GW  of  PHS,  of  which  26  GW  correspond  to  new  PHS 
capacity.  

To compensate this loss in flexibility provision, methanation plants also become a profitable 
option as a flexibility provider, since during periods where renewables produce the most, 
their  generation  is  more  than  sufficient  to  supply  the  hourly  hydrogen  demand.  RES 
generation surplus is then used by methanation plants and the resulting methane can be 
stored for later use using the current important storage capacities of the gas system. 

It is also noticeable in this scenario that the total electrolysers installed capacities are lower 
than in the central METIS-1.5C scenario. Their installed capacity reaches 412 GW, which 
represent  55%  of  the  total  flexibility  solutions  installed  capacities.  This  decrease  in 
electrolysers installed capacities can be better understood when looking at their capacity 
factors  in  Figure  58.  It  is  visible  that  this  variant  –  which  assume  a  constant  hydrogen 
demand  -  is  the  scenario  where  electrolysers  have  by  far  the  highest  capacity  factors, 
which  allows  them  to  produce  enough  hydrogen  to  meet  hydrogen  demand  and  feed 
methanation plants. 

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Figure 58 Monthly capacity factors for electrolysers in Europe for hydrogen demand sensitivities 

In  the  scenario  with  dedicated  off-grid  hydrogen  production,  electrolysers  installed 
capacities  are  considerably  lower  than  in  the  central  METIS-1.5C  scenario,  due  to  the 
reduced hydrogen demand42. When looking at other storage solutions, however, we can 
see an increase in the total installed capacities, in particularly of batteries, PHS and CCGT 
plants. 

Since a part of RES generation is separated from the grid together with electrolysers that 
are solely dedicated to  hydrogen production, the  system loses the  flexibility needs from 
RES and flexibility provision provided by electrolysers. To compensate for this decrease in 
flexibility provision, we  can see an increase in batteries installed capacity, now rising to 
5 GW and a total of 51 GW of PHS installed capacity, of which  5 GW correspond to new 
PHS capacity. 

Another  important  impact  of  changes  in  the  hydrogen  demand  flexibility  is  the  level  of 
investment in OCGTs and CCGTs, that are much higher than in the central scenario. Their 
total installed capacity is now 273 GW, 37% higher than in the central scenario. This shows 
that hydrogen demand  flexibility can greatly  reduce the need  for gas-fired plants in the 
provision of flexibility. 

By looking at Figure 59, we can see that electrolysers supply almost 100% of hydrogen 
demand in this variant, with a small part complemented by hydrogen produced by SMR 
with CCS.  

42 Please note that we only refer here to electrolysers capacities connected to the electricity grid. For the scenario 
with dedicated off-grid hydrogen production, off-grid electrolysers are also installed. 

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Figure 59 - Hydrogen supply for METIS-1.5C 2050 sensitivities about hydrogen flexibility 

2.8.  CONCLUSION  TO  THE  QUANTIFICATION  OF  THE  CONTRIBUTION  OF  ENERGY 

STORAGE TO THE SECURITY OF SUPPLY 

Our results reveal that in 2030 a large share of the required levels of flexibility can still be 
provided by conventional power plants and by using the power networks to trade electricity 
between the different  European countries.  However,  for the provision of daily flexibility, 
storage technologies such as batteries or pumped storage appear to be relevant solutions 
in our scenarios. Up to 108 GW of electricity storage (batteries and pumped hydro storage) 
would  be  necessary  for  the  EU-28  (97  GW  for  EU-27),  with  a  large  development  of 
stationary  batteries.  At  the  2030  horizon,  electrolysers  do  not  appear  to  be  competitive 
solutions  to  provide  flexibility  to  the  power  system.  However,  if  a  deployment  of 
electrolysers were to materialise already in 2030 (e.g. driven by indirect electrification of 
end-uses in the industry or heating sectors), they could provide flexibility on all timescales. 

In the assessed 2050 scenarios, the deep decarbonisation of the different sectors, such as 
industry, mobility and heating, the Long-Term Strategy assumes that an important amount 
of “decarbonised” hydrogen (produced by water electrolysis with decarbonised electricity), 
and synthetic fuels43 will be produced. This hydrogen is generated from electricity coming 
for  large-scale  wind  and  solar  power  plants,  and  then  converted  into  hydrogen  with 
electrolysers. To satisfy this demand, around 550 GW of electrolysers would be required in 
our  different  2050  scenarios.  Combined  with  the  flexibility  offered  by  the  end-users’  of 
hydrogen and e-fuels, or with direct use of hydrogen or gas storage facilities, electrolysers 
will  able  to  provide  important  levels  of  flexibility  to  the  power  system.  The  potential 
deployment  of  electric  vehicles  using  smart  charging  strategies  and  of  space  heating 
combined with short-term thermal storage also enable the demand-side to provide daily 
flexibility to the power system. Due to the competition between various flexibility sources, 
the need for pumped hydro storage and batteries is found to be lower in 2050 than it is in 
2030, and reaches around 50 GW in our 2050 scenarios. 

To recognise the high level of uncertainty surrounding the configuration of the 2030 and 
even  more  so,  of  the  2050  energy  systems,  different  sensitivity  analyses  have  been 
designed to assess the impacts of some of the assumptions on the deployment of flexibility 
technologies. Based on the analysis of the results of the three scenarios (METIS-Baseline, 

43 e-gas and e-liquids, produced from hydrogen with methanation plants and the Fischer-Tropsch process. 

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METIS-1.5C and METIS-2C-P2X), three topics have been selected for further analysis since 
they might substantially impact the optimal mix of flexibility solutions: 

  Demand-response:  Electricity  storage  technologies  compete  with  demand-side 
response, since they both provide daily flexibility services to the power system. In 
2030, an optimal use of the flexibility of electric vehicles and of decentralised space 
heating could reduce the need for stationary batteries by half (67 GW vs 34 GW). 

  Costs of electrolysers: In the 2050 scenarios, the large deployment of electrolyser 
leads  to  an  important  drop  of  their  investment  costs.  In  a  sensitivity  where  the 
prices of electrolysers are significantly higher, the need for pumped hydro storage 
and batteries rise from 50 GW to 73 GW. 

  Flexibility of hydrogen demand: the 2050 scenarios assume an important flexibility 
of end-uses on the P2X side (hydrogen and e-fuels), that can be provided by direct 
hydrogen  storage  but  also  via  some  flexibility  in  the  end-users  consumption  (for 
example for the e-liquids provision for vehicles can be flexible, thanks to  current 
infrastructure for petrol). In a sensitivity with lower flexibility on the hydrogen side, 
additional investments in methanation plants would be required to benefit from the 
flexibility offered by the current gas infrastructure. 

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3.  ASSESSMENT  OF  ENERGY  STORAGE  POLICIES,  BARRIERS  AND 

BEST PRACTICES  

3.1.  INTRODUCTION 

The objectives of this chapter are to: 

 

Identify  current  barriers  and  best  practices  at  the  Member  State  level  for  the 
deployment of energy storage; 

  Assess the impact of the new market design at the EU and Member States levels, 
identifying which barriers will be addressed with its full implementation, and which 
are left untouched; 

  Provide complementary measures to address the barriers which remain even after 

the implementation of EU legislation. 

The present chapter allows to develop the policy recommendations for energy storage, in 
combination  with  the  analysis  of  the  contribution  of  energy  storage  to  the  security  of 
electricity supply of this study. 

As clearly stated in the Clean Energy for All Europeans Package, storage is recognised 
as a competitive activity, meaning that all policies and regulations should respect this 
principle and take all measures to ensure a level playing field. Investors will respond to the 
need for storage only if they are able to build a strong business case. In the energy 
sector,  business  cases  are  commonly  built  on  expectations  rather  than  on  current 
circumstances, due to the long lead-times and lifespans of investments. These expectations 
are affected by several factors, described next. 

Given current energy transition trends, awareness of the potential of storage is increasing 
for many potential applications, from large pumped-hydro storage to the behind-the-meter 
battery at home. Trends include decentralising energy production (mainly from renewable 
sources),  empowering  energy  consumers  and  increasing  the  share  of  intermittent 
renewable electricity production into the energy system.  However, this is not enough to 
ensure the market uptake of storage applications, as in most of the situations the business 
case still remains difficult for these investments, even when they are coupled with other 
assets (at the production or consumption side). 

Regarding  technology  readiness,  the  Levelised  Cost  of  Storage  and  the  technical 
performance  of  the  different  technologies  are  gradually  improving,  with  capital  costs 
playing  a  central  role  in  the  case  of  storage,  while  operational  costs  are  more  limited. 
Logically, the confidence of investors would gradually improve as the readiness increased 
for certain technologies and specific application. 

Storage business cases could also become challenging or even inviable according to some 
stakeholders, if they depend on revenue streams from the provision of services in multiple 
energy markets, in a fast changing environment. The volatility of electricity market prices 
(affected  by  the  increasing  share  of  intermittent  renewable  energy  sources)  and  the 
reaction of market actors for providing the required flexibility will have an important impact 
on the deployment of storage. As a capital-driven investment, a storage unit does need 
reasonably  secure  long-term  revenue  streams  to  ensure  its  viability.  Low  carbon  prices 
could also disincentivise storage deployment, as they negatively affect its competitiveness 
vis-à-vis flexible fossil-based resources. 

However, the majority of the consulted stakeholders emphasize the fact that regulatory 
barriers,  which  for  example  hinder  participation  in  electricity  markets,  are  an 
important  issue  hampering  the  profitability  of  storage  investments.  Unclear 
frameworks jeopardise the use of storage, as uncertainty increases the risks and therefore 
the financial expectations of the investors. Storage could become a relevant option, if the 
two  following  issues  are  addressed:  ensure  a  level  playing  field  for  all  users  and 
applications, and increase the security of investors. 

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This chapter is organized as follows: 

  Section 3.2 introduces the 2013 paper and 2017 strategy of the EU on energy 

storage; 

  Section 3.3 presents the barriers and best practices per policy category, 

summarizing the current status across the Member States; 

  Section 3.4 focuses on the new EU electricity market design (recast Electricity 

Directive and Regulation) as well as other EU legislation related to energy storage, 
indicating potential remaining barriers. 

Various  stakeholders  have  been  consulted  regarding  the  national  and EU-level  data  and 
analysis.  A  number  of  national  stakeholders,  including  national  contact  points  of  the 
European Commission Electricity Coordination Group (ECG), have provided inputs for the 
Member States storage policy fiches presented in Annex 4. A stakeholder policy workshop 
took place in December 2019, and further comments on the policy analysis draft and the 
national policy fiches were received through written feedback afterwards, including from 
the ECG national contact points. 

3.2.  BACKGROUND ON ENERGY POLICIES IMPACTING STORAGE 

The  European  Commission  released  in  2013  its  working  paper  ‘The  future  role  and 
challenges of Energy Storage’44. The paper addressed the state of play and importance 
of  storage  for  the  energy  system,  existing  barriers  and  policies  to  address  them, 
particularly  regarding  the  role  of  the  EU.  The  working  paper  aimed  to  bring  greater 
attention to storage, recognizing its importance to support decarbonisation of the electricity 
system, while acknowledging limited deployment of electricity storage at the time. 

The most important barrier to energy storage indicated in this working paper is the lack of 
a business case which adequately values its benefits, both from the energy system and the 
storage investor perspectives. This economic barrier is affected by a number of underlying 
technical, economic, regulatory and strategic aspects discussed in the working paper. 

The working paper highlighted that to address these barriers, the main objective of any 
regulator or legislator should be to create a clear, level playing field for the development 
and provision of storage services. This includes non-discrimination among different storage 
technologies, sizes and location in the system, but also equal access by energy storage to 
potential revenue streams such as in energy and ancillary services markets. Such a level 
playing  field  would  improve  the  business  case  for  storage,  by  providing  new  revenues 
streams  and  by  reducing  costs  unfairly  imposed  to  storage  facilities  (such  as  double 
charging of grid tariffs, although storage can lead to avoided network investments).  

Finally, the paper noted that the EU can play an important role given the differences in the 
deployment  of  renewable  electricity  among  Member  States,  in  the  cross-border  market 
interactions and potential for distortions, and the need for additional storage R&I to which 
multiple suitable EU instruments exist. 

The  need  for  an  EU  strategy  to  energy  storage,  coherent  with  the  overall  energy  and 
climate  policies,  was  hence  already  highlighted  in  2013.  The  paper  listed  a  number  of 
actions  covering  the  EU  strategy,  support  to  consumers,  market  design,  R&I  and 
investments. Overall, a main takeaway from the paper was the need for more attention for 
electricity storage at the EU level and its integration in all EU energy and climate policies 
and measures. 

In  2017,  the  Commission  published  its  white  paper  on  ‘Energy  storage  –  the  role  of 
electricity’,45 related to the Clean Energy Package46 and its new electricity market design. 
The  most  adequate  storage  technologies  are  in  this  paper  briefly  assessed  according  to 

44 DG Energy (2013) The future role and challenges of Energy Storage 
45 DG Energy (2017) Energy storage – the role of electricity 
46 European Commission (2016) Clean Energy For All Europeans. COM(860) 

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their  potential  applications,  and  policy  approaches  to  address  barriers  to  storage  are 
discussed within the context of the new electricity market design. 

Multiple regulatory issues are listed. The first relates to energy policy measures targeting 
other objectives than storage, such as the cost recovery of renewable electricity support 
through tariff surcharges. It can unduly burden the business case of storage, as in some 
Member  States  storage  facilities  pay  such  surcharges  despite  not  actually  consuming 
electricity (except for cycle losses). The existence of regulated retail prices in some Member 
States is also negatively impacting the business case for storage, as they can discourage 
the development of behind-the-meter storage. 

Another issue, not exclusively  concerning storage, is the design of energy, capacity and 
ancillary services markets. This includes the trading timeframes (bidding window and time 
resolution), the inexistence of dynamic electricity pricing to end-consumers and the market 
access  for  both  autonomous  storage,  demand-side  response  (with  storage)  and 
aggregators. More fundamentally, the establishment of the right of consumers to produce 
and consume their own electricity would positively impact the development of behind-the-
meter  storage.  Also,  the  insufficient  consideration  of  energy  storage  in  system  planning 
until then is noted, as well as grid issues such as potential double charging of access fees. 

The document discusses not only these issues as affecting the business case for storage, 
but  also  highlights  differences  among  Member  States  and  how  resulting  inconsistencies 
can  lead  to  cross-border  market  distortions  which  also  impact  storage  negatively.  It 
moreover indicates that a number of issues are addressed in the new market design, such 
as:  the right for consumers to produce and consume their own electricity; improved cross-
border trading; shorter time frames and opening of markets; and the broader development 
of dynamic electricity end-user pricing. 

The white paper recognizes that energy storage will be developed primarily through private 
investments, and, in line with the issues listed above and the measures in the Clean Energy 
Package, sets four principles for supporting the market development for energy storage: 

1.  Energy storage should be allowed to participate fully in electricity markets 
2.  Energy storage should participate and be rewarded for services provided on equal 

footing to providers of flexibility services 

3.  Energy storage as an enabler of higher amount of variable RESs could contribute 

to energy supply security and decarbonisation of the electricity system or of other 
economic sectors 

4.  The cost-efficient use of decentralised storage and its integration into the system 
should be enabled in a non-discriminatory way by the regulatory framework 

Principles 1. and 2. are closely related to non-discrimination of storage in the energy and 
ancillary  services  markets,  and  in  capacity  mechanisms.  It  places  the  different  energy 
storage  technologies  on  an  equal  footing  with  flexible  and  intermittent  generation  and 
demand  side  response.  Given  the  increasing  needs  for  flexibility  to  face  the  growing 
penetration of intermittent renewable energy sources, non-discrimination would enable the 
flexibility contribution of storage to be adequately valued. 

While  also  related  to  non-discrimination,  principles  3.  and  4.  address  the  fact  that  the 
contribution  of  the  different  storage  technologies  arise  in  multiple  centralized  and 
decentralized applications and in various sectors. Hence, a holistic approach is necessary 
to  value  both  mature  and  developing  storage  technologies  (from  pumped  hydro  to 
batteries, compressed air and chemical storage) in the electricity, heating, transport and 
industry sectors. 

Hence, both the 2013  and 2017 papers identify a number  of policy issues and resulting 
barriers  in  various  areas,  related  to  general  aspects  such  as  the  design  of  energy  and 
ancillary services, and capacity mechanisms, as well as storage-specific practices such as 
grid charges. The papers highlight moreover the need to consider storage holistically, in 
various  policy  areas  (energy,  climate,  environmental,  fiscal)  rather  than  developing  a 
specific  regulation  targeted  at  storage.  This  given  the  variety  of  issues,  of  storage 

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technologies  and  the  potential  applications  (and  considering  the  relevance  of  revenue 
stacking to improve the business case of storage). 

Besides the  European Commission papers  on energy  storage, a large  number of studies 
have  covered  barriers  to  the  development  of  electricity  storage,  and  policies  to  address 
them.  A  number  of  selected  studies  are  reviewed  in  Annex  2.  Two  main  aspects  are 
extensively  discussed  in  these  studies,  which  are  apparent  also  in  the  Commission 
documents:  the  large  diversity  and  interaction  of  storage  technologies  and  applications, 
and the resulting large diversity of barriers and corresponding policies for energy storage. 

3.3.  BARRIERS FOR ENERGY STORAGE 

Data  on  energy  storage  policies  as  well  as  barriers  and  best  practices  was  collected 
covering  all  EU28  countries.  The  policy  barriers  and  best  practices  to  energy  storage 
covered are classified in the following categories: 

  Public support and strategy; 
  Permitting; 
  Energy markets and capacity mechanisms; 
  Ancillary and grid management services; 
  Grid aspects; 
  Taxes & other levies; 
 
  Storage definition and other policy aspects. 

Involvement of network operators; 

The best practices present relevant policy approaches in EU Member States as well as non-
EU countries which should be considered for replication, either across the EU or for specific 
Member States, consider their specificities. 

Each  of  the  above  mentioned  categories  starts  with  a  short  explanation  of  the  context, 
followed  by  the  current  status  across  member  States  and  finally  (if  there  is  information 
available) about the best practices.     

  PUBLIC SUPPORT AND STRATEGY (PLAN) FOR STORAGE 

Context 

This  topic  addresses  the  support  to  storage  assets,  which  can  take  the  form  of  grants, 
investment  aid  or  other  types  of  direct  or  indirect  subsidies.  Public  support  reflects  the 
political willingness of authorities to stimulate the development and/or implementation of 
storage technologies which are considered important to  ensure the reliability/stability of 
the  electricity  system  and  to  succeed  the  energy  transition.  Support  can  accelerate  the 
penetration of ready-to-market technologies or compensate for the development cost of 
specific promising technologies in view of their large-scale deployment in the medium or 
long term. Supports can be either direct (e.g. investment grant) or indirect (e.g. through 
the support to decentralised renewable production unit like PV). 

Storage technologies, such as batteries and compressed air are still at an early stage, while 
others such as pumped hydro are mature. Public support in the EU Member States is at 
present mainly focusing on batteries. Pumped hydro is also still facing barriers, but these 
are  not  related  to  the  lack  of  adequate  public  support  for  technology  deployment,  but 
rather to regulatory and market aspects. 

Storage  should  also  be  properly  considered  in  investment  planning  at  national  level; 
therefore, planning and determining adequate objectives for storage are considered as an 
important element in this assessment on how MS address the deployment of storage. 

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Current status across Member States 

A limited number of Member States have implemented direct investment support schemes 
for energy storage, which generally aim at small systems (usually home batteries). Indirect 
support for storage mainly results from another policy scheme or practice; prosumers are 
for instance in several countries incentivized to invest in batteries in order to increase their 
self-consumption  allowing  them  to  avoid  low  feed-in  prices,  and/or  to  reduce  grid  costs 
and related surcharges. The absence of a direct support scheme is usually not considered 
as an important barrier, as storage operators engaged in the electricity market consider 
eliminating market and regulatory barriers (e.g. discriminatory rules) more efficient and 
important than granting support. Public support is considered as a measure of last resort, 
for some applications of strategic interest, which would otherwise not enter the market. 

In some Member States, support is specifically addressing isolated systems, such as islands 
or  remote  areas.  This  allows  to  value  the  specific  contribution  of  storage  to  security  of 
supply  and  system  reliability  of  isolated  regions,  as  opposed  to  more  general  support 
schemes not tailored for the characteristics of such systems. But in contrast, a stakeholder 
indicates that wherever public service obligation subsidises diesel & heavy fuel oil-based 
electricity generation options on islands, it needs to be revised to enable hybrid renewable 
energy sources + storage plants to also qualify and receive such support. This will allow 
operators to replace their thermal capacity and prioritise the dispatch of hybrid plants, and 
enable island operators to make a gradual shift to cleaner energy sources, without need to 
overhaul the system and posing no threat to energy security. 

In a few Member States, storage is supported via tenders for pilot projects. Nonetheless, 
in the majority of countries there is no direct financial support for energy storage. In these 
Member States investors are often opting for hybrid solutions where energy storage is for 
instance coupled with variable renewable energy production, which offers a higher overall 
profitability than separate investments. Energy storage is also increasingly being deployed 
in  the  context  of  sector  coupling,  such  as  combined-heat-and-power  plants  which  are 
storing heat in order to take benefit of the price volatility on the electricity market. 

Pumped hydro storage (PHS) is the main electricity storage technology largely deployed 
across  many  Member  States  and  has  an  important  role  in  the  electricity  system,  in 
particular to provide ancillary services such as black start.47 A few countries have put into 
place  specific  support  schemes  to  PHS  (e.g.  discount  on  grid  tariffs  in  BE)  and/or  have 
removed some major barriers (e.g. discriminatory rules in capacity mechanisms following 
contestation by market operators).  

In order to analyse the plans of Member States concerning storage, the National Energy 
and Climate Plans (NECPs) submitted to the European Commission within the framework 
of  the  Energy  Union  Governance  were  reviewed.  All  Draft  NECPs  were  considered,  with 
results being updated with the final NECPs for the Member States which had submitted one 
by February 2020. Therefore, final NECPs were considered for 16 Member States: AT, HR, 
CY, DK, EE, FI, EL, HU, IT, LT, MT, NL, PL, PT, SK, SE. 

According to the NECPs, Member States consider energy storage as an important pillar of 
the  energy  transition  and  of  a  low  carbon  economy.  It  provides  flexibility  to  the  energy 
system  and  is  therefore  considered  as  an  enabler  for  intermittent  renewable  electricity. 
But only a few NECPs present a detailed view on the appropriate policy to deploy energy 
storage at scale and on the types of storage that would best fit the energy system needs. 
A  few  NECPs  address  the  barriers  to  storage  and  define  objectives  or  measures  to 
strengthen R&D on storage. Next to the specific references to storage in the NECPs, a few 
Member States have or are preparing a strategy or roadmap specific to or including storage 
(such as FI, DK, FR, PT). NECPs should provide further details on the deployment pathways 
for each storage technology as well as the forecasted measures in order to allow market 
actors to deploy the identified storage capacity needed. 

47 ENTSO-E (2019) Survey on ancillary services procurement, balancing market design 2018 

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The  majority  of  Member  States  consider  electric  vehicles  as  potential  storage  units  that 
can  offer  flexibility  to  the  energy  system,  while  contributing  to  reducing  the  need  for 
investments  in  grid  capacity.  A  limited  number  of  Member  States  consider  storage  as  a 
mean  to  empower  consumers  (both  households  and  companies).  Some  Member  States 
mention in their plan that storage should be developed in order to anticipate accelerating 
energy  system  changes  and  to  avoid  curtailment  of  variable  renewable  electricity 
production.   

At  present,  there  is  in  most  Member  States  no  comprehensive  national  regulatory 
framework for storage; policy instruments and measures applicable to storage are spread 
across different legislations and regulations and appear to address storage without a clear 
and consistent vision. This leads to non-harmonised rules, and in some cases incoherent 
and complex  frameworks. Following the publication of the new  electricity market design 
package, some countries are taking initiatives to specifically address storage in their energy 
and/or electricity sector legislation or strategy, and are organising or intend to organise 
consultations on a proposed review of the legal framework for storage. The changes mainly 
address electricity and ancillary services markets rules, as well as the definition of storage.  

A few Member States have clearly identified the technologies and applications that have 
an interesting industrial potential, and include them in their energy, industrial and/or R&D 
strategies. Some countries have also a specific budget for storage R&D. Also, some Member 
States have a specific roadmap which addresses the different applications for storage in 
households, tertiary buildings, transport (electric vehicles), and others.  

In some Member States, the principles of self-consumption and energy communities are 
currently being implemented in the electricity market legal framework, with the inclusion 
of energy storage. 

There is finally the potential to further incorporate storage in energy efficiency policies and 
measures. The various energy storage technologies have the potential to increase energy 
efficiency  in  multiple  ways,  such  as  by  reducing  transport  losses  and  increasing  the 
(renewable)  energy  self-consumption in  buildings  and  industry.  When  advancing  energy 
efficiency targets, investments in energy storage technologies coupled with other measures 
such  as  building  renovation  or  waste  energy  utilisation  should  be  eligible  for  available 
support mechanisms. 

Best practices 

There is no consensus on the importance or need to set up a storage support scheme due 
to  the  existence  of  market  failures.  Nonetheless,  for  the  majority  of  the  stakeholders, 
storage  should  have  adequate  grid  tariffs  and  levies,  non-discriminatory  access  to  all 
electricity markets and eventual capacity mechanisms, a stable regulatory framework that 
reflects  the  long-term  lifetime  of  storage  assets.  This  would  enable  the  competitive 
development of storage, before any kind of economic support is considered. According to 
other  stakeholders,  for  specific  Member  States,  economic  support  can  be  useful  to 
stimulate the development of non-mature storage technologies, to leverage economies of 
scale, to stimulate R&I concerning energy storage, or to support pilot  or demonstration 
projects supporting policy learning. For some stakeholders, economic support, especially 
in  countries  with  low  level  of  cross-border  interconnection  and  immature  electricity 
markets,  is  recommended,  and  would  also  depend  on  the  expected  technologies, 
applications and market penetration.  

Member  States  which  do  choose  to  implement  a  storage  support  scheme  should  pay 
attention to minimising market distortions and the discrimination of other flexibility sources 
as  far  as  possible.  Integrated  or  indirect  support  schemes  can  be  considered  as  the 
preferred option to stimulate investments in energy storage; such an approach is in general 
less distortive than direct support (see section 1.2.1). National support schemes for small 
scale PV can indirectly incentivize behind-the-meter small scale storage units, if the support 
scheme is properly designed and implemented. Net metering is considered as a distortive 
measure, which disincentivizes investment in behind-the-meter storage. Several Member 

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States (e.g. AT, DE, GR) have implemented renewable energy support schemes which de 
facto stimulate local storage and can be considered as best practices. Some countries, like 
Ireland, have launched a specific pilot micro-generation scheme to support PV installations 
coupled with home battery storage for self-generation. Other regions such as the US state 
of Massachusetts (with the SMART program) also increase the support to renewable energy 
installations through a multiplier, if storage is added. 

Member States such as Belgium, Finland, France, the Netherlands, Poland, Portugal and 
Spain have dedicated R&I budgets for energy storage. Hungary, Italy, Lithuania and Malta 
on the other hand, highlight storage in their R&I Action Plan, but do not refer to a dedicated 
budget for storage. R&I strategies are supposed to be implemented in the framework of 
the 2021-2030 National Energy and Climate Plans (NECPs). 

Storage has been addressed in a more holistic way in the draft or final NECPs of Austria, 
France, Greece and Spain. In these plans, the concerned authorities do not only recognise 
the need for storage, but they also address the different technologies and applications they 
intend  to  focus  on.  Some  plans  are  more  detailed  and  also  contain  specific  storage 
objectives,  a  set  of  concrete  policies  and  measures,  a  clear  R&I  agenda  and  proposed 
regulatory  changes  to  address  barriers  and/or  incentivize  the  deployment  of  storage  at 
scale. 

Looking  outside  of  the  EU,  California  has  set  in  2013  an  energy  storage  procurement 
mandate  for  investor-owner  utilities,  requiring  them  to  install  1  325  MW  of  storage  by 
2020. The targets are separated between front-of-the-meter (sub-divided in transmission- 
and  distribution-connected)  and  behind-the-meter  storage,  and  covers  several 
technologies (although large hydropower is excluded). Following the mandate, California 
adopted new regulations to accelerate storage development. It created a independent body 
to mediate connection disputes, added a new target of additional 500 MW by 2024, and 
expanded    funding  incentives  to  behind-the-meter  storage.48  In  2018,  the  state  of  New 
York  also  announced  a  storage  target,  aiming  at  1  500  MW  to  be  deployed  by  2025, 
reaching 3 000 MW in 2030. This target is to be achieved by various mechanisms utility 
procurement of bulk storage, changes in tariff design and wholesale energy markets, taking 
storage into account in the criteria for large-scale renewable auctions, and addressing other 
regulatory barriers.49 

  PERMITTING & STANDARDISATION 

Context 

This topic addresses the permitting rules applied to storage for build up or for operation. 
Permitting  regulation  can  be  specific  to  storage  facilities,  depending  on  their  technical 
characteristics and impact on the environment (including soil), safety, fire hazards, public 
health and/or landscape. Usually, when there are no specific rules, storage is falling under 
the  standard  framework.  The  lack  of  specific  rules  is  a  priori  not  considered  as  a  main 
barrier for the deployment of storage but could in some  cases slow down the permitting 
process. Pumped-hydro storage is due to its high environmental impact a specific case, for 
which the permitting procedure can act as a barrier.  

For large storage facilities, a license to be issued by the national energy ministry according 
to the electricity legislative framework can be required. This licence (which also applies to 
large  generation  plants)  does  not  address  connection  and  access  conditions  to  the  grid 
(which are covered by the agreements to be concluded with the grid operator). It rather 
allows  the  installation  of  the  storage  assets  from  an  electricity  system  perspective.  In 
general,  this  legal  obligation  is  not  considered  as  a  barrier  to  storage,  as  it  was  not 
highlighted by stakeholders, also considering that it generally only applies to larger scale 
facilities, while small installations are exempted. 

48 The Climate Group (2017) How California is driving the energy storage market through state legislation 
49 NYSERDA et al. (2018) New York State Energy Storage Roadmap 

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Mandatory compliance with standards related to safety and security (e.g. fire protection), 
has an impact on the economic and technical feasibility of storage and can hence act as a 
barrier to specific storage types, in particular batteries. The standards address stationary 
and  mobile  applications,  inside  and  outside  applications.  Although  the  manufacturing 
industry  is  responsible  for  the  production  of  storage  components,  the  safety  of  the 
consumers is to be ensured by the installation companies. Safety and security standards 
are needed, but they should be based on the real risks and avoid jeopardizing the uptake 
of storage.  

Current status across Member States 

Most of the Member States do not have specific permitting rules applicable to storage. New 
projects  must  comply  with  the  standard  notification,  planning  acceptance  or  permitting 
rules,  usually  depending  on  the  overall  risk  level  of  the  installation  and  its  size, 
environmental impacts and location. Although the absence of specific rules is a priori not 
considered  as  a  barrier,  issues  may  result  from  the  inadequacy  of  the  standard  legal 
framework to storage projects and/or the lack of enabling specific provisions for storage.  

In  the  Netherlands  for  instance,  the  absence  of  a  comprehensive  national  permitting 
regulation that also covers energy storage results in local authorities having the possibility 
to impose very strict conditions to storage units. This leads to diverging rules depending 
on the location, and uncertainty for potential investors in storage assets. For some other 
Member States, the lengthy permitting process with different concerned administrations 
becomes a critical aspect in developing storage projects. 

The  permitting  process  should  be  streamlined,  ensuring  an  appropriate  coordination 
between  all  the  administrations  involved.  The  process  should  take  place  according  to  a 
timeframe  which  is  not  excessively  long,  while  allowing  for  early  and  effective  public 
consultation.  According to our analysis, if the storage project characteristics do not fit the 
existing  permitting  regulations,  authorisation  bodies  (such  as  municipalities)  may  be 
inclined to determine their own regulations, which may increase the permitting complexity. 

As far as can be determined, few Member States have yet introduced mandatory standards 
for the installation of the different relevant battery technologies (incl. lithium). Only some 
technologies are included in the national normative frameworks. Transport and storage of 
batteries  (incl.  lithium)  are  apparently  weakly  addressed  by  Member  States,  but  some 
Member  States  are  considering  enlarging  their  normative  framework  to  include  these 
issues. The transposition of the Directive 2013/56/EU, amending the Directive 2006/66 on 
batteries and accumulators and waste batteries and accumulators, was not considered as 
an issue when addressing the barriers to the use  of storage technologies. However, the 
Directive does not address the issue of utilising the batteries in a ‘second life’ application,50 
e.g. using EV batteries in stationary applications, which could be considered as a raising 
issue. 

A stakeholder has also indicated that stringent calibration requirements on mobile battery 
charging stations for EVs in Germany constitute  d  a  barrier  to  developing  the  business 
model,  although  no  further  indications  of  this  barrier  were  identified  in  other  Member 
States. Also, where applicable, the requirement for operators of charging points to notify 
or request authorisation for the installation and decommissioning of charging points well 
in advance could hinder cases where such points would be dynamically placed. 

Several Member States face problems when it comes to the delivery of a permit for larger 
scale storage projects, such as pumped hydro or hot water storage (based in natural rock). 
Environmental  concerns  and  local  opposition  can  jeopardize  or  (significantly)  delay  the 
permitting process. Although the permitting procedure  of large-scale  projects comprises 

50 European Commission (2019) Report on the implementation and the impact on the environment and the 
functioning of the internal market of Directive 2006/66/EC 

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wide  public  hearings,  public  acceptance  remains  a  major  hurdle.51  The  lack  of  public 
acceptance and understanding of the economic and societal added value of such projects 
can be considered as the root cause of this barrier. Public acceptance may become a more 
significant issue also for batteries, as he Renewables Grid Initiative notes that there has 
been rising opposition in some regions, such as Ireland. Governments should implement 
best  practices  for  the  involvement  of  the  public  in  the  development  and  operation  of 
storage projects, such as understanding and adequately communicating safety standards 
for battery projects.52.  

For  pumped  hydro  storage,  in  the  majority  of  Member  States,  both  a  building  and 
environmental  permit  are  required.  These  permits  are  usually  delivered  based  on  a 
comprehensive Environmental Impact Assessment study. Even small-scale storage may be 
affected in this regard, as the JRC notes that ‘a consistent and efficient licensing process 
is particularly important for hydro stations of the small- or mini-scale. Long and complex 
licensing procedures render such investments not feasible and of high risk.’53 

Best practices 

There  are  at  present  no  national  practices,  which  can  as  such  be  considered  as  best 
practices. Austria seems the only Member State that considers storage from a holistic point 
of  view,  taking  into  account  all  impacts  and  potential  risks  related  to  manufacturing, 
storage, transport, installation and operation. 

  WHOLESALE ENERGY MARKETS AND CAPACITY MECHANISMS 

Context 

in  13  Member  States,  being 

Forward, day-ahead and to a more limited extent, intraday electricity markets are the most 
mature  and  supra-nationally  integrated  markets  in  Europe.  Also,  by  the  end  of  2018 
furthermore  under 
capacity  mechanisms  existed 
implementation  in  Italy  and  Germany.54  These  can  form  important  revenue  streams  for 
storage,  especially  when  coupled  with  other  revenue  sources  from  ancillary  services 
markets  and  congestion  management.  Storage  can  provide  significant  value  to  energy 
markets and capacity mechanisms, but its effective participation is strongly influenced by 
the  technical  characteristics  of  the  various  storage  technologies,  especially  regarding 
energy and discharge capacity rates as well as the rate of self-discharge. Pumped hydro 
storage  has  a  long  record  of  participating  in  energy  markets,  while  newer  technologies 
such as battery storage are only starting. 

Market  barriers  for  storage  can  be  separated  between  barriers  to  entry  and  barriers  to 
participation. Barriers to entry comprise for instance market rules not defining storage or 
excessive pre-qualification requirements (such as minimum nominal capacity), and barriers 
to  participation  comprise  for  example  inappropriate  market  design  parameters  (for 
example a minimum bid size of several MWs). Specific market designs may exhibit only 
barriers  to  entry  or  only  to  participation,  with  the  similar  end-result  of  hindering  the 
deployment  of  storage.  Moreover,  besides  market  barriers  specifically  affecting  storage, 
other  barriers  such  as  market  power  of  incumbents  may  affect  all  potential  market 
entrants, including storage. 

51 European Parliamentary Research Service (2019) Understanding public responses to low-carbon technologies 
JRC (2014) Hydropower – technology information sheet 
52 Renewables Grid Initiative (2019) Energy Storage – Perspectives from California and Europe. 
53 JRC Low Carbon Energy Observatory (2019) Hydropower Technology Market Report 
54 ACER and CEER (2019) 8th ACER-CEER Market Monitoring Report focusing on 2018. Volume 1: 
Electricity Wholesale Market Volume 

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Storage  can  directly  or  indirectly  (via  aggregators)  participate  in  electricity  markets  via 
transactions in organized exchanges or over-the-counter (OTC). Over-the-counter trade is 
still more predominant than trade in exchanges in high-volume markets such as Germany, 
France and the UK.55 As long term revenue certainty is important to unlock investments in 
storage,  forward  contracts  can  also  be  an  adequate  instrument  for  storage  operators  to 
ensure a certain level of certainty of revenues from these markets. 

Market barriers related to energy markets and capacity mechanisms affect not only stand-
alone storage, but also hybrid cases where storage is aggregated with other resources such 
as other storage facilities, renewable energy generation and/or demand response. Another 
relevant case for this section is the coupling of combined-heat-and-power with heat storage 
in order to respond to the price volatility in the wholesale energy markets. 

Current status across Member States 

Participation of storage in the energy market is not indicated as a barrier in most countries 
with liquid and deep electricity markets. Even when there are no specific provisions related 
to  storage,  participation  is  possible,  as  the  regulatory  framework  does  not  foreclose 
storage, which is then generally considered a producer. There are no indications of undue 
pre-qualification requirements in countries with developed energy markets. 

In  Member  States  with  less  developed  energy  markets,  participation  of  storage  (and 
especially technologies other than pumped hydro) is more limited, as lack of specific rules 
still creates uncertainty and market power sometimes also constitutes a barrier to entry. 

Besides barriers to entry in less developed energy markets, specific energy market design 
parameters act as participation barriers to  storage in some countries,  such as minimum 
bid sizes and price  caps.  However, while minimum bid sizes of  e.g.  1 MW are common, 
these may frequently be met through aggregation of resources, effectively reducing the 
participation  barriers  to  storage.  Nonetheless,  aggregation  is  still  not  allowed  in  some 
energy markets. 

A  rather  technical  but  still  important  barrier  to  participation  of  storage  is  the  lack  of 
appropriate order (i.e. bid) formats, as storage may be exposed in case of uncertainty in 
securing  simultaneously  market  orders  for  the  charge  and  discharge  phases  (with  an 
energy purchase and sale order, respectively). In this context, EPEX (covering six Member 
States) introduced loop block56 orders for its day-ahead market in late 2018, being the first 
power  exchange  to  do  so.57  Nonetheless,  EPEX  and  other  exchanges  such  as  Nord  Pool 
offer linked block orders, which may also be used for storage to secure orders for its charge 
and discharge cycle.  

Participation of behind-the-meter storage in energy markets is still limited. Locational and 
temporal signals in energy markets play an important role in fostering the participation of 
distributed resources. However, locational signals are limited given the zonal approach for 
European  energy  markets,  while  the  use  of  temporal  signals  for  active  residential 
consumers  is  also  limited.  As  recently  as  2018,  fixed  electricity  prices  were  still  the 
dominant  type  available  to  households  in  most  Member  States,  while  dynamic  end-user 
price  offers  were  available  in  7  Member  States.58  However,  demand-side  management 
through heat storage in response to energy market prices is relevant in more and more 
Member States, especially in Scandinavian and Eastern European Member States.  

55 DG Energy (2019) Quarterly report on European electricity markets. Volume 12 – Issue 1, Q1 2019. 
56 Loop block orders are a group of one sell and one buy orders at two different trading periods which are 
accepted or rejected together. They thus reflect the storage cycle, eliminating the risk a sell or buy order is 
accepted without the correspondent order. 
57 EPEX SPOT (2018) EPEX spot introduces curtailable blocks and loop blocks on all day-ahead markets. 
Available at http://www.epexspot.com/en/press-media/press/details/Press/show_detail/40116 
58 European Commission (2019) Energy Prices and Costs in Europe. COM(2019) 1 final. 

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Participation  of  storage  in  capacity  mechanisms  is  in  general  legally  possible,  but  its 
effective participation and the impact on its profitability is still very limited. Certain national 
mechanisms were recently contested by market actors due to considered barriers to access 
for demand side response or storage. While storage is generally eligible for participation in 
the  mechanisms  deployed  in  recent  years,  specific  design  aspects  such  as  the  derating 
factors  applied  to  storage  can  act  as  a  barrier.  This  occurs  for  example  by  including  by 
grouping storage with other technologies, or by applying a generic derating factor to all 
storage technologies. Some stakeholders indicated that all capacity mechanisms notified 
by Member States and approved by the European Commission so far have a contracting 
window of 5 years or less before (eventual) delivery. According to the stakeholders, that 
would hinder the participation of technologies with a very long lead time, such as pumped 
hydro storage. 

Best practices 

Generally, the most important best practice for energy storage regarding energy markets 
is the development of deep and liquid day-ahead and intraday energy markets in Europe 
which allow storage to place orders aligned with its technical characteristics. One example 
are the EPEX and Nord Pool exchanges, where the bid size for the spot market is only 0.1 
MW which facilitates participation of storage.59 EPEX has in 2018 launched loop block orders 
covering its 6 Member  States (NL, FR, BE, DE, UK, AT) which are suited for storage.  In 
addition, EPEX and other exchanges such as Nord Pool offer linked block orders suited for 
storage. Another important best practice is the allowance of aggregators in these markets, 
such as in the case of EPEX. 

In the US, in 2018 FERC issued order No. 841 to remove barriers for the participation of 
storage  in  capacity,  energy,  and  ancillary  service  markets  operated  by  Regional 
Transmission  Organizations  (RTO)  and  Independent  System  Operators  (ISO)  (RTO/ISO 
markets).60 The order determines that RTOs and ISOs must define market rules that (1) 
ensure storage is eligible to provide all capacity, energy, and  ancillary services that it is 
technically capable of providing in the RTO/ISO markets; (2) ensure that storage can be 
dispatched  and    can  set  the  wholesale  market  clearing  price  as  both  a  seller  or  buyer 
consistent  with  existing  market  rules;  (3)  account  for  the  physical  and  operational 
characteristics of electric  storage resources through bidding parameters or other means; 
and  (4)  establish  a    minimum  size  requirement  for  market  participation  in  the  RTO/ISO 
markets that does not exceed  100 kW. 

Examples of adequately designed capacity mechanisms, mechanisms which (will) allow for 
the participation of storage include Belgium (upcoming in 2020, with participation possible 
including  through  aggregation),  France  (minimum  capacity  of  1  MW,  with  aggregation 
possible),  Ireland  (with  derating  factors  specific  to  the  storage  size  and  duration),  and 
Poland (minimum required provision period shortened to four hours). However, even these 
capacity  mechanisms  may  have  specific  design  parameters  which  do  not  fully  provide  a 
level playing field for storage across different time horizons. 

Moreover, functioning wholesale markets have led to the development of distributed heat 
storage (e.g. in CHP plants) in order to react to dynamic prices in countries such as Austria, 
Czech Republic, Germany, Belgium, Denmark and Finland.  

  ANCILLARY AND GRID MANAGEMENT SERVICES 

Context 

59 EPEX SPOT (2018) Trading on EPEX SPOT 2018 
Nord Pool (2020) Rules and regulations 
60 Federal Energy Regulatory Commission (2018) Order No. 841 Electric Storage Participation in Markets 
Operated by Regional Transmission Organizations and Independent System Operators 

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Ancillary and grid management services form an important potential revenue stream for 
storage,  which  can  provide  much  value  to  such  services,  given  the  controllability,  fast 
response  and  modularity  of  storage  technologies.  It 
is  essential  as  storage 
investors/operators  are  more  and  more  considering  multiple  revenue  streams  in  their 
business cases. Thanks to its controllability, fast response and modularity, policy makers, 
regulators and network operators have  recognized the  contribution storage can bring to 
system security and stability. 

Ancillary services may be separated between balancing and non-frequency services, while 
grid management services (for congestion management) are a third category.61 Network 
operators  play  a  central  role  in  procuring  these  services  as  they  are  tasked  with 
guaranteeing the system security. 

Pumped  hydro  has  traditionally  been  the  storage  technology  most  commonly  providing 
balancing and non-frequency ancillary services. Recently, batteries have made inroads in 
multiple  Member  States,  either  through  market-based  procurement  or  more  rarely 
experimentation  by  network  operators.  Besides  front-of-the-meter  storage,  active 
customers  and  behind-the-meter  storage  have  a  strong  potential  to  participate  in  the 
provision of these services, including via vehicle-to-grid applications. 

It is generally acknowledged that storage can provide similar services to the system similar 
to other flexibility resources and should hence be treated equally in a technology-neutral 
approach. However, an equal approach may constitute a barrier to entry if the technical 
characteristics  of  storage,  such  as  more  limited  discharge  durations,  are  not  properly 
considered when designing the products to be procured. 

National regulators and network operators recognise the increasing flexibility needs which  
arise  from  the  penetration  of  intermittent  renewables.  They  are  conducting  studies  to 
better  understand  the  potential  role  of  storage  technologies,  estimate  future  flexibility 
needs and implement pilots in multiple Member States, even in those where there is at the 
moment barely any participation of storage in the provision of ancillary services. 

Current status across Member States 

Ancillary  services  markets  are  less  developed  than  energy  markets  in  terms  of  depth, 
liquidity  and  cross-border  integration.  Moreover,  procurement  of  ancillary  services  is 
frequently not market-based  or some services are imposed to network users and hence 
not  remunerated  (or  only  partly).  This  applies  especially  to  non-frequency  ancillary 
services. Participation of storage in ancillary service provision is currently hence limited in 
many  Member  States.  Participation  in  balancing  services  is  more  advanced,  while  non-
frequency ancillary services present higher barriers to storage. 

Concerning balancing services, frequency containment and replacement reserve markets 
are more frequently accessible to storage, in particular pumped hydro, while batteries are 
still rarely admitted, except in Central-Western Europe. Also, the limited market size can 
lead to the dominant participation of few large flexible generators (including hydropower) 
in  detriment  of  potential  market  entrants.  Moreover,  the  approach  per  Member  State 
varies, with storage not being eligible to provide services in at least one of the national 
balancing markets in almost all Member States. This is partially a consequence of national 
regulatory frameworks not defining and addressing energy storage consistently.  

In addition to these barriers to entry, the design of balancing markets represents barriers 
to participation. Parameters such as requirements for symmetry in the provision of upward 
and downward balancing, or minimum balancing energy provision duration are barriers in 
some  Member  States.  Various  stakeholders  have  indicated  concerns  regarding  the 

61 Balancing actions maintain the electricity frequency within a predefined stability range. Non-frequency 
ancillary services comprises for example voltage control (to maintain it also within predefined ranges), black 
start (to recover from a partial or total shut-down of the electric system) or islanded operation (in the case of 
system splitting) capabilities. 

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provisions  of  the  recast  Electricity  Regulation  concerning  the  limit  of  12  months  to 
balancing  contractual  durations,  indicating  that  it  would  be  insufficient  to  provide  the 
certainty required for long-term investments. However, theoretically storage operators are 
still able to establish contracts of a larger duration with balancing service providers and/or 
responsible parties. 

The  possibility  of  storage  to  provide  non-frequency  ancillary  services  is  even  more  rare 
than balancing services. This is especially valid for batteries, which in most Member States 
cannot provide voltage control nor black-start services due to the way these services are 
procured.  Moreover,  generators  are  in  multiple  Member  States  obliged  to  provide  these 
ancillary  services,  with  the  consequent  inexistence  of  organized  markets  for  their 
procurement. 

Finally, participation of storage in grid congestion management is at present limited to pilot 
projects focusing on battery systems. Albeit limited in scale, these projects are taking place 
in  multiple  Member  States,  in  recognition  of  the  modularity  and  controllability  of  the 
technology. Nonetheless, national regulations in many Member States still need to provide 
a level playing field for the procurement of such services by DSOs, while guaranteeing that 
all flexibility resources are in network development plans considered equally with network 
expansion.  The  implementation  of  dynamic  or  time-of-use  network  tariffs  and  end-user 
prices  at  the  distribution  level  could incentivize  distributed  flexibility resources  including 
storage, but variable tariff and price signals are not yet common practice. 

Best practices 

Concerning  the  access  of  storage  to  balancing  markets,  the  best  examples  are  the 
balancing markets of Central-Western Europe and the British Isles. There, multiple Member 
States  allow  storage  to  provide  capacity  (and  more  limitedly  energy)  frequency 
containment reserves (BE, DE, FR, UK, IE). In addition, several countries (FR, BE, AT, DE, 
SL)  allow  pumped  hydro  to  provide  automatic  frequency  restoration  reserves,  while  the 
Netherlands allows batteries in this market. 

One  positive  development  is  the  cross-border  integration  of  balancing  markets.  The 
Electricity  Balancing  Guideline  sets  requirements  concerning  separate  upward  and 
downward  balancing  procurement,  the  imbalance  settlement  period  and  other  aspects 
which will eventually be implemented across Member States.62 The Baltic Interconnection 
Project  is  also  leading  to  the  integration  and  improvement  of  balancing  markets  in  the 
Baltic States. 

Multiple  projects  are  ongoing  for  market-based  procurement  of  balancing  reserves,  for 
example in Italy, Finland, Denmark, the Netherlands and Portugal. For example, TenneT 
and other partners are working on blockchain-based projects to sources flexibility services 
from  EVs  and  residential  storage  to  the  TSO.63    It  is  also  worthy  to  note  the  important 
participation of storage operators for the provision of balancing services in Hungary, with 
multiple battery projects in the recent years. 

  GRID ASPECTS 

Context 

This topic addresses grid charges that are applied to users of transmission and distribution 
networks.  Usually,  end-users  pay  grid  charges  on  the  basis  of  the  amount  of  electricity 
taken off from the grid (€/MWh), and/or on the basis of their connection capacity or their 
peak capacity taken off from the grid (€/MW). Generators pay in some countries also grid 
charges  depending  on  their  injection  volumes  and/or  capacity.  Energy  storage  can 
physically be considered as both producer and consumer, and therefore both types of grid 

62 European Commission (2017). Regulation 2017/2195 establishing a guideline on electricity balancing 
63 Eurelectric (2018) Blockchain in Electricity: a Critical Review of Progress to Date 

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charges (double grid charging) apply in several Member States as storage is not specified 
in  the  regulatory  framework,  notwithstanding  the  potential  contribution  of  storage  to 
avoiding or reducing network congestion and investments. This is considered as a distortion 
and  a  major  barrier  to  the  deployment  of  storage.  However,  for  some  grid  operators, 
network tariffs should cover and reflect the actual use of the network. As a result, storage 
must  pay  the  off-taking  tariff  when  it  takes  off  energy  from  the  network,  as  any  other 
consumer site does and pay the injecting tariff when it injects, as any other production site 
does.  Any  policy-related  levies  (such  as  for  supporting  renewable  energy)  recovered 
through the network tariff component are similarly detrimental. 

Storage installations benefit in some Member States of grid charges exemptions, or specific 
tariff rules. These exemptions can be specific per technology, application or grid service. 
Due to the variety of storage technologies, potential applications and services, a case by 
case  exemption  regime  can  be  complex  and  difficult  to  apply  in  practice.  Exemption 
regimes for storage can apply to transmission or distribution charges only or to both, with 
some differentiation.  

Storage can specifically be addressed in the grid tariff regulation via two approaches: either 
by  incentivizing  specific  storage  technologies  to  support  their  uptake  or  by  eliminating 
distorting  practices  (e.g.  double  grid  charging)  and  reflecting  in  the  tariff  setting  the 
potential benefits of storage to the network. In the second case, the approach should be 
the same for all types of storage, independently of the technology, application or service.  

More generally, locational or temporal signals in network tariffs could be used to incentivise 
investment  and  operational  decisions  of  network  users,  including  of  storage  operators. 
However, the benefits of such signals must be weighed against the costs of implementing 
these measures. It is important to differentiate between locational and temporal signals, 
between the transmission and distribution levels, and between the network connection and 
access  charges.  They  must  not  be  confused  either  with  signals  for  energy  prices  either. 
Therefore, the interactions between the different possible signals that can be provided to 
network users through network tariffs and energy prices should be considered, as well as 
the  current  practices  across  the  EU,  in  order  to  identify  the  most  appropriate  approach 
balancing benefits and costs. 

The deployment of storage can also be hindered by grid connection and access rules, such 
as technical specifications, agreements or contracts. This might in particular be a hurdle 
for small scale systems, if they have to comply with the same specifications and procedures 
as  large  projects.  If  grid  rules  and  codes  do  not  properly  take  into  account  the  specific 
status and characteristics of storage, the administrative and technical burden for storage 
can be disproportionate and constitute a major barrier. 

Net metering64 for small scale prosumers (consumers, usually households, equipped with 
a production unit behind-the-meter) discourages active participation in the market. It also 
limits the interest to opt for hybrid solutions consisting of a storage and production unit 
allowing to increase  self-consumption. Net metering is hence a major  barrier to  behind-
the-meter storage. The new electricity market Directive introduces limitations to new net 
metering schemes for active consumers. 

Current status across Member States 

In  multiple  Member  States,  the  qualification  of  storage  facilities  as  both  consumer  and 
producer makes the storage operator a “double” network user. This leads to the obligation 
to pay network charges based on its volumes taken off from the grid as well on its volumes 
injected into the grid. Awareness about this barrier is increasing among Member States, 

64 Net metering is defined in European Commission (2015) Best practices on Renewable Energy Self-
consumption as “a regulatory framework under which the excess electricity injected into the grid can be used at a 
later time to offset consumption during times when their onsite renewable generation is absent or not sufficient. 
In other words, under this scheme, consumers use the grid as a backup system for their excess power production” 

85 

 
 
 
 
 
 
                                           
and  some  of  them  are  currently  implementing  changes  to  address  this  distortion  in  the 
regulation. 

According to ACER65, at the transmission-level, of the 13 surveyed Member States which 
apply  injection  charges  to  electricity  network  users,  8  apply  charges  to  pumped  hydro 
storage and 5 to non-pumped hydro storage.66 At the distribution level, 6 Member States 
which charge injections from distribution-connected pumped hydro storage, and 4 Member 
States do so for non-pumped hydro storage technologies.67 

The  recent  changes  in  grid  tariff  principles  apply  in  particular  to  pumped-hydro  storage 
plants (mainly new projects, or existing plants under certain conditions) and comprise an 
exemption from  or reduction of the grid fee  for offtake and/or injection. The  off-take of 
electricity for conversion into hydrogen or  synthetic  methane is in some Member States 
also subject to exemption. For batteries installed by end-users, this is not an issue, as they 
mostly do not (yet) inject electricity into the distribution grid. The deployment of batteries 
by  utilities  for  balancing  purposes  might  however  be  hindered  in  Member  States  where 
double grid charging is applied for such installations. 

A few Member States have implemented exemption regimes with complex rules which do 
not  address  the  possible  behind-the-meter  combinations  of  storage,  with  for  example 
generation.  Other  countries  are  currently  addressing  the  issue  of  double  charges  in  the 
context  of  the  review  of  their  Electricity  Market  Design  framework.  But  some  Member 
States have not yet taken the initiative to address this issue. 

For several stakeholders, exemptions on grid tariffs and taxes / surcharges are commonly 
introduced  when  a  need  to  deal  with  distortions  created  by  the  existing  grid  tariffs  and 
taxes  /  surcharges  is  identified.  Thus,  these  exemptions  are  more  about  dealing  with 
consequences  than  with  causes  and,  in  addition,  significantly  complicate  the  regulatory 
framework and risk to create further distortions. Therefore, the optimal way to deal with 
the need identified is to tackle the genuine issue – i.e. redesign the grid tariffs and taxes 
/ surcharges according to appropriate regulatory and efficiency principles. 

Usually, self-consumers with net settlement do not pay grid tariffs for the share of their 
consumption that is covered by own production. This measure stimulates the use of behind-
the-meter storage. 

As  storage  facilities  are  currently  considered  as  producer  in  most  Member  States,  they 
have to fulfil the usual generators’ obligations such as: be part of a portfolio with balancing 
responsibility; comply with the technical specifications of network operators; compensate 
for the provision of primary balancing power in proportion to their injection quantities. In 
addition, in many Member States, storage facilities that take off energy from the grid have 
also to comply with end consumer obligations. Both obligations apply if there are no specific 
grid connection and access rules for storage facilities. 

The  obligations  are  in  some  cases  limited  to  storage  facilities  above  a  certain  threshold 
(usually  >  1  MW).  Smaller  storage  units  do  in general  not  have  to  comply,  as  they  are 
usually  coupled  with  either  self-consumers  (self-consumption  schemes)  or  distributed 
power generation (mainly renewable energy-based), and hence not directly connected to 
the grid. Standards for the construction, testing and operation of electrical systems usually 
also apply to storage facilities. 

Concerning  tariff  signals  at  the  transmission  level,  ACER68  also  indicates  that  out  of  29 
surveyed  jurisdictions,  11  had  some  sort  of  time-differentiated  transmission  network 
tariffs, namely BE, HR, EE, FI, FR, NO, PT, SI, ES, GB, and NI (Northern Ireland). Such 

65 ACER (2019) ACER Practice report on transmission tariff methodologies in Europe 
66 Charges pumped hydro: AT, BE, FR, IE, PT, RO, ES, UK (GB). Charges other storage technologies: BE, FI, 
FR, IE, UK. 
67 Charges pumped hydro: AT, DK, PT, RO, ES, UK (GB). Charges other storage technologies: DK, FI, SE, UK. 
68 ACER (2019) ACER Practice report on transmission tariff methodologies in Europe 

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signals were mostly applied to the withdrawal charges, either the energy  component (8 
cases) or the power component (5 cases). Only in 5 cases were such signals applied to the 
injection component. Dynamic pricing was much less common than seasonal, day/night or 
peak/off-peak signals. Regarding transmission locational signals, out of the 29 jurisdictions 
surveyed by ACER, 6 had some kind of locational signal. Most often this applied to both 
injection and withdrawal (NO, SE, GB), and less often to withdrawal (AT) or injection (IE, 
NI).  In  the  consideration  on  the  harmonisation  of  electricity  tariff  structures  through  a 
network  code  by  ACER,  a  study69  indicated  that  given  the  difficulties  of  implementing 
locational marginal pricing in Europe, the use of locational signals in transmission tariffs 
could be an adequate form of providing incentives for the siting decisions of network users. 

For distribution, the use of locational or temporal signals for DSO’s tariffs is much rarer. 
As far as 2015, no tariff schemes with locational nor dynamic price signals were found in 
the EU in a study for the European Commission.70 Moreover, the study indicates that such 
locational  signals  can  be  more  appropriately  conveyed  through  energy  prices  for  short-
term network congestions, while structural congestions may be better addressed through 
network expansion. 

Net  metering  still  exists  in  multiple  Member  States  and  is  an  important  barrier  to  the 
deployment of small-scale storage coupled with distributed power generation units. 

Only a limited number of Member States have already grid codes addressing specifically 
storage characteristics. In some Member States, storage is addressed through the smart 
grid framework, with incentives or specific rules applied to flexible solutions. 

Best practices 

Several  Member  States  (AT,  BE,  DE,  FR,  IT,  ES)  that  dispose  of  pumped  hydro  storage 
capacities that are considered crucial for the stability of their electricity system (balancing 
and ancillary services), have recently taken measures to reduce grid charges and related 
costs  for these  installations. UK is  currently considering such a measure.  The new  rules 
can be considered as good practices, as they are more cost-reflective and take into account 
the specific benefits that storage offers to the grid. The current grid tariffication practices 
across Member States are however still quite diverging: same or different rules for existing 
and  new  storage  facilities,  losses  included  in  tariffs  or  not,  grid  tariffs  applicable  to 
electricity  offtake  and/or  to  injection,  tariff  rebate  on  all  volumes  or  only  for  electricity 
providing specific services (e.g. balancing). Addressing double charges is hence a highly 
complex task. Following a multiple year process, the UK is minded to adopt a licence for 
storage which could help reduce this complexity. 

There  are  currently  few  Member  States  having  introduced  specific  connection  rules  and 
tariffs  for  storage,  resulting  in  both  generators  and  consumers’  rules  potentially  being 
applied  to  storage  projects.  In  Denmark,  the  TSO  Energinet  has  published  the  first  grid 
codes specifically for connection and access of batteries. For some stakeholders, there is 
need to make connection processes more transparent and simplify technical specifications 
(DSO/TSO). The approach in France can be considered as a good practice; it has recently 
included in its legislation a proper definition of energy storage and intends to specifically 
address the issue of connection rules for storage in a near future. 

In Ireland, the TSO EirGrid has recognised that some derogations are required to account 
for the specific characteristics of energy storage and its potential to offer ancillary services. 
In the Netherlands, where there is no pumped hydro capacity to ensure system balancing, 
the TSO TenneT identifies the need to further develop cooperation between TSO and DSOs, 
the  market  model  and  processes  for  the  use  of  flexibility  sources  including  storage  for 
congestion management. In the UK, the Piclo Flex platform  – currently being trialled by 
several  UK  DNOs  –  provides  a  marketplace  for  DNOs  to  tender  for  and  receive  bids  to 
resolve  anticipated  network  congestion  needs.  Ofgem’s  RIIO-2  price  control  review, 

69 CEPA (2015) Scoping towards potential harmonisation of electricity transmission tariff structures 
70 Ref-e et al. (2015) Study on tariff design for distribution systems 

87 

 
 
 
 
 
 
 
                                           
currently underway, is also looking at stronger incentives and obligations on DNOs/DSOs 
to assess the opportunity for flexibility.   

  TAXES & OTHER LEVIES 

Context 

This topic addresses the specific taxes and levies applied to storage facilities. An electricity 
generation or consumption tax and/or other levies exist in all Member States. 

Besides applying to end-users, they may also apply to storage facilities. Similarly to the 
double charging of network tariffs, storage plants that are directly connected to the grid, 
may  be  considered  as  both  producer  (injection)  and  consumer  (offtake).  If  storage  is 
considered  an  energy  consumer  for  taxation  purposes,  energy  offtake  by  storage  will 
constitute a taxable event. Subsequently, the discharge energy will be taxed  once again 
when  finally  consumed  by  the  end-user.  This  situation,  called  double  taxation,  has  a 
negative impact on investments in and use of storage.  It must be noted that  as double 
taxation occurs during storage offtake and then again during the final energy consumption, 
it  differs  from  double  tariff  charging,  which  takes  place  when  storage  charges  and  then 
discharges. 

Storage can be subject to exemptions from or reductions of taxes and other levies. Similar 
to  grid  tariffs,  these  exemptions  or  reductions  can  be  specific  per  voltage  level 
(transmission or distribution), storage technology or application.  

Current status across Member States 

In several Member States, double taxation occurs. This practice leads to a double burden 
on temporarily stored electrical energy, as the final consumer of stored electricity has also 
to pay network charges, taxes and levies on the same electricity volumes. Some Member 
States apply specific exemption or reduction regimes for storage, which can take different 
forms  (exemption  under  certain  conditions  like  coupling  with  a  renewable  energy 
production facility, technology or size specific,…). Such exemptions or reductions have in 
several  Member  States  been  implemented  for  pumped  hydro  storage,  while  some  other 
Member  States  plan  to  implement  such  measures  in  the  near  future.  In  some  Member 
States, exemptions apply for electricity which is generated with a renewable unit or CHP 
and then self-consumed, or for electricity which is fed in into the grid to participate in the 
balancing market. 

In some Member States, levies and taxes apply to all electricity consumed irrespective if 
that energy comes from the grid or from an own production or storage facility behind-the-
meter. Such a framework disincentivizes both local production and storage. 

The majority of Member States have not yet addressed the double levies applied to both 
offtake and injection by storage facilities. This is still an important barrier, and it will also 
hinder the future development of vehicle-to-grid applications. 

In some Member States, as storage is not properly defined in the national legislation, the 
rules applicable regarding levies and surcharges are not clearly defined and remain vague 
and subject to diverging interpretation. 

A few national authorities are providing tax discounts (on taxable income) for the purchase 
of energy storage equipment, in particular batteries. This support is usually implemented 
within the broader framework addressing the climate and energy objectives. 

Storage has also to be considered when addressing the level of taxes and grid tariffs. Very 
high tariffs/taxes billed are an obstacle for the development of storage directly connected 
to the grid (as it is generally the case of big pumped hydro storage plants). However, very 
high tariffs/taxes can be an incentive to install a storage plant (like a battery) behind the 
88 

 
 
 
 
 
 
 
 
 
 
 
 
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meter of a prosumer. As a result, lowering tariffs/taxes billed to storage  could stimulate 
the development of storage directly connected to the grid and lower the development of 
behind the meter storage. Hence, the height of the tariffs/taxes billed to storage appears 
to be a very interesting policy discussion.  

Best practices 

Austria,  Belgium  and  Germany  are  exempting  pumped  hydro  storage  from  paying  fees 
resulting from the cost recovery of support schemes for renewable and/or CHP electricity. 

In Luxembourg, the legislative framework foresees the exemption of the electricity tax for 
“energy consumption used for storage purposes ". 

Finland  has  recently  suppressed  the  double  taxation  of  electricity  for  large  batteries. 
Electricity can now be transferred to storage sites without the excise duty on electricity, 
which is due when electricity is transferred for consumption. 

Investors in energy storage assets are eligible to a federal tax discount (deduction on the 
taxable income) in Belgium and Italy (when coupled with PV). 

In  the  Netherlands,  there  is  a  tax  ruling  to  avoid  double  taxation  for  storage  supplying 
energy directly to end consumers, but this provision does not cover the case of suppliers 
delivering energy which was previously stored. The government has announced plans to 
end this double taxation on storage in 2021. 

  INVOLVEMENT OF NETWORK OPERATORS 

Context 

Electricity storage can provide value both to network users (generators and consumers) 
and  network  operators.  Hence,  the  role  of  network  operators  in  the  ownership  and 
operation of storage and the consideration of storage as a competitive activity have been 
extensively debated in the run-up to the Clean Energy Package, and afterwards. 

Proponents  of  the  separation  of  storage  from  regulated  network  activities  argue  that  if 
allowed to own and operate storage, network operators would enjoy an unfair competitive 
advantage for several reasons. These include that network operators are responsible for 
providing connection and access to networks and could hence disadvantage other potential 
storage operators to favour their own projects. Also, being responsible for the operation of 
the electricity system, network operators have a better knowledge of the electricity system, 
which leads to information asymmetry. Furthermore, being regulated, network operators’ 
activities  have  a  lower  risk,  and  thus  they  have  access  to  capital  at  a  lower  cost  than 
market  parties.  Finally,  the  combination  of  network  and  storage  activities  could  lead  to 
cross-subsidisation  and  distort  competition  between  storage  operators,  and  between 
storage  and  other  flexibility  resources,  such  as  demand-side  response  or  dispatchable 
generation, on the other hand. 

Arguments  in  favour  of  network  operators  playing  a  role  in  electricity  storage  activities 
revolve  around  the  still  incipient  role  of  storage  technologies  (especially  batteries  and 
power-to-gas)  and  the  need  for  innovation.  Excluding  network  operators  from  storage 
activities would hinder experimentation in new technologies, in a context of potential lack 
of  market  interest.  Furthermore,  regulated  investment  may  drive  the  deployment  of 
storage technologies, at a faster pace than what would be achieved by the market. Storage 
technologies can also be combined in multiple network points in order to create ‘virtual’ 
lines,  in  a  similar  manner  to  conventional  network  investments.  Moreover,  some 
proponents  argue  that  adequate  models  exist  to  leverage  the  expertise  of  network 
operators  while  guaranteeing  that  storage  remains  a  competitive  activity,  with  network 
operators acting as “storage service providers” to the market. 

89 

 
 
 
 
 
 
Current status across Member States 

Due to the limited deployment of electricity storage in the past, many national regulatory 
frameworks did not explicitly address the ownership and operation of storage by network 
operators, and storage was in most countries not defined in primary legislation. This is also 
partly a consequence of the third energy package which did not address this issue. 

When ownership and operation of storage by network operators is addressed in legislation 
or regulation, it is most commonly not allowed, which was already noted by CEER in 2014.71 
Regulatory frameworks which do allow ownership and operation by grid operators usually 
do not indicate requirements which need to be fulfilled. However, such requirements are 
sometimes mentioned, for example maximum storage or discharge capacities of e.g. 0.5 
MW.  In  rare  cases  storage  may  be  considered  a  regulated  activity  such  as  for  pumped 
hydro in isolated systems such as islands, in one Member State. CEER indicates that in the 
few cases where storage is considered exclusively as a regulated rather than competitive 
activity, regulators set disclosure obligations to network operators so that the knowledge 
from the development and operation of storage is shared with market actors.  

Regardless of unbundling requirements in Member States, in practice, network operators 
do not own nor operate storage in most countries, as was also acknowledged by CEER.72 
Also, given the uncertainty and the proposed unbundling requirements already in 2016 in 
the Clean Energy Package, only a limited number of system operators actually developed 
such projects since 2016. 

Nonetheless, Lithuania, France,  Germany and  Italy are developing pilot  storage projects 
with  the  involvement  of  network  operators.  For  some,  it  is  argued  that  these  projects 
respect the unbundling requirements as they are operated as ‘virtual power lines’ and only 
intervene  during  a  few  seconds  when  a  problem  crops  up,  for  instance  due  to  network 
elements  faults.73    Further  analysis  and  guidance  from  the  Commission  might  be 
appropriate to guarantee the unbundling rules set in the new electricity market design are 
respected. 

A particular question on the role of network operators for storage concerns the ownership 
and operation of power-to-gas facilities, which is related to the question of whether the 
technology is considered storage or not (this point is discussed in the next section). At the 
moment,  national  definitions  are  divided  on  this  aspect.  Providing  certainty  for  the 
investments in power-to-gas will thus require clearly addressing these interrelated aspects: 
whether network operators are allowed to own and operate storage, and whether power-
to-gas is considered storage. Currently, power-to-gas projects are limited to a handful of 
countries, with participation of both TSOs and DSOs in some projects. 

Multi-service business cases are when “multiple  stakeholders  are together involved in the 
ownership, development, management, and/or operation of an energy storage facility in 
order to maximise its social welfare by fully deploying all services storage  can  deliver”.74 
Multi-service  business  cases  could  allow  individual  storage  facilities  to  provide  storage 
services  clearly  separated  between  markets  and  regulated  actors,  through  adequate 
contractual arrangements between the parties. These cases are at this moment restricted 
to a handful of explorative projects.75 The two regulatory conditions of successful multi-
service business cases are likely not fulfilled by the current national frameworks in the EU. 
Namely,  a  clear  separation  between  market  and  regulated  storage  activities,  and  the 
possibility to combine both in an individual storage project. 

71 CEER (2014) Development and Regulation of Electricity Storage Applications. 
72 CEER (2014) Development and Regulation of Electricity Storage Applications. 
73 See IRENA (2019) Innovation Landscape for a Renewable-Power Future – Solution V. 
BMWI (2020) What is a grid booster? 
74 EASE (2019) Maximising Social Welfare of Energy Storage Facilities through Multi-Service Business Cases. 
75 EASE (2019) Maximising Social Welfare of Energy Storage Facilities through Multi-Service Business Cases. 
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Generally, national regulatory frameworks are consistent in the approach for transmission 
and distribution system operators: where unbundling requirements exist, they are applied 
for both TSOs and DSOs. Conversely, where the national regulatory framework does not 
explicitly  address  the  issue,  this  is  the  case  for  both  the  transmission  and  distribution 
activities. 

Best practices 

The  existence of clear  national rules regarding the possible role of network operators in 
storage can as such be considered as best practice. At the moment TSOs and/or DSOs are 
not allowed to own and operate storage in AU, HR, CZ, FI, NL, SI. Many national regulatory 
frameworks  do  however  not  address  whether  and  under  which  conditions,  network 
operators are allowed to own and operate storage. One example of an explicit reference to 
possible involvement of network operators is Hungary, where ownership and operation of 
storage  is  allowed  for  DSOs,  but  limited  to  a  certain  capacity  (0.5  MW).  Alternative 
approaches to the involvement of DSO ownership of storage can be identified in the US, 
where the rules for states such as New York or California vary in how much involvement is 
allowed.76 

  STORAGE DEFINITION, FINANCING, SECTOR COUPLING AND OTHER ASPECTS 

Context 

The  main  aspect  in  this  section  is  the  definition  of  storage  in  primary  legislation  of  the 
electricity sector, which most often has a large impact on policies and barriers for storage 
in a given Member State. The definition determines for instance whether storage operators 
are  a  specific  and  different  market  actor  than  generators  and/or  consumers.  This 
differentiation should result in greater certainty for the participation in electricity markets 
and  guarantee  that  storage  is  not  burdened  with  undue  costs  such  as  double  network 
tariffs,  electricity  consumption  taxes  or  RES  surcharges.  These  barriers  to  entry  in 
electricity markets and undue costs applied to storage have a direct impact on investment 
decisions. 

A particular question concerning the definition of storage is whether it requires the energy 
conversion  back  to  electricity  (such  as  in  the  case  of  pumped  hydro  and  batteries)  or 
whether conversion to another energy carrier without re-conversion to electricity is allowed 
(as in the case of power-to-gas or most heat storage technologies). 

In the case of conversion technologies between electricity, gas and heat vectors, conflicting 
definitions my arise in the primary legislation of each sector. For example, in the case of 
power-to-gas definition in the primary legislation of the gas and electricity sectors.  

Even though funding some low carbon projects (like wind and PV) becomes relatively easy 
to obtain, private investments on other clean technologies like storage is still considered 
difficult. The main barrier comes from the difficulty to reach a viable business case due to 
all related regulatory barriers. Another barrier comes from the difficult access to finance, 
which  is  gains  relevance  as  we  approach  a  potential  large-scale  deployment  of  storage 
technologies and applications. 

The access to finance depends on the business case of an investment and on the stability 
of  the  regulatory  and  policy  framework.  It  is  of  paramount  importance  to  ensure  this 
stability  and  to  send  the  appropriate  signal  to  the  financial  institutions  and  investors  in 
order for them to understand correctly the risk associated to storage investment. 

Sector coupling was previously understood as the electrification of end-use applications 
(e.g.  self-production  of  electricity  by  consumers).  Currently,  this  definition  has  been 

76 CERRE (2019) Smart consumers in the internet of energy – Flexibility markets and services from distributed 
energy resources  

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broadened  to  energy  systems’  integration,  which  is  the  increased  interaction  between 
energy vectors and sectors, e.g. interaction between electricity, gas, and heat vectors by 
using  ‘new’  supply  and  demand  technologies,  such  as  power-to-X,  gas-to-power,  and 
others.  

The increasing share of intermittent renewable electricity (mainly wind and solar power) 
leads to higher price volatility, and specific challenges to balance electricity demand and 
supply  at  any  moment  as  well  as  to  ensure  the  supply  adequacy.  This  creates  multiple 
opportunities for sector coupling in different sub-sectors, e.g. x-to-power can be used at 
moments of scarce electricity supply availability (and high prices), while power-to-x can 
be used at moments of high availability (low prices). 

Through sector coupling the storage of energy carriers other than electricity can provide 
services to the electricity system and increase the security of electricity supply. The first 
important  possibility  is  that  of  sector  coupling  through  heat  storage.  Examples  include 
thermal  storage  coupled  with  a  CHP  plant,  a  borehole  thermal  energy  storage  (BTES) 
combined to a heat pump, or recovery of waste heat from industry, datacentres and others. 
These solutions employing storage respond to price differences on the electricity market 
(daily to seasonal) and allow an industrial process, a district heating network or a building 
to deliver services to the electricity market more cost-effectively than employing electricity 
storage. 

Current status across Member States 

Most national regulatory frameworks do not contain a definition of storage (the deadline 
for the transposition of the Electricity Directive is the end of 2020). In such cases, storage 
is  commonly  considered  as  a  generator  when  participating  in  electricity  and  ancillary 
services  markets.  For  grid  tariffication  and  taxation  purposes,  storage  is  frequently 
considered as both a consumer and generator. Consequently, storage may be faced with 
market  rules  which  do  not  take  into  consideration  its  specific  characteristics  and  is 
furthermore burdened with non-reflective costs which significantly affect its business case. 

Furthermore, even countries where the primary electricity sector legislation has recently 
been  updated,  may  not  have  provided  a  definition  for  storage  in  it.  And  in  at  least  one 
Member  State,  storage  has  recently  been  defined  in  primary  legislation,  but  secondary 
legislation and in the design of electricity markets have not been adjusted, due to the time 
needed to update all relevant provisions. 

In  a  few  Member  States  storage  is  defined  only  in  secondary  legislation  (e.g.  regarding 
active  consumers,  renewable  energy  or  taxation).  In  this  case,  the  definition  does  not 
reduce the uncertainty for storage in topics not directly related to the concerned secondary 
legislation. In some Member States storage definitions are not fully consistent, such as if 
both energy and electricity storage are defined in different secondary legislative acts in an 
incompatible manner. 

Also,  the  definitions  across  Member  States  differ  concerning  whether  conversion  of 
electricity into another carrier and use without re-conversion is considered as storage. Most 
of the existing definitions require re-conversion of energy into electricity, thus excluding 
power-to-gas.  This  leads  to  inconsistent  approaches  across  the  EU  and  might  have  a 
negative impact on the business case of power-to-gas which injects hydrogen or synthetic 
methane  into  the  gas  grids.  In  particular,  if  such  power-to-gas  projects  would  be 
considered  as  electricity  end-user  and  hence  have  to  pay  the  “full”  grid  costs  and 
surcharges. The majority of the existing definitions also require storage to be connected 
to the grid (as part or not of a user facility, i.e. including behind-the-meter storage). 

Another  point  is  whether  the  definition  explicitly  refers  to  certain  storage  technologies, 
while de facto excluding other options. This is the case in at least one Member State. Also, 
when cycle losses are defined in legislation or regulation, they may be defined following 
typical values for pumped hydro of 75%, thus not being adapted to round-trip losses of 
other technologies such as batteries (where losses are typically lower). 

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Many  definitions  do  not  address  the  specific  issue  of  the  combination  of  storage  with 
generation,  either  front-of  or  behind-the-meter,  and  the  case  of  active  consumers  with 
storage.  More  generally,  the  variety  of  applications  of  storage  in  combination  with  the 
diversity of policies affecting storage (from electricity market design to network tariffication 
and taxation) are complex. This in turn increases the risk of inconsistencies in how storage 
is addressed in legislation and market rules. 

For  one  stakeholder,  the  definition  of  energy  storage77 in  the  recast  Electricity  Directive 
could also evolve. To the stakeholder, the definition bundles different steps in the energy 
supply  chain:  the  energy  conversion  activity  (e.g.  power-to-gas,  gas-to-power)  and  the 
storage  activity  itself.  Hence,  to  the  stakeholder,  should  storage  receive  any  ad-hoc 
treatment,  it  would  be  needed  to  differentiate  when  the  activity  is  genuinely  part  of  a 
storage system in order to avoid distortions (e.g. opportunistic behaviours causing free-
riding,  cross-subsidisation,  etc).  In  this  sense,  temporal  and  geographical  coordination 
between the conversion (e.g. power-to-gas) and the storage itself (e.g. injection into the 
storage)  would  be  key.  Other  stakeholders,  however,  argue  that  classifying  energy 
conversion as storage is more appropriate, and thus that the current definition is adequate. 

The difficulty to access finance from commercial banks is an increasing barrier as storage 
applications  slowly  reach  market  deployment.  Beyond  the  measures  addressing  the 
business  case  to  make  it  a  reality,  the  regulatory  framework  should  be  as  simple  as 
possible, providing a coherent and long-term approach. Complexity increases the risk for 
investors  and  financial  institutions.  There  is  need,  for  some  Member  States,  to  have  a 
stable framework based on a long-term vision and ensuring the coherence and place  of 
storage in the whole energy system.  

Currently electricity storage is not included as a subsector in the Directive on protecting 
European Critical Infrastructures. It could be considered to add it to the Directive, taking 
into account adequate  criteria for the  selection only of electricity storage projects which 
would be ‘essential for the maintenance of vital societal functions, health, safety, security, 
economic or social well-being of people, and the disruption or destruction of which would 
have a significant impact in a Member State as a  result of the failure to maintain those 
functions’.78 

Concerning sector coupling, when considering seasonal storage, power-to-X is currently 
seen as another relevant option. The bulk storage of hydrogen in underground salt domes, 
aquifers,  rock  caverns  or  mines  can  provide  long-term  seasonal  energy  storage  for 
electricity production or injection in the gas grid. However, these ‘new’ applications are not 
yet  cost  competitive  and  the  energy  efficiency  of  certain  processes  is  still  low;  further 
applied research and innovation, including pilot projects, is needed to lower the cost and 
increase the efficiency. 

Another issue to consider will be the interaction of renewable guarantees of origin (GO) for 
different  energy  carriers.  Based  upon  the  FastGO  project,  79  the  standard  CEN  16325  is 
being updated to address this issue and avoid problems such as (the perception of) double 
counting, and lack of trust or understanding.  Recent draft rules for the European Energy 
Certificate System (EECS), the platform for guarantees of origin, address the gas GOs and 
the conversion of GOs of different carriers.80 

77 ” Art. 2(59) of Directive (EU) 2019/944: ‘energy storage’ means, in the electricity system, deferring the final 
use of electricity to a moment later than when it was generated, or the conversion of electrical energy into a form 
of energy which can be stored, the storing of such energy, and the subsequent reconversion of such energy into 
electrical energy or use as another energy carrier; 
78 Directive (2008/114) on the identification and designation of European critical infrastructures and the 
assessment of the need to improve their protection. 
79 FastGO project deliverables at https://www.aib-net.org/news-events/aib-projects-and-
consultations/fastgo/project-deliverables 
80 See EECS rules Release 7 v11 at https://www.aib-net.org/eecs/eecsr-rules 

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Coupling  of  the  electricity  and  transport  sector  are  another  significant  opportunity.  This 
can occur through demand response of vehicle charging. Much of the electric vehicles (EVs) 
charging will occur at night and during weekends, when electricity prices are relatively low 
and vehicles are less employed, although some EVs will need to charge during the day and 
even during peak demand periods. Grid-connected EVs could also be used in lieu of or in 
conjunction with stationary electricity storage to supply energy in scarcity periods as well 
as ancillary services to the system, i.e. vehicle-to-grid applications. 

Stakeholders  have  indicated  there  is  a  need  for  the  development  of  interoperability 
standards  for  communication  between  and  control  of  the  different  EV  brands  as  well  as 
charging  stations  and  systems,  in  order  to  facilitate  EV  charging  and  the  provision  of 
services in all electricity markets.81 This is supported by the European Smart Grids Task 
Force,82 with the main EU efforts taking place in the JRC European Interoperability Centre 
for Electric Vehicles and Smart Grids founded in 2015.83 

Currently,  the  digital  layer  of  battery  management  systems  (BMS),  notably  application 
programming  interfaces  (APIs),  is  often  based  on  proprietary  solutions,  and  a  move  to 
open APIs would desirable. In addition, access to data of battery management systems is 
often  limited,  depending,  among  other  things,  on  how  data  encryption  is  done.  The 
standards or protocols currently being developed for data encryption and communication 
(so-called  Public  Key  Infrastructure)  between  the  vehicle  and  the  charging  point  are 
proprietary, and created according to the specific interests of the automotive industry. 

On top  of the need  for  interoperability between EVs,  charging infrastructure and control 
systems, there is the additional challenge of facilitating cross-border EV travel (e-roaming). 
While the Alternative Fuels Infrastructure Directive 2014/94/EU established requirements 
to facilitate e-roaming and led to the development of initiatives to implement this, there is 
no consensual communication protocol for e-roaming.84 A stakeholder has indicated also 
that the facilitation of direct payments could also be a solution to enable cross-border EV 
travel. 

The deployment of mobile and stationary energy storage technologies as well as increased 
sector coupling can lead in the future to the reduction of energy price differentials between 
peak and off-peak times. For example, when EVs deployment reach significant levels, the 
purchase of energy at off-peak times to charge EVs and eventual the energy supply in peak 
times could be enough to reduce the viability of other applications.  

Best practices 

The  best  practice  concerning  the  definition  of  storage  is  to  address  it  in  the  primary 
legislation  of  the  energy  sector,  in  a  technology-neutral  approach.  The  regulatory 
frameworks of Belgium, France, Hungary include a definition of electricity storage in the 
primary legislation of the  electricity sector.  However, these  require the  re-conversion of 
the  energy  into  electricity,  while  the  French  definition  explicitly  includes  4  technologies, 
namely  pumped  hydro,  power-to-gas,  batteries  and  flywheels.  Moreover,  the  definition 
does not necessarily eliminate barriers to storage in other policy categories. 

To  improve  financing  conditions  and  availability  to  storage,  stakeholders  indicate  that 
Member States could support or even coordinate the following actions: 

  Creating an asset class for storage, to mainstream into the appropriate financial 

instruments; 

81 EASE (2019) Energy Storage: A Key Enabler for the Decarbonisation of the Transport Sector. 
82 European Smart Grids Task Force (2019) Expert Group 3 - Demand Side Flexibility Perceived barriers and 
proposed recommendations. 
83 https://ec.europa.eu/jrc/en/research-facility/european-interoperability-centre-electric-vehicles-and-smart-grids 
84 Ferwerda et al. (2018) Advancing E-Roaming in Europe: Towards a Single “Language” for the European 
Charging Infrastructure 

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 

Introducing an investment grade warranty, which builds upon the investment 
grade, to support the risk level assessment; 

  Getting the private  financial sector (including savings, retail as well as 

cooperative financial institutions) involved to finance energy storage – this is 
mainly about increasing awareness, probably using success stories and explaining 
the regulatory framework; 

  Establishing linkages with public financial or investment institutions to defer 

investment risks: EIB, European funds (like the Innovation Fund), or national 
institutions; 

  Contributing to the EU works on integrating sustainability considerations into the 

 

EU financial policy framework in order to mobilise finance for sustainable growth85 
& working on the Green Bonds86 – mainstreaming storage into these 
considerations; 
Insuring guarantees: Energy storage units and systems do need to be insured to 
make the risks of an investment manageable. A reliable guarantee and insurance 
system will also make it easier to rate energy storage products and energy 
storage companies. Reliable ratings will facilitate financing for the energy storage 
sector. 

3.4.  THE  EU  ELECTRICITY  MARKET  DESIGN  AND  OTHER  LEGISLATION  RELATED  TO 

ENERGY STORAGE 

The  previous  section  identified  policy  barriers  and  best  practices  affecting  the  business 
case of energy storage around several topics, with a focus on the Member State level. The 
present section complements this analysis, focusing on the EU level. The first sub-section 
assesses the impact of the new electricity market design on storage. Then, section 3.4.2 
covers other relevant areas and the concerned EU legislation, namely the: 

  Energy Taxation Directive 
  Guidelines on Environmental Protection and Energy State Aid 
  Trans-European  Energy  Infrastructure  (TEN-E)  Regulation  and  the  Connecting 

Europe Facility (CEF) Regulation 

  Water Framework Directive 
  Hydropower rights granting procedures 
  R&I Framework Programmes: Horizon 2020 and Horizon Europe 
  Critical raw materials 
  Financing 

  IMPACT OF THE NEW ELECTRICITY MARKET DESIGN ON STORAGE 

In  November  2016,  the  European  Commission  published  the  Clean  Energy  for  All 
Europeans draft package, a collection of eight legislative acts (directives and regulations) 
touching on different aspects of the EU energy legislative framework. An important part of 
the  Clean  Energy  Package  was  dedicated  to  redesigning  the  internal  electricity  market 
through recasts of the Electricity Directive (2009/72) and Regulation (714/2009).  

The  EU  institutions  reached  a  political  agreement  in  December  2018  and  the  recast 
Electricity Directive (2019/944) and Regulation (2019/943) were published in June 2019 
after  adoption  by  the  EU  Parliament  and  Council  (hereafter  named  the  Directive  and 
Regulation).87 The new Directive must be transposed by the end of 2020 and is applicable 

85 https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance 
86 https://ec.europa.eu/info/publications/sustainable-finance-teg-green-bond-standard_en 
87 Directive (EU) 2019/944 on common rules for the internal market for electricity. 
Regulation (EU) 2019/943 on the internal market for electricity. 

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from the beginning of 2021, while the Regulation is directly applicable from the beginning 
of  2020.  However,  multiple  provisions  in  the  Directive  and  Regulation  have  specific 
deadlines,  for  example  ACER  had  to  publish  a  best  practice  report  on  transmission  and 
distribution tariff methodologies by October 2019.88  

The first objective of this section is to analyse the provisions in the new electricity market 
design  which  affect  storage.  In  many  Member  States  there  are  indications  that  the 
implementation  of  the  new  electricity  market  design  should  remove  barriers  to  storage. 
The  second  objective  of  the  section  is  to  determine  which  of  the  barriers  to  storage 
observed at the national level in the previous section would remain after implementation 
of the new provisions (and whether any new barriers may arise due to the new market 
design). As analysed below, several provisions in the Directive and Regulation adequately 
address relevant barriers, but others remain due to not being addressed at all or due to 
necessary improvements to the new provisions. 

As Member States have discretionary room regarding the forms and methods to achieving 
the goals set in a directive (but less in a regulation), the actual way in which the Directive 
is  implemented  will  vary  from  one  Member  State  to  the  other.  Hence,  whether  the 
provisions were specified in the Directive or Regulation has an impact on their applicability 
as  well  as  in  the  form  in  which  they  are  implemented.89  Also,  Member  States  have  the 
ability to further reduce the barriers to energy storage beyond what is required in the EU 
Directive or Regulation, be it through the implementation of more ambitious rules or faster 
implementation than what is required. 

The  Directive  and  Regulation  comprise  provisions  related  to  all  energy  storage  policy 
categories discussed in section 3.3, except to permitting. The addressed topics are detailed 
in this section, while the barriers which will remain after the implementation of the new 
provisions  in  the  electricity  market  design  are  covered  in  the  following  section.  The 
mapping of the categories to the Directive and Regulation articles are presented in Annex 
3. 

The provisions in the Directive and Regulation with a low indirect impact on storage are 
not  analysed  here  as  they  are  not  directly  addressing  the  main  barriers  identified 
previously.  These  “Low  impact”  provisions  include  the  need  to  conduct  national  and 
European  adequacy  assessments  which  consider  storage  and  the  obligation  for  NRAs  to 
monitor  the  investment  in  storage  capacities.  It  also  comprises  the  requirement  for 
Member  States  to  consider  alternatives  such  as  energy  storage  when  authorizing  new 
generation capacity, and the need for TSOs and DSOs to consider storage in their network 
development plans. Provisions with “High impact” are indirectly or directly addressing the 
main  barriers  and  are  hence  considered  as  priorities.  Their  proper  implementation  is 
supposed to have a high impact on the deployment of storage. Provisions with “Medium  
impact” have a lower impact on the deployment of storage but would provide additional 
value and improve the global framework for storage.  

Direct impact provisions are those that explicitly refer to storage, remove undue costs, 
such as double charging, or open revenue streams which were foreclosed, e.g. by enabling 
participation in new electricity markets. Indirect impact provisions are those that improve 
the  signals  for  the  investment  and  operational  decisions  of  (active)  consumers  (e.g. 
dynamic  pricing),  or  indirectly  open  new  revenue  streams  (for  instance,  through 
aggregation). 

Considering the transposition of these provisions, an adequate formulation does mean the 
transposition could be straightforward as it does correctly address the issue from a storage 
perspective. Some provisions, being partially addressed, still need to be further developed 
and detailed either at Members State level or at EU level. For some of these provisions, 
clarifications are needed. 

88 Art. 18(9) of the Regulation. 
89 European Parliament (2018) Transposition, implementation and enforcement of Union law. 

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Electricity markets 

Electricity market design 
(REG) 

High direct impact 

Adequate formulation 

The  Regulation  requires  that  all  relevant  actors  (national  governments  and  regulators, 
system operators and market operators) should ensure electricity markets provide a level-
playing  field  for  generation,  electricity  storage  and  demand  response  (art.  R3(j)).  The 
requirements are comprehensive, covering energy and ancillary service markets as well as 
capacity  mechanisms,  and  all  forms  of  trade  from  over-the-counter  to  electricity 
exchanges, as well as all time frames. Furthermore, the market rules should allow for the 
efficient dispatch of the mentioned market agents as well as for their easy entry and exit. 

The  provisions  require  national  authorities  to  assess  the  design  of  energy  and  ancillary 
services markets as well as capacity mechanisms for the entry and participation of storage, 
and potentially redesign them as required. However, details on how the level-playing field 
should be guaranteed and monitored are not provided. Moreover, by being defined in the 
Regulation, the provisions have immediate effect but actual market design is still left to 
national  regulators,  after  consultation  with  network  and  market  operators  (some 
parameters are defined in other provisions, as discussed below). 

As the assessment indicated there are in several Member States still significant barriers for 
storage to enter and participate in energy and ancillary services markets, these provisions 
will have a high direct impact. 

Aggregation (DIR) 

High indirect impact 

Adequate formulation 

The Directive aims to guarantee final customers are able to access all electricity markets, 
including  through  aggregation,  being  also  entitled  to  separate  electricity  supply  and 
electricity service contracts. NRAs or system operators should establish the rules for the 
participation of aggregators in the markets. 

These  provisions  will  have  an  indirect  positive  effect  on  front-  and  behind-the-meter 
electricity  storage  by  encouraging  aggregation  (including  with  other  resources  and 
especially  demand  response),  which  is  not  allowed  in  specific  markets  in  some  Member 
States. The exact impact of the provisions will depend on the importance of aggregation 
of multiple energy storage facilities and with other flexibility resources, versus the direct 
participation  of  energy  storage  facilities  in  electricity  markets  via  the  concerned  asset 
operators. 

Storage  was  indicated  to  interact  significantly  with  resources  such  as  demand  side 
response and renewable electricity generation. By requiring also aggregation for storage 
to be considered in electricity markets, the provision complements other electricity market 
requirements which address entry and participation barriers for standalone storage. 

Active customers and citizen 
communities (DIR) 

High indirect impact 

Adequate formulation 

The  Directive  provisions  aim  to  enable  the  participation  of  end-users  in  all  electricity 
markets while forbidding or phasing out network tariffication elements which are not cost-
reflective,  with  several  storage-specific  aspects.  End-users  are  entitled  to  non-
discriminatory  technical  and  administrative  requirements,  and  network  charges.  Those 
end-users which own energy storage are entitled to a timely grid connection and should 
not  be  subject  to  double  charging  either  when  self-consuming  or  providing  flexibility 
services. To further increase the cost-reflectiveness of self-consumption and the provision 
of  flexibility  services  by  end-users,  the  Directive  requires  network  charges  account 
separately for electricity injection and withdrawal, and prohibits existing metering schemes 
without such separate accounting of granting new rights after 2023. These requirements 
also  apply  to  citizen  communities,  which  in  addition  are  financially  responsible  for  their 
balancing. 

97 

 
 
 
 
 
 
 
 
 
The provisions should have an important impact on developing behind-the-meter storage 
in the future at the residential, industrial and commercial levels. They remove both entry 
and participation barriers to storage and should reduce both network connection and access 
costs. At the same time the provisions establish limitations to net metering practices, which 
are at present still common practice in many Member States and which  discourage end-
users  from  developing  storage  capacities.  The  Directive  does  not  establish  further 
implementation or monitoring requirements. 

Energy markets and capacity mechanisms 

Day-ahead and intraday 
markets (REG) 

High direct impact 

Partially adequate 
formulation 

The Regulation requires day-ahead and intraday markets of nominated electricity market 
operators (NEMOs) to have a maximum bid size of 500 kW and trading period as short as 
the imbalance settlement period (of 15 minutes from 2021, with potential derogations not 
longer than 30 min from 2025 on). 

The Regulation will have a high impact in reducing barriers to the participation of storage 
in  energy  markets.  The  provisions  establish  a  clear  threshold  for  bid  size  and  duration. 
Although there are currently already markets with lower bid sizes, these generally occur 
for developed energy markets, and 500 kW is an improvement on the current maximum 
bid  size  observed  in  Europe  (and  presents  synergies  with  the  requirements  on 
aggregation). Although derogations are possible for the latter, this should nonetheless lead 
to the harmonization towards shorter trading periods.  

However, the Regulation does not include provisions leading to further harmonization e.g. 
on  the  definition  of  market  products  as  recommended  in  the  Smart  Grids  task  force. 90 
Different  product  definitions  in  each  country,  such  as  block  or  exclusive  offers,  when 
combined with other elements (such as aggregation), may hinder participation of storage 
facilities in multiple countries or in the day-ahead and intraday markets simultaneously. 

Dynamic electricity pricing 
(DIR) 

Medium to high indirect 
impact 

Adequate formulation 

Final  customers  with  a  smart  meter  are  entitled  to  a  dynamic  pricing  contract;  Member 
States are responsible that this is offered by at least one supplier, and every supplier with 
at least 200 000 final customers. This provision has a direct relationship with aggregation 
and active customer provisions of the new electricity market design. 

With the EU roll-out of smart meters to be well-advanced by 2020,91 this will enable most 
final  customers  to  access  dynamic  pricing.  As  discussed  in  the  assessment  of  current 
policies, there is a need for further availability of variable pricing offers for final customers 
in the EU, in order to provide adequate price signals for demand response and local storage. 
The  impact  of  this  provision  will  depend  on  the  attractiveness  of  storage  to  active 
customers for load management, self-consumption and participation in electricity markets. 

90 European Smart Grids Task Force (2019) Expert Group 3 - Demand Side Flexibility Perceived barriers and 
proposed recommendations. 
91 The latest European Commission benchmarking exercise estimated 72% of European electricity and 40% of 
gas customers would have smart meters by 2020. European Commission (2014) Benchmarking smart metering 
deployment in the EU-27  with a focus on electricity. COM(2014) 356. 

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Capacity mechanisms (REG)  Medium direct impact 

Partially adequate 
formulation 

The  Regulation  requires  capacity  remuneration  mechanisms  to  be  open  to  all  resources 
with adequate technical performance, including storage. Any existing capacity mechanisms 
should be adapted by the end of 2019 (with existing commitments unaltered). 

The measure should have a direct impact on storage, but its importance will depend on 
the relevance of capacity mechanisms revenue streams to storage technologies. Capacity 
mechanisms  are  increasingly  allowing  the  participation  of  storage,  although  the  exact 
mechanism design can still be contested.92 As discussed, derating factors can inadequately 
measure the effective capacity contribution of storage technologies to security of supply, 
such as if storage is grouped in ‘other technologies’. 

An adequate capacity mechanism design is difficult due to the  varying characteristics of 
the  different  storage  technologies.  As  no  requirements  are  set  concerning  these 
mechanism  design  features,  further  guidance  will  need  to  come  from  the  European 
Commission approval of proposed mechanisms in State aid decisions. 

Ancillary Services 

Balancing markets (REG/DIR)  High direct impact 

Partially adequate 
formulation 

Several  articles  of  the  Regulation  address  the  design  of  balancing  markets,  while  the 
Directive  touches  on  the  procurement  of  balancing  services  by  TSOs.  Important 
requirements besides non-discrimination to (aggregated) storage include the limits on the 
gate  closure  time  for  balancing  energy  (to  occur  at  or  after  cross-zonal  intraday  ones). 
Also  relevant  is  the  separation  of  upward  and  downward  balancing  capacity  (except  if 
derogated  due  to  a  cost-effectiveness  evaluation  by  the  TSO).  Moreover,  balancing 
capacity cannot be contracted more than one day before delivery or with a duration longer 
than one day. However, significant exceptions are allowed, through derogation by the NRA. 
A minimum threshold of 40%  of the standard  and 30% of all balancing products, and a 
period  of  one  month  for  the  rest  is  still  required  indefinitely,  while  longer  contractual 
periods  are  allowed  for  a  limited  amount  of  time.  Finally,  national  regulators  and  TSOs 
should  collaborate  with  market  participants  to  define  the  balancing  market  technical 
requirements. 

The measures will have a high direct impact by facilitating access to balancing markets to 
storage  and  other  flexibility  resources,  especially  by  reducing  important  existing  entry 
barriers  caused  by  undue  pre-qualification  requirements  and  through  eliminating 
mandatory  provision  of  symmetric  balancing  products  in  most  markets.  While  the 
shortened duration and procurement periods should reduce market participation barriers 
for many storage technologies, storage associations have indicated also that the limitation 
to  contracting  periods  could  impact  the  business  case  of  storage  by  increasing  the 
balancing revenue uncertainty. Moreover, the maximum provision period of one day may 
still be too long for many emerging storage technologies, but represents an improvement 
over current practices. 

Non-frequency ancillary and 
grid management services 
(REG/DIR) 

High direct impact 

Adequate formulation 

The  Directive  determines  the  transparent,  non-discriminatory  and  market-based 
procurement of non-frequency ancillary services by TSOs, unless derogated by the NRA for 

92 In 2018 the General Court of the European Union (press release 178/18) annulled the Commission’s decision 
not to investigate the UK’s proposed capacity mechanism. Available at 
https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-11/cp180178en.pdf 

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cost-effectiveness  considerations.  TSOs  subject  to  NRA  approval,  or  NRAs  themselves, 
should  specify  the  non-frequency  ancillary  services  procured,  and  where  appropriate 
standardised  market  products  at  the  national  level.  Similar  provisions  apply  to  the  grid 
management services, including congestion management. The Regulation provides further 
guidance on the allowed exceptions to market-based procurement  of  redispatching, and 
establishes reporting and monitoring obligations for the system  operators and the NRAs 
regarding this aspect. 

This  requirement  should  have  a  high  direct  impact  in  facilitating  market-based 
procurement  of  non-frequency  ancillary  and  grid  management  services,  and  access  of 
storage  to  them.  These  services  are  currently  the  services  least  accessible  to  energy 
storage,  especially  those  technologies  other  than  pumped  hydro.  Standardized  market 
products at the national level should support participation of storage in services such as 
voltage support and black-start, while storage may also derive important revenues from 
local services such as grid management which may not count with standardized products. 
While  provisions  exist  for  monitoring  and  reporting  requirements  for  redispatching,  this 
does not apply for other services discussed here. 

Grid aspects and taxes & levies 

Connection and access 
charges (REG/DIR) 

High direct impact 

Adequate formulation 

Following the Directive, TSOs shall publish procedures for non-discriminatory connection 
of  new  energy  storage.  Moreover,  they  cannot  refuse  to  connect  a  new  storage  facility 
based on future limitations on available network capacities (close or far to the connection 
point). TSOs may limit the guaranteed connection capacity or offer connections subject to 
operation limitations, upon regulatory approval. This shall not apply when costs are borne 
by  the  storage  facility.  The  Regulation  in  turn  indicates  network  charges  shall  be  cost-
reflective,  transparent  and  non-discriminatory,  and  not  discriminate  either  positively  or 
negatively against energy storage or aggregation. Charges shall not include unrelated costs 
supporting unrelated policy objectives. 

The connection provisions should provide clear rules to storage and impede the connection 
refusal  for  grounds  other  than  economic  efficiency,  a  relevant  provision  in  a  context  of 
potential  public  acceptance  issues  for  new  network  projects.  It  can  be  expected 
furthermore that storage aiming to provide grid congestion services would actually increase 
the available capacity. Further clarifications will be needed regarding whether connection 
refusal is not allowed when deep connection tariffs are applied to storage. 

Regarding access charges, they should lead to a revision to avoid double charging while 
valuing the system benefits brought by storage (and thus increasing cost-reflectivity), as 
well as avoid the inclusion of surcharges related to e.g. renewable energy support (related 
to taxes & levies). The recast Renewable Energy Directive also contains a provision to avoid 
double charging for storage combined with self-consumption of renewable energy.93 This 
is an important contribution to increased cost-reflectiveness for storage. Especially as the 
assessment  of  barriers  indicated  that  double  charging  is  still  applied  in  the  majority  of 
Member States, while the phase out of double charging often starts with pumped hydro, 
to the detriment of other storage technologies. 

Locational and variable tariff 
signals (REG) 

Medium direct impact 

Adequate formulation 

The Regulation indicates the possibility of location signals in transmission and distribution 
network  charges,  as  well  as  time-differentiated  distribution  network  charges.  Although 
application  is  not  obligatory,  NRAs  should  consider  the  latter  where  smart  meters  have 

93 Art 21(2) of Directive 2018/2001 on the promotion of the use of energy from renewable sources 

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been deployed. ACER is also obliged to every two years provide a report on transmission 
and distribution tariff methodologies best practices. 

Locational  and  temporal  signals  can  to  a  certain  extent  improve  the  business  case  for 
storage by incentivising load and generation management of users and by rewarding the 
provision  of  flexibility  to  the  system.  But  signals  will  also  affect  the  investment  and 
operational decisions of other network users and thus actually decrease the price volatility. 
Nonetheless,  such  tariff  signals  can  contribute  to  reducing  the  overall  system  costs  and 
valuing all flexibility resources, including storage and demand side  management. This is 
true  especially  of  temporal  signals  such  as  time-of-use  tariffs  while  the  suitability  of 
locational signals in network tariffs is contested, as other measures may be more efficient 
from an implementation standpoint, for instance, at the transmission level, the review of 
bidding zones where needed.94 From this point of view, the optionality of such signals is 
adequately  formulated  in  the  Regulation.  The  ACER  report  will  also  provide  a  better 
overview  of  transmission  and  distribution  tariff  methodologies  across  the  EU,  and  base 
eventual initiatives for harmonisation, if deemed adequate in the future. 

Involvement of DSO/TSO 

Ownership and/or operation 
of storage facilities (DIR) 

High direct impact 

Adequate formulation, 
clarifications needed 

The Directive states TSOs and DSOs shall not own, develop, manage  or  operate  energy 
storage facilities. Exceptions comprise fully integrated network components or a regulatory 
process  certifying  the  lack  of  market  interest  at  reasonable  cost  and  length  and  the 
necessity of the storage system or services for the network. The article includes a phase-
out  of  system  operator  activities  in  18  months  in  the  case  of  sufficient  market  interest, 
with possible compensation. 

The storage unbundling requirements for TSOs and DSOs have been recently overviewed 
by CEER,95 who welcomes the clear conditions for derogation by regulators, following an 
appropriate review. While the issue is not without dispute from some system operators, 
the provisions have been accepted by most stakeholders. The provisions provide certainty 
for  potential  storage  investors  by  impeding  potential  competition  issues  and  should 
furthermore lead to the exit of system operators presently owning or operating storage.  

However, the phase out provision period and potential lack of compensation is considered 
inadequate by system operators and could ultimately disincentivize experimentation and 
investment  in  developing  storage  technologies.  Also,  the  feasibility  of  multi-service 
business cases is made difficult by the provisions, as a pre-requisite for the involvement 
of  network  operators  with  storage  is  the  lack  of  market  interest  (for  non-integrated 
components). 

Other & General 

Definition of storage (DIR) 

High direct impact 

Adequate formulation 

The  Directive  includes  definitions  of  energy  storage  and  energy  storage  facilities.  They 
comprise  “deferring  the  final  use  of  electricity  to  a  moment  later  than  when  it  was 
generated”,  or  the  conversion  and  storage  in  other  energy  forms,  with  the  subsequent 
reconversion or not to electricity. This hence should include conversion technologies such 
as  power-to-gas,  while  remaining  technology-neutral.  Stakeholders  have  however 
indicated that clarifications are welcome on the interpretation of the definition, for example 

94 See for example  ECN et al (2017) Study supporting the Impact Assessment concerning Transmission Tariffs 
and Congestion income Policies; Ref-e et al. (2015) Study on tariff design for distribution systems; and Energy 
Community (2017) Technical Assistance to Develop Policy Guidelines for the Distribution Network Tariffs. 
95 CEER (2019) Implementation of TSO and DSO Unbundling Provisions - Update and Clean Energy Package 
Outlook 

101 

 
 
 
 
 
 
 
 
                                           
concerning  the  temporal  and  geographical  coordination  of  the  power-to-gas  facility  and 
actual gas storage facilities. 

The  transposition  of  the  definitions  into  national  legislation  should  provide  the  basis  for 
reducing  regulatory  uncertainty  for  storage.  The  definitions  should  preferably  be 
incorporated  into  the  primary  legislation  of  the  electricity  sector  and  address  any 
incoherence with secondary legislation, also in view of eliminating barriers related to other 
policies or practices. This includes for example the charging of double network tariffs and 
of electricity consumption taxes, when storage facilities are considered both as generator 
(injecting  energy  into  the  grid)  and  as  consumer  (taking  off  energy  from  the  grid). 
Furthermore, the definition should not require storage to be connected to the electricity 
network, while some existing national definitions do include this condition. 

Remaining barriers in the new electricity market design 

The analysis indicates that the new electricity market design addresses several important 
barriers  for  energy  storage,  especially  by  defining  energy  storage,  removing  entry  and 
participation barriers to electricity markets, making network tariffs and taxation more cost-
reflective (e.g. by removing double network charges), and clarifying the role of network 
operators.  Here  the  barriers  which  are  not  addressed  by  this  new  market  design  are 
discussed. 

The new electricity market design does not contain provisions regarding the permitting of 
energy storage facilities. This is however not considered a central obstacle for development 
of storage in the Member States, except in the case of large scale projects such as pumped 
hydro or depending on natural reservoirs (e.g. heat and compressed air storage). 

Energy  taxation  is  also  not  addressed  by  the  new  market  design,  except  for  the 
requirement  for  network  charges  not  to  include  costs  supporting  unrelated  policy 
objectives.  The  overall  absence  of  taxation-related  provisions  is  due  to  the  fact  that 
taxation in general (and thus including energy taxes) is mostly a prerogative of EU Member 
States,  with  the  EU  institutions  having  only limited  competences.  However,  in  2019  the 
discussion  on  energy  taxation  has  been  reopened,  with  a  European  Commission 
communication and the evaluation of the Energy Taxation Directive (ETD).96 The revision 
of the ETD is addressed in the following section. 

Further aspects that could be addressed at the EU level after the new electricity market 
design  is  implemented  and  the  necessary  provisions  transposed  in  national  legislation 
include, for instance: 

  Harmonizing the day ahead and intraday energy market products to enhance cross-

border participation of storage; 

  Guaranteeing  actual  capacity  mechanisms  design  details  adequately  enable  the 
participation of all relevant storage technologies taking into account their different 
technical characteristics; 

  Facilitating  long-term  contracts  between  storage  operators  and  balancing 
responsible  parties  (electricity  generators/suppliers  and  aggregators)  or  TSOs 
(ancillary services) in order to increase revenue certainty and stability for energy 
storage investments through market mechanisms; 

  Assess  the  risk  of  cross-subsidisation  via  network  tariffs  between  end-users  with 

 

and without energy storage, and mitigate the risk when it is identified; 
Improving  the  permitting  procedure  for  large  scale  storage  projects,  increasing 
public involvement and acceptance, while facilitating procedures also for small-scale 
projects taking into account their more limited impact; 

  Guaranteeing locational information in congestion management products to foster 

market-based procurement; 

96 European Commission (2019) A more efficient and democratic decision making in EU energy and climate 
policy. COM (2019) 177. 
European Commission (2019) Evaluation of the Council Directive restructuring the Community framework for 
the taxation of energy products and electricity. SWD(2019) 332 final. 

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  Assuring all provisions on the electricity markets design, grid aspects and taxation 
are clear and also facilitating cases combining storage with other resources such as 
demand-side  management,  self-consumption  of  (renewable)  energy  and  vehicle-
to-grid applications; 

It  must  be  noted  that  the  analysis  was  done  considered  all  provisions  in  the  electricity 
Directive  and  Regulation  are  properly  transposed  and  implemented.  However,  EU  and 
national  policy  makers,  regulators  and  network  operators  should  still  pay  significant 
attention  to  implementation  of  the  provisions,  as  the  new  electricity  market  design  still 
leaves room for diverging interpretations and practices.  

  OTHER EU INITIATIVES RELATED TO ENERGY STORAGE 

Moreover, the analysis of the previous section focuses on the electricity market design, 
but other relevant EU legislation should be revised to guarantee barriers to energy 
storage are removed. These are addressed in this section. 

Energy Taxation Directive 

At  the  time  of  the  approval  in  2003  of  the  Energy  Taxation  Directive  (ETD),  several 
electricity  storage  and  sector  coupling  technologies  were  not  significant  yet,  as 
acknowledged  by  the  evaluation  of  the  ETD  published  by  the  European  Commission  in 
2019.97 This leads to possible changes in the ETD arising from the deployment of “new” 
energy technologies and the specific role of storage in the transition to a carbon-neutral 
energy system. 

For the analysis of these potential amendments, certain principles should be observed by 
any  recast  ETD.  Energy  taxation  should  in  general  be  technology  neutral,  stimulate 
processes  with  high  efficiency,  and  internalize  the  externalities  of  the  different 
technologies. The latter refers especially to negative environmental externalities such as 
emissions of greenhouse gases and local pollutants, when not internalized through other 
mechanisms such as the Emissions Trading Scheme. 

A  distinction  needs  to  be  made  between  on  the  one  hand  energy  use  for  intermediate 
processes, for example storage and conversion technologies such as power-to-gas or gas-
to-power,  and  on  the  other  hand  energy  end-use.  Energy  taxation  should  only  apply  to 
end-use of energy products, as is the stated objective of the current ETD. As observed in 
the analysis of taxation policies, if energy used for the charging of storage is considered 
as a chargeable event, it leads to double taxation. 

Energy losses in the storage cycle could be subject to energy taxation if considered end-
use.  However,  the  current  ETD  states  in  art.  21(3)  that  energy  consumption  in  an 
establishment producing energy products does not give rise to a chargeable event (e.g. 
electricity consumption in power plants). Following this and to treat storage equally vis-à-
vis  other  energy  producers,  losses  in  the  storage  cycle  should  not  be  subject  to  energy 
taxation  either.  Changing  this  principle  and  hence  taxing  all  energy  end-use,  including 
energy 
the 
transport/distribution  infrastructure,  could  be  considered.  It  would  de  facto  stimulate 
technologies with high energy efficiency and hence contribute to the energy and climate 
objectives. 

in  production  and  conversion  processes  as  well  as 

losses 

in 

It must be noted that the value-added tax (VAT) is outside the scope of the ETD and should 
be applied to the value added by the storage activity. VAT expenses should be paid by the 
storage  operator  in  the  purchasing  of  necessary  goods  and  services  (including  energy) 
being duly credited. Also outside the scope of the ETD are levies such as surcharges for 
the financing of support mechanisms to renewable energy or capacity adequacy. However, 

97 European Commission (2019) SWD 329. Evaluation of the Council Directive 2003/96/EC of 27 October 2003 
restructuring the Community framework for the taxation of energy products and electricity. 

103 

 
 
 
 
 
 
                                           
in contrast to VAT, these should be levied exclusively on end consumption, and thus not 
on energy inputs for storage or conversion to another intermediate energy vector. 

Following  these  considerations,  the  main  recommendations  relevant  for  storage  for  the 
review of ETD are:98 

  Define taxation levels based on the energy and GHG content: the ETD does 
not  treat  energy  products  equally,  as  taxes  are  not  required  to  be  based  on  the 
carbon content, nor energy content in the case of fuels. Defining minimum taxation 
levels based on energy and carbon content is a central step in providing an equal 
playing field for all energy products; 
transfer 

from  end-use 
consumption and make the former a non-chargeable event. Currently this is left 
for Member States, where often electricity used for intermediate storage is subject 
to  electricity  consumption  taxes.  Only  the  conversion/storage  losses  could  be 
considered as a chargeable basis; 

  Differentiate  energy 

to  storage 

facilities 

  Update the scope to include products resulting from conversion technologies such 
as power-to-gas. The use in the ETD of static references to Common Nomenclature 
codes  and  the  lack  of  reference  to  products  not  significant  at  the  time  of  the 
approval  of  the  ETD  leads  to  an  outdated  harmonized  scope  for  certain  energy 
products, such as hydrogen; 

  Update the products entitled to preferential treatment to include renewable 
and low-carbon hydrogen and other fuels of biological and non-biological origin. The 
ETD  does  not  allow  for  a  preferential  tax  treatment  for  those,  even  though  they 
might bring environmental benefits; 

  Guarantee that storage of energy products does not cause the loss of their 
preferential  treatment  rights  (e.g.  renewable  energy),  when  they  are 
appropriately  tracked  using.  It  is  not  specified  for  example  whether  stored 
renewable  electricity  released  for  end-consumption  is  eligible  for  preferential  tax 
treatment; 

  Determine  that  transfer  of  energy  to  behind-the-meter  storage  facilities 
intended for subsequent injection in energy networks is a non-chargeable 
event  and  provide  guidelines  on  the  differentiation  from  end-use  consumption. 
Smart meters can be used to differentiate between exempt and non-exempt energy 
uses e.g. for users with a single connection point to an energy network and with 
behind-the-meter storage; 

  Update  minimum  tax  rates  for  energy  products  considering  technological 
neutrality and recent developments such as heat pumps and power-to-gas which 
are increasing competition between energy products. Potential competition between 
electricity, gas and heat carriers is hampered by e.g. high tax rates for electricity 
compared to gas;99 

  Clarify whether the conditional exclusion of electricity from the ETD scope 
applies to hydrogen electrolysis. The ETD scope does not cover electricity, when 
it  accounts  for  more  than  50  %  of  the  cost  of  a  product  (considering  purchased 
goods,  personnel  and  fixed  capital  costs).  This  could  be  the  case  of  hydrogen 
produced  from  electrolysis  but  would  also  depend  on  electricity  prices  and 
electrolyser costs. The threshold could provide perverse incentives to increase the 
cost share of purchased electricity.100 

  Treat  losses  equally  for  energy  production,  storage  and  transport 
processes,  preferentially  taxing  losses  in  the  entire  supply  chain  to  stimulate 
efficient technologies, or alternatively guaranteeing any tax exemptions apply to all 
the supply chain; 

  Consider including heat in the scope of the ETD, given developments such 
as in heat-to-power technology. Heat networks are not significantly integrated 
at  the  moment.  However,  competition  between  alternative  energy  carriers  for 
heating, increased sector coupling and integration of heat networks could require 
minimum harmonization of taxation for heat and other energy carriers (considering 

98 Based on own analysis and issues identified in the ETD 
99 Fortum (2019) Efficient district heating: an enabler of carbon neutral energy system 
100 DNV GL (2018) Hydrogen as an Energy Carrier 

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energy  and  GHG  content).  This  includes  any  potential  exemptions  for  all  energy 
carriers. 

State Aid for Environmental Protection and Energy 

Still  nowadays,  the  economic  feasibility  of  energy  storage  systems  is  generally  a  major 
barrier for their development as indicated in the introduction of this chapter, with possibly 
pumped  hydro  storage  having  a  smaller  profitability  gap.  Therefore,  public  support  to 
storage can be justified due to various considerations: of dynamic efficiency (that is, future 
reductions  in  the  cost  of  storage  due  to  innovation),  lack  of  internalization  of  negative 
externalities of other technologies, such as the cost of emissions, or of positive externalities 
of storage (such as increased security of supply). 

In the EU, such public support by Member States is governed by the Guidelines on State 
Aid for Environmental Protection and  Energy 2014-2020 ("EEAG"). While acknowledging 
the  economic,  environmental  and  security  of  supply  benefits  of  certain  energy  projects, 
the EEAG aims to reduce the cost of state aid to governments, minimize overcompensation 
to companies and diminish distortions to competition. 

The EEAG covers only public support by Member States, and thus does not address cross-
subsidization  issues  related  to  e.g.  net  metering  or  double  charging  of  grid  tariffs  to 
storage,  which  are  more  adequately  addressed  in  the  electricity  market  design.  Hence, 
issues relevant to storage which fall in the scope of State Aid rules comprise direct support 
to investment, production and decommissioning of energy projects. 

Member States should respect the principle of technology neutrality in their policies. Hence 
besides state aid not discriminating between energy technologies, exemptions to state aid 
notification  requirements  should  apply  only  to  support  R&D  in  technologies  with low(er) 
readiness  levels  and  first  market  introduction  to  accelerate  deployment.  Additionally, 
notification  exemptions  can  be  granted  to  regulated,  non-competitive  activities  such  as 
energy  transmission  and  distribution.  However,  this  should  not  discriminate  against 
flexibility  resources  which  provide  an  alternative  to  network  expansion,  such  as  storage 
(including conversion technologies), dispatchable generation or demand response. 

The  approach  to  authorizing  state  aid  set  in  the  EEAG  is  generally  considered  adequate 
and the revision rather to be an update than a thorough change in the approach. In 2019 
the European Commission announced the extension of the EEAG until 2023, when an on-
going  fitness  check  (due  in  2020)  and  subsequent  impact  assessment  should  enable  a 
replacement proposal. 

A  number  of  elements  indirectly  address  energy  storage  in  the  current  Guidelines,  as 
discussed next. 

First,  important  Projects  of  Common  European  Interest  (IPCEIs)  are  eligible  for  public 
financing, with the European Commission providing guidelines regarding the compatibility 
with State Aid rules.101 EASE and EERA have argued for the designation of energy storage 
projects as eligible IPCEIs, which would enable storage to access multiple support types 
(such  as  loans,  guarantees,  grants),  exempted  from  State  Aid  requirements  of  prior 
notification  by  Member  States  and  approval  by  the  Commission.102  Currently,  the  list  of 
supply chains designated as IPCEIs include batteries; connected, automated and electric 
vehicles; and hydrogen technologies and systems.103 

Second, the EEAG  cover aid measures to guaranteeing power generation adequacy (i.e. 
capacity  remuneration  mechanisms),  which  should  be  open  and  provide  adequate 

101 European Commission (2014) Criteria for the analysis of the compatibility with the internal market of State 
aid to promote the execution of important projects of common European interest (2014/C188/02) 
102 EASE and EERA (2017)  European Energy Storage Technology Development Roadmap 
103 DG GROW (2019) Strategic Forum for Important Projects of Common European Interest (IPCEI) – 3rd 
Meeting of the members 

105 

 
 
 
 
 
 
 
 
 
                                           
incentives  to  substitutable  technologies  to  generation,  including  storage  and  demand 
response, which can directly participate or via aggregation. Capacity mechanisms should 
also  not  undermine  the  internal  market  nor  investment  decisions  in  ancillary  service 
markets. 

Third, the EEAG cover aid to energy from renewable energy resources. Renewable energy 
is  defined  in  Art.  19(11)  as  coming  from  renewable  energy  plants  (potentially  in 
combination with conventional sources) and includes renewable electricity used to charge 
storage  systems,  but  explicitly  excludes  energy  provided  by  storage  systems.  The 
definition  could  also  be  interpreted  as  excluding  hybrid  renewable  energy  installations 
employing storage. 

Fourth, the General Block Exemption Regulation (GBER) 104 indicates the exemption cases 
to the EEAG, when prior notice by Member States and approval by the Commission are not 
necessary. The GBER exempts investment aid for energy infrastructure from the from the 
notification  requirement  of  the  EEAG,  but  explicitly  excludes  electricity  storage  projects 
from  this  exemption,  to  whom  thus  the  EEAG  still  apply.  Moreover,  the  definition  of 
electricity storage infrastructures is aligned with the TEN-E regulation, being restricted to 
facilities connected to transmission lines with a minimum voltage of 110 kV. Hence, even 
if electricity storage was exempt, a wide range of facilities including all those connected to 
transmission under 110 kV and distribution networks would fall under the EEAG. 

Fifth,  the  GBER  does  exempt  aid  for  research  and  development  projects  from  the 
notification  requirement.  There  are  specific  exemption  thresholds  per  undertaking  and 
project  for  fundamental  research  (40    mln  EUR),  industrial  research  (20  mln  EUR), 
experimental development (15 mln EUR) or feasibility studies (7.5 mln EUR). The Storage 
at  Scale  competition  by  the  UK  government  which  set  a  limit  of  15  mln  EUR  for  each 
candidate  undertaking  in  the  projects,  is  hence  exempt  from  the  notification 
requirement.105 One stakeholder has indicated that these thresholds limited support and 
did not sufficiently the potential value of flexibility resources. 

The European Commission has indicated the EEAG for the next programming period to be 
concluded by 2023 will be aligned with the objectives of the Green Deal. The new guidelines 
should  consider  recent  and  future  regulatory  developments  such  as  the  new  electricity 
market  design,  innovation  (such  as  storage  and  hydrogen  technologies)  and  market 
development such as higher penetration of renewables, development of infrastructures and 
low-carbon mobility. The new guidelines would include simplified approval for small(er) aid 
amounts.106 

Therefore, the opportunity exists for a number of improvements in the future guidelines 
concerning energy storage. Given the above analysis, potential elements for amendment 
include: 

  Align  the  EEAG  with  the  new  electricity  market  design  and  renewable 
energy directive, regarding requirements for capacity mechanisms, for example 
CO2 emission limits, opening of support schemes and definition of storage; 

  Align the EEAG scope with the upcoming, revised TEN-E regulation; 
  Consider  explicitly  support  to  hybrid  projects  as  an  eligible  state  aid 
measure (combining generation and storage of renewable electricity, gas or heat); 

104 Regulation (EU) No 651/2014 declaring certain categories of aid compatible with the internal market in 
application of Articles 107 and 108 of the Treaty 
105 BEIS (2019) Storage at Scale competition. Available at https://www.gov.uk/government/publications/storage-
at-scale-competition?utm_source=be02a8e4-bfa8-4666-a669-
2f30ecd1e607&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate 
106 DG Competition (2019) Presentation on guidelines on State aid for Environment and Energy 2014-2020 
(EEAG): Fitness Check 

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  Consider explicitly entitling conversion technologies to state aid (subject to 
notification and approval). Only use of non-supported renewable energy inputs (e.g. 
renewable electricity) should be allowed (to avoid double support). 

TEN-E and CEF 

The  Trans-European  Networks  for  Energy  (TEN-E)  Regulation107  considers  electricity 
storage projects as eligible for a PCI status and opening the possibility  for CEF financing. 
Projects must contribute to at least one of the criteria of market integration, competition, 
sustainability or security of supply. 

Electricity  storage  PCIs  should  be  directly  connected  to  high-voltage  transmission  lines 
designed for a voltage of 110 kV or more. As most electricity storage projects are located 
in the territory of a single Member State, these projects should have a significant cross-
border impact. Moreover, they should have an installed capacity of at least 225 MW and 
an annual net electricity generation at or above 250 GWh/y. 

PCI status provides certain benefits, including a one-stop shop for the permitting process 
(which is limited to 3.5 years), risk mitigation incentives, and access to Union financing. 
PCIs  are  eligible  also  for  Union  financial  assistance,  that  is  for  financing  from  the 
Connecting  Europe  Facility  or  the  European  Funds  for  Strategic  Investments.  However, 
electricity storage PCIs are not eligible for the risk mitigation incentives. 

Assistance  may  be  provided  for  studies  or  works.  All  storage  PCIs  are  eligible  for  Union 
financial  assistance  for  studies  and  works,  except  pumped  hydro  storage  which  is  not 
eligible  for  assistance  for  works.  The  TEN-E  determination  that  financial  assistance  for 
works  requires  a  cross-border  cost  allocation  decision  by  the  involved  NRA(s)  does  not 
apply  to  storage  projects.  Hence,  to  qualify  for  financial  assistance  for  works,  storage 
projects  need  to  “aim  to  provide  services  across  borders,  bring  technological innovation 
and ensure the safety of cross-border grid operation”.  

The  latest  (4th)  list  of  electricity  PCI  projects108  was  published  in  2019  and  includes  10 
(clusters of) projects, mostly focussed on pumped hydro storage, with 2 compressed air 
energy  storage  projects.109  By  March  2019  the  Connecting  Europe  Facility  had  provided 
financial  assistance  to  one  compressed  air  and  three  pumped  hydro  energy  storage 
projects, for a total financing value of 10.6 million €.110 

Of the 13 electricity storage PCIs of the 3rd PCI list covered in the latest available ACER 
monitoring,111 2 were under consideration (in the NL and LT), 3 were planned but not yet 
in permitting (in BE, and the UK), and 8 were under permitting (in AT, BG, EE, EL, ES and 
the UK). Concerning progress, 8 were on time or ahead of schedule, 3 were delayed due 
to  financing  reasons,  complex  negotiations,  or  delays  due  to  environmental  concerns  (a 
hydro project in EL), and 2 were rescheduled due to being in the initial stages. 

There  is  therefore  no  indication  of  permitting  being  a  particular  concern  for  electricity 
storage PCIs, although permitting is the most common cause for delays in electricity PCIs 
overall.  Of  the  3rd  list  of  PCIs,  25%  of  electricity  projects  (of  which  the  majority  are 
transmission projects) were delayed in 2019, with permitting being the cause for 46% of 
those.  Specific  permitting  issues  comprise  environmental  problems  (3  PCIs),  public 
opposition (3 PCIs), national law changes affecting permitting (1 PCI) and prolongation in 
obtaining permits for various other reasons (5 PCIs). 

107 Regulation (E) 347/2013 on guidelines for trans-European energy infrastructure 
108 European Commission (2019) Delegated regulation C(2019) amending Regulation (EU) No 347/2013 as 
regards the Union list of projects of common interest. Annex. 
109 Pumped hydro: new or capacity increase projects in AT, BE, BG, DE, EE, EL, ES, LT, UK. Compressed air 
energy storage: new projects in NL, UK. 
110 INEA (2019) Connecting Europe Facility - Energy – Supported Actions, May 2019. 
111 ACER (2019) Consolidated report on the progress of electricity and gas Projects of Common Interest - 2019 

107 

 
  
 
 
 
 
 
 
                                           
An evaluation of the TEN-E regulation was published in 2018.112 The evaluation highlights 
the complementary nature of storage, transmission infrastructure and demand response. 
It  furthermore  acknowledges  the  lack  of  many  viable  business  cases  and  that  limited 
investments in storage were made so far, except for pumped hydro. It further indicates 
that  the  relevance  of  energy  storage  has  increased  compared    to  2013,  but  that  most 
projects are of a local nature and thus are not eligible for PCI status. 

The  evaluation  concludes  that  the  consideration  of  storage  in  the  scope  of  the  TEN-E 
regulation will remain relevant in the future. However, it finds no evidence that the TEN-E 
scope should be enlarged to include local storage projects. The evaluation does indicate 
that a review of the eligibility criteria could be considered and further assessed. Also, an 
improved  framework  for  measuring,  monitoring  and  reporting  storage  PCI  benefits 
regarding innovation would allow a better understanding of it in the future. Nonetheless, 
there is no need for a change in the regulatory framework to further incentivize innovation. 

Additionally,  relevant  stakeholder  contributions  to  the  evaluation  indicate  that  the  cost-
benefit analysis needs to be improved as it does not capture all benefits of storage projects 
and  may  have  inconsistencies  between  regional  groups.  The  need  to  consider  storage 
capacities in defining interconnection targets for Member States is also mentioned. 

In July 2019 the European Commission published a study113 on improving the cost-benefit 
analysis  (CBA)  methodology  employed  by  the  ENTSO-E  regarding  the  consideration  of 
benefits  of  electricity  storage.  The  current  CBA  2.0  is  used  also  for  the  PCI  selection 
process,  including  for  storage.  Acknowledging  limitations  in  ENTSO-E’s  CBA  2.0 
methodology, the study details nine benefits of electricity storage for consideration in the 
PCI selection process. 

A  mid-term  evaluation  of  the  CEF  was  published  also  in  2018.114  However,  it  does  not 
contain  insights  or  recommendations  specific  to  energy  storage.  A  proposal  for  the 
Connecting  Europe  Facility  Regulation  for  the  2021-2027  programming  period  was 
published in 2018. By the end of 2019, interinstitutional negotiations were yet due to be 
finalized.  Nonetheless,  it  was  agreed  that  the  European  Commission  would  by  2020 
evaluate the effectiveness and coherence of the TEN-E regulation.115 

It  must  be  noted  that  the  CEF  2021-2027  proposal  includes  support  for  cross-border 
renewable  energy  projects.  It  is  important  that  hybrid  projects  combining  renewable 
energy and storage are eligible for support in the coming CEF programme. However, the 
question is whether hybrid projects are allowed under the definition of renewable energy 
joint  projects  and  schemes  in  the  recast  Renewable  Energy  Directive,  and  in  the  cross-
border implementation of these by the countries. 

Therefore, given the considerations above and the analysis conducted in the present study, 
appropriate measures concerning energy storage projects within the TEN-E and CEF 2021-
2027 regulations are: 

  Assess  the  TEN-E  eligibility  criteria  and  electricity 

infrastructure 
categories, and consider enlarging them regarding the eligibility of electricity 
storage projects connected at lower transmission voltage or at the distribution level; 

112 Trinomics (2018) Evaluation of the TEN-E Regulation and assessing the impacts of alternative policy 
scenarios. 
113 Navigant (2019) Study on an assessment methodology for the benefits of electricity storage projects for the 
PCI process. 
114 European Commission (2018) SWD 44. Report on the mid-term evaluation of the Connecting Europe Facility 
(CEF). See also accompanying in-depth documents. 
115 Council of the European Union (2019) Proposal for a Regulation of the European Parliament and of the 
Council establishing the Connecting Europe Facility – Progress report. 7207/1/19 Rev 1. 

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  Align the TEN-E infrastructure categories for electricity storage to the definition 
of  the  Electricity  Regulation,  concerning  especially  the  inclusion  of  conversion 
technologies such as power-to-gas; 
Implement  the  relevant  recommendations  of  the  study  on  the  benefits  of 
electricity storage to the CBA 2.0 methodology; 

 

  Reconsider the exclusion of hydro pumped storage to eligibility for Union 
financial assistance for works in line with the technology neutrality principle, as 
other  storage  technologies  are  eligible.  Art.  14(2c)  already  establishes  a 
requirement that projects receiving assistance for work should not be commercially 
viable.  Further  weight  to  innovation  could  be  given  in  the  CEF  award  process  to 
consider the contributions to innovation of each project; 

  Examine  the  innovation  eligibility  requirement  for  financial  assistance  to 
works for electricity storage PCIs. Although it is desirable that the PCI selection 
process and Union financial assistance support innovation, this requirement is not 
applied to other types of projects such as for electricity transmission. Supporting 
innovation  could  be  added  as  an  explicit  objective  of  TEN-E  and  CEF,  and  duly 
considered  in  the  PCI  selection  and  CEF  award  processes  as  for  the  above 
recommendation; 
If  the  innovation  eligibility  requirement  is  maintained,  assess  and  improve  the 
framework  for  measuring,  monitoring  and  reporting  the  innovation  benefits  of 
PCIs.  This  could  be  aligned  with  the  recommendations  of  the  innovation  and 
security  of  supply  in  national  regulatory  frameworks  study116  regarding  a  EU 
guideline on the matter for non-PCI projects at the national level. 

 

These  recommendations  focus  in  particular  on  the  energy  storage  aspects  in  the  TEN-E 
and CEF regulations. Additionally, further improvements to the regulations as proposed in 
their respective evaluations and other studies should of course also be addressed. 

Water Framework Directive 

The Water Framework Directive117 (WFD) is the main EU environmental legislation affecting 
existing and new hydropower facilities, including hydro pumped storage. The WFD aims to 
prevent further deterioration, protect and enhance river basins and ecosystems (partially) 
located in the EU. The WFD requires the development of river basin management plans by 
the cooperation of the concerned countries and accompanying appropriate measures. The 
European Commission was concluding in 2019 a fitness check of the Water Framework and 
the Floods Directives.118 

The central point of analysis on the impact of the WFD on hydropower (not only pumped 
storage) concerns the stated objectives of the WFD of non-deterioration and improvement 
of water bodies in the EU on one hand, and the environmental pressures placed on water 
bodies by hydropower  on the other. Protection of water bodies in the  EU  could have an 
impact both on the deployment of new hydropower capacity as well as on the operation of 
existing plants, by e.g. constraints on reservoir levels, allowed generation or pumping, and 
thus interact with policy objectives regarding renewable energy. 

The  WFD  states  that  Member  States  should  implement  measures  to  prevent  the 
deterioration of all surface water bodies, following Art. 4(1a). Hydropower is indicated as 
one  of the most frequent hydromorphological pressures for  river basins, and already an 
important part of water bodies in the EU is heavily modified due to power generation.119 
Although hydropower is not a ‘consumptive’ use of water, in that there is no net extraction 

116 Ecorys et al. (2019) Do current regulatory frameworks in the EU support innovation and security of supply in 
electricity and gas infrastructure? 
117 Directive  2000/60/EC  establishing  a  framework  for  Community  action  in  the  field  of  water  policy 
118 European Commission (2019). Evaluation Roadmap - Fitness check of the Water Framework Directive and 
the Floods Directive 
119 European Commission (2017). Environmental requirements in relation to hydropower in the context of the 
WFD. IEA Hydropower TCP – European Commission DG RTD Joint Workshop 

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of water for hydropower, dams do impound water bodies through reservoirs and alter the 
river’s flow. It is however important to note that not all hydropower projects have the same 
impact  and  some  may  not  deteriorate  the  status  of  a  water  body.  Also,  hydropower 
promotion  should  not  be  based  on  size,  as  impacts  are  not  necessarily  proportional  to 
size.120 Dedicated pumped hydro storage may not have the same environmental impacts 
as  other hydropower plants, whether  run-of-river  or with a  reservoir. Generally, run-of-
river  hydropower  is  considered  to  have  less  environmental  impacts  than  both  pumped 
hydropower and hydropower with a reservoir.121  

For  hydropower  plants  which  do  lead  to  deterioration  or  impede  a  water  body  from 
recovering, the WFD still allows Member States to proceed with projects, as long as the 
non-deterioration exemption requirements  set  in Art. 4(7) are met. These  requirements 
are that: 

  All practicable steps to mitigate adverse impacts are taken; 
  The river basin management plan includes the projects; 
  The  project  is  of  overriding  public  interest  and/or  benefits  outweigh  the 

environmental and societal benefits if no project occurred; 

  Other  alternatives  are  not  available  due  to  lack  of  technical  feasibility  or 

disproportionate cost. 

It is important to differentiate between existing and new projects. Existing projects 
need to mitigate their impact on river basins to achieve the WFD objectives, and often the 
most  interesting  solution  for  them  is  modernization  or  repowering  in  order  to  increase 
energy  or  capacity,  possibly  combined  with  ecological  restoration  measures.  For  new 
hydropower projects, an evaluation of whether the project will deteriorate the water bodies 
or prevent their enhancement needs to be conducted. In both cases, the requirements of 
Art. 4(7) need to be met.122 

Especially for the development of new hydropower, stakeholders agree that a pro-active 
(i.e. early) and integrated planning as well as increasing the information availability 
(e.g. on potential assessments, impacts and mitigation measures) is the best approach to 
develop hydropower while considering the objectives of the WFD. It is also important to 
recognise when pumped hydro has lower environmental impacts than large-scale reservoir 
hydropower,  especially  in  the  case  of  closed-loop  pumped  hydro.123  Additionally, 
upgrading  and retrofitting existing pumped hydro should be a  priority given the 
average  age  of  the  existing  hydropower  facilities,  and  the  possibility  to  improve  the 
operational performance and safety. 

A workshop on these issues was conducted in 2011, resulting in an issue paper of the WFD 
Common  Implementation  Strategy  (CIS).124  It  recalls  key  recommendations  for 
hydropower development under the WFD: 

  Pro-active planning of zones for hydropower should be conducted in collaboration 

between authorities, stakeholders and NGOs, indicating ‘no-go’ areas; 

  Focus  should  be  placed  on  the  modernization  and  repowering  of  existing 

hydropower;125 

  The  development  of  new  or  existing  hydropower  should  be  accompanied  by  an 

improvement of water ecology; 

120 Kampa et al. (2011). Issue paper of the Common Implementation Strategy Workshop - Water management, 
Water Framework Directive & Hydropower. 
121 Melin (2010). Potentially conflicting interests between Hydropower and the European Unions Water 
Framework Directive 
122 European Commission (2017). Environmental requirements in relation to hydropower in the context of the 
WFD. IEA Hydropower TCP – European Commission DG RTD Joint Workshop 
123 JRC Low Carbon Energy Observatory (2019) Hydropower Technology Market Report 
124 Kampa et al. (2011). Issue paper of the Common Implementation Strategy Workshop - Water management, 
Water Framework Directive & Hydropower. 
125 This is also supported by the JRC in its 2019 Hydropower Technology Market Report. 

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  An  analysis  of  costs  and  benefits  of  the  project  is  necessary,  although  not 

necessarily with full monetization or even quantification; 

  The  size  of  the  project  is  not  the  relevant  criteria  for  exemption  from  non-

deterioration, as impacts are not necessarily related to the size. 

A summary of WFD Common Implementation Strategy guidance and activities concerning 
hydropower is available.126 The EU has also issued in 2018 a guidance on the requirements 
for hydropower in relation to EU nature legislation.127 

The use of strategic planning to integrate energy, climate, water and other environmental 
objectives  in  consultation  with  all  stakeholders  is  a  consensual  solution  considering  the 
recommendations from the CIS, the hydropower industry and other stakeholders. Activities 
increasing information on potentials, costs and benefits as well as R&I support in mitigation 
techniques for hydropower are also generally accepted. 

The issue paper of the CIS also provides a number of best practices regarding the  non-
deterioration exemption process, highly relevant given Art. 4(7) is central to hydropower 
deployment. Proponents of hydropower development have made proposals on the WFD. 128 

In any future update of the WFD balancing environmental, climate and energy policies will 
remain  central.  The  WFD  could  require  the  assessment  of  the  impact  of  river  basin 
management  plans  and  measures  on  existing  and  new  renewable  energy 
production. Related to this, the update should weigh whether the consideration of public 
and  private  costs  and  benefits  of  hydropower  projects  is  adequately  formulated,  and 
whether the appropriate balance in approving hydropower projects is achieved. In order 
not    to  bias  any  cost-benefit  analysis  towards  the  economic  benefits  of  hydropower, 
attention should be paid to the challenges in assessing positive and negative environmental 
externalities. 

A second point of consideration relates the WFD Art. 9, which establishes the principle of 
cost-recovery  of  water  services  through  water  pricing.  The  latest  report  on  the 
implementation  of  the  WFD129  indicates  a  significant  number  of  Member  States  have 
broadened their definition of water services to encompass activities which have a significant 
impact on water bodies, including hydropower. The report notices, however, that the actual 
use  of  economic  instruments  throughout  the  EU  is  limited,  and  that  the  cost-recovery 
principle implementation is incomplete. Moreover, recently the European Court of Justice 
has  ruled  that  Member  States  may  exclude  certain  water  uses  from  this  pricing 
mechanism.130 Thus, at present water pricing for  hydropower may not be an immediate 
issue in most Member States. The question in a recast of the WFD is whether to specifically 
include or exclude hydropower in the cost-recovery principle (or if to leave it to Member 
States,  due  to  subsidiarity),  considering  the  future  evolution  of  water  pricing  policies  in 
Member States. 

126 European Commission (2017). Environmental requirements in relation to hydropower in the context of the 
WFD. IEA Hydropower TCP – European Commission DG RTD Joint Workshop 
127 European Commission (2018). Guidance on the requirements for hydropower in relation to EU nature 
legislation 
128 Notably Eurelectric (2018) Water Framework Directive: Experiences & Recommendations from the 
Hydropower Sector 
129 European Commission (2019) SWD 30. European Overview - River Basin Management Plans. 
Accompanying the report on the implementation of the Water Framework Directive (2000/60/EC) and the 
Floods Directive (2007/60/EC). 
130 European Court of Justice (2014) Judgment of the Court on recovery of the costs for water services - concept 
of ‘water services’. Case C‑525/12. Available at 
http://curia.europa.eu/juris/document/document.jsf?text=&docid=157518&pageIndex=0&doclang=EN&mode=r
eq&dir=&occ=first&part=1 

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Concerning  actions  on  energy  policy  measures,  the  CIS131  recommends  that  support 
schemes and other measures to renewable energy should advance criteria for protection 
of  water  status  when  relevant.  As  dedicated  pumped  hydro  plants  do  not  contribute  to 
renewable  energy  targets,  the  recommendation  could  be  broadened,  as  Member  States 
should  consider  the  water  status  when  developing  any  support  measures  to  storage  as 
well. 

Hydropower rights granting procedures 

Given the potential environmental impacts of hydropower, the  use of public resources 
and  the  benefits  to  the  energy  system  as  well  energy  and  climate  policy 
objectives, the  rights to explore hydropower  resources are generally granted by public 
authorities. Beyond the Water Framework and State Aid Directives, this granting of rights 
is  also  affected  by  the  Services  Directive,  the  EU  rules  on  public  procurement  and  the 
freedom of establishment and the freedom to provide services.132 

National  legislation  and  practices  for  granting  exploration  rights  still  differ  significantly 
among Member States, concerning the use of competitive procedures, the types of rights 
provided  according  (authorization,  concession,  license  or  permit),  the  duration  of  these 
rights  (from  less  than  15  years  to  unlimited)  and  the  involvement  of  local  or  regional 
authorities.133  This  variety  of  approaches  as  well  as  the  legal  uncertainty  regarding  the 
alignment with EU legislation leads to complexity and uncertainty, which are an important 
barrier to hydropower development.134 Moreover, differences between Member States can 
lead  to  distortion  of  the  Internal  Electricity  Market,  if  not  justified  by  economic  and 
environmental aspects.135 

Moreover, within the same Member State, the rights granting approach will also frequently 
vary according to the size of the installation. Also, the definition of small hydropower is not 
consistent between Member States, varying between 1.5 and 15 MW. While environmental 
impacts  of  hydropower  are  not  necessary  related  to  the  size  of  the  installations  (as 
indicated in the discussion on the Water Framework Directive), especially for small-scale 
hydropower developers may not have the resources necessary for the complex granting 
process,  nor  benefit  from  the  economies  of  scale  of  larger  projects.  Recent  national 
strategies have focused on smaller scale projects (and especially run-of-river plants) due 
to the overall lower impact.136 

In  the  last  20  years,  several  European  countries  have  been  subject  to  infringement 
procedures by the European Commission (and even the European Free Trade Association, 
EFTA) concerning the procedures for allocating rights for the exploration of new or existing 
hydropower.  However,  these  infringement  procedures  have  been  started  by  different 
Commission Services and do not necessarily follow a common approach. 137 

Recently,  the  European  Commission  called  8  Member  States  to  comply  with  EU 
legislation.138 The infringement procedures were related to transparency and impartiality 
in the selection procedures for new hydropower authorisations in five Member States (AT, 
DE, PL, SE and the UK) and for expired authorisations in IT, while French and Portuguese 

131 Kampa et al. (2011). Issue paper of the Common Implementation Strategy Workshop - Water management, 
Water Framework Directive & Hydropower. 
132 Respectively Directive 2006/123/EC, Directive 2014/23/EU and Articles 49 and 56 of the Treaty on the 
Functioning of the European Union 
133 Glachant et al. (2015) Regimes for granting rights to use hydropower in Europe 
134 JRC Low Carbon Energy Observatory (2019) Hydropower Technology Development Report 2018 
135 Glachant et al. (2016) For a harmonisation of hydropower regimes in European Single Market 
136 JRC Low Carbon Energy Observatory (2019) Hydropower Technology Development Report 2018 
137 Glachant et al. (2015) Regimes for granting rights to use hydropower in Europe 
138 European Commission (2018) Hydroelectric power concessions: Commission calls on 8 Member States to 
comply with EU law. 

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laws allow some hydropower concessions to be renewed or extended without the use of 
competitive procedures. 

Glachant et al. (2016)139 argue for the Commission Services and institutional stakeholders 
to develop a harmonised approach to granting hydropower rights. This comprises defining 
recommendations  for  granting  of  hydropower  rights,  as  well  as  coordinating  and 
harmonizing  the  actions  of  Commission  Services.  The  latter  regarding  requesting 
compliance  from  Member  States  and  starting  infringement  procedures,  based  on  the 
relevant  EU  law  (such  as  the  Water  Framework,  State  Aid  and  Public  Procurement 
Directives). The authors also call for a harmonised regulatory regime across Member States 
to  reduce  market  distortions,  addressing  the  variations  in  grating  procedures,  unless 
justified by national environmental or economic specificities. 

Research and Innovation Framework Programmes 

The  current  Framework  Programme  Horizon  2020  has  financed  over  150  projects 
researching  various  aspects  of  energy  storage,  from  fundamental  research  in  specific 
technologies  to  energy  system  integration  or  research  in  associated  concepts  such  as 
energy  communities  or  electric  vehicles.  Assessing  CORDIS140  data  for  Horizon  2020 
funding for R&I projects related to storage141, it can be seen that Horizon 2020 contributes 
the majority of the total projects funds (as opposed to other sources  of funding). Overall, 
the projects considered in the analysis have been awarded hundreds of million € in Horizon 
2020  funds.  Albeit  determining  the  exact  funding  volume  is  challenging  as  it  requires  a 
detailed analysis of the projects’ scope, it should be over 1.5 billion €. 

Projects  worthy  of  note  include  XFLEX  (power  system  flexibility  through  hydropower), 
INVADE  (RES  storage  through  EVs  and  batteries),  INTENSYS4EU  (systems  integration), 
HyBalance (PtH2 demonstration), SMILE (smart island energy systems) and HORIZON-STE 
(on concentrated solar power).  

It must be noted also that R&I projects at the EU and MS level interact with EU strategic 
priorities  as  reflected  in  the  recently  founded  European  Battery  Alliance,  as  well  as  the 
SET-Plan platforms BatterRIes Europe.  

Horizon 2020 is due to  end in 2020, being replaced in 2021 by Horizon Europe. Energy 
storage is one of the areas of intervention of the cluster ‘Climate, Energy and Mobility’ of 
Horizon Europe, and moreover the cluster includes the other related intervention areas of 
‘Energy  systems  and  grids’,  ‘Smart  mobility’  and  ‘Clean  transport  and  mobility’.  The 
climate, energy and mobility cluster has a proposed budget of 15 billion €.142 

Besides areas of intervention, Horizon Europe clusters have key orientations, which  
provide  strategic  guidance  with  a  description  of  impacts,  related  intervention  areas  and 
cross-cluster issues. The key orientations related to storage are: 

 

 

‘Cross-sectoral  solutions  for  decarbonisation’,  aiming  (also)  at  developing  the 
European battery, low-carbon hydrogen and fuel cells value chains. 
‘Develop  cost-efficient,  net  zero-greenhouse  gas  energy  system  centred  on 
renewables’, aiming (also) to advance the  technological  readiness  of  centralised  
and  decentralised energy storage for industrial-scale and domestic applications. 

The orientations published by the  European Commission towards the first Strategic Plan 
for  Horizon  Europe143  highlight  the  need  for  research  in  storage.  This  especially  on  key 
technologies such as battery, hydrogen and thermal storage. The orientations specifically 

139 Glachant et al. (2016) For a harmonisation of hydropower regimes in European Single Market 
140 Available at https://data.europa.eu/euodp/en/data/dataset/cordisH2020projects 
141 Projects with descriptions containing the following were included: (energy OR electric*) AND storage AND 
(batter* OR hydrogen OR hydropower OR flywheel OR compressed air). * denotes a free ending to the word. 
142 European Commission (2018) Commission proposal for the next EU Research and Innovation Programme 
(2021 –2027). Available at https://ec.europa.eu/info/sites/info/files/horizon-europe-presentation_2018_en.pdf 
143 European Commission (2019) Orientations towards the first Strategic Plan for Horizon Europe 

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indicate that R&I investments in the cluster climate, energy and mobility targets impacts 
in  “novel  competitive  cross-sectoral  solutions  for  decarbonisation  such  as  batteries, 
hydrogen, and  other types  of  storage (chemical, mechanical, electrical and thermal), as 
well  as  sustainable  buildings  and  infrastructure  enabling low  carbon  solutions  and  other 
break-through technologies.” 

The  orientations  also  indicate  that  a  co-programmed  partnership  with  industry  and 
academia  is  proposed  for  the  European  industrial  battery  value  chain,  and  a  reinforced 
hydrogen  Institutionalised  Partnership  in  the  form  of  the  Fuel  Cells  and  Hydrogen  Joint 
Undertaking.  Other  storage  types,  including  thermal  storage,  also  feature  very 
prominently, even if no need for specific partnership has been identified. EU R&I support 
to  battery  technologies  should  be  interconnected  also  to  the  EU  actions  on  critical  raw 
materials, for instance to reduce or substitute the use of critical raw materials.  

Critical raw materials 

The large-scale deployment of energy storage may create new dependencies for the EU, 
according to the exact storage technologies which are deployed. Recent EU initiatives to 
address the dependency on raw materials include the 2017 list of critical raw materials for 
the EU144 and key actions within the Strategic action plan on batteries.145 

The  recent  2018  Report  on  raw  materials  for  battery  applications146  covers  four  raw 
materials for batteries: cobalt, lithium, graphite, and nickel. It focuses on the relevant key 
action from the Strategic action plan on batteries, which aims to: 

  Build on the EU list of Critical Raw Materials, established in 2017, to map the current 

and future primary raw materials availability for batteries; 

  Assess the potential within the EU for sourcing the four battery raw materials; 
  Assess the potential in the whole EU for sourcing of secondary raw materials; 
  Put  forward  recommendations  aimed  at  optimising  the  sourcing  of  batteries  raw 

materials. 

The report on raw materials indicates it is necessary to improve the knowledge  on battery 
raw materials, and confirms these are mainly supplied to the EU from third countries. The 
report highlights the potential to increasing primary and secondary production of these raw 
materials  in  the  EU,  and  that  there  are  few  obstacles  to  using  the  EU  potential.  The 
obstacles include the unavailability of geological data on the deposits (which are difficult 
to access), the lack of integrated land use planning and mining, public acceptance, and the 
regulatory heterogeneity across the EU. 

Given  this  assessment,  the  report  makes  recommendations  grouped  in  three  main 
categories: 

  Improving knowledge on battery raw materials 
  Boosting primary and secondary battery materials production in the EU 
  Ensuring access to battery raw materials on global markets 

Moreover,  the  Energy  Technology  Dependence  study  was  finalized  in  2019147    for  the 
Commission. It conducted a broad assessment of 13 energy technologies, selecting 3 for 
an  in-depth  assessment,  among  which  battery  energy  storage  (focused  on  lithium-ion 
batteries). 

144 European Commission (2017). Communication on the 2018 list of Critical Raw Materials for the EU. 
COM(2017) 490. 
145 European Commission (2018) Annex to the Communication Europe on the Move. ANNEX 2 – Strategic 
Action Plan on Batteries. COM(2018) 293. 
See also European Commission (2019). Report on the Implementation of the Strategic Action Plan on Batteries: 
Building a Strategic Battery Value Chain in Europe. COM(2019) 176. 
146 European Commission (2018) Report on Raw Materials for Battery Applications SWD(2018) 245/2 
147 Trinomics et al. (2019). Study on Energy Technology Dependence 

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The  batteries  technology  was  assessed  for  the  EU  external  dependence,  market 
concentration,  political  risk,  ease  of  market  entry,  availability  of  substitutes  and 
competitiveness  trends.  While  critical  dependencies  for  lithium,  battery  cells,  cathode 
substrate and battery recycling were potentially identified on a first moment, a more in-
depth look provided no evidence for it. The in-depth assessment focused on cobalt critical 
dependencies. 

The  main  findings  for  battery  storage  technology  indicated  that  raw  cobalt  is  indeed  a 
critical dependency, with a few non-EU third countries supplying the material. Moreover, 
maintaining the EU refined cobalt industry is strategic as the global market is concentrated 
and substituting cobalt is challenging. Battery cells are identified as a critical dependency, 
but with a relatively low risk given stability of security of supply. 

The main recommendations of the study to address the dependencies identified in the field 
of battery storage technology, such as to increase EU funding for the development of new 
battery  designs  employing  alternative  raw  materials,  to  provide  further  support  to 
investors  in  battery  cell  manufacturing  (including  new  entrants),  and  to  develop  EU 
finishes  with  general 
incentives  for  the  battery  recycling  industry.  The  study 
recommendations on coordinated policies, integrated energy dependence assessments, the 
circular economy and the role of EU industrial policy. 

EU energy storage financing 

To stimulate the market uptake of energy storage, access to finance should be facilitated 
by measures that improve the bankability of storage assets.  Hundreds of billions of 
euros will be needed to finance new energy storage systems and electrolysers in the EU 
up  to  2050,  particularly  to  scale-up  deployment  from  2030  to  2050.  Moreover,  some 
stakeholders  indicate  that  the  uncertainty  on  returns  for  storage  projects  and  the 
unavailability  of  funds  with  adequate  interest  rates  form  a  barrier  to  the  deployment  of 
storage. 

Financing Under the next MFF (2021-27) all EU access to (risk) finance instruments will be 
implemented under a single InvestEU Fund. EU instruments which form part of InvestEU 
can help address the financing challenge, in the categories of sustainable infrastructure, 
research, innovation & digitalisation, social investments & skills, and SMEs. 

As part  of the  European Green Deal the  European  Commission aims to start a  buildings 
‘renovation  wave’  initiative,  due  in  2020.  The  aim  is  to  increase  the  renovation  rate, 
bringing together the different actors in order to develop financing and combine renovation 
efforts. This initiative could constitute an opportunity in order to develop behind-the-meter 
storage  in  buildings.  Storage  should  also  be  considered  within  a  COVID-19  recovery 
strategy. 

In order to increase the ability of market actors to finance their investments in mature or 
promising  storage  technologies,  European  and  national  public  investment  banks  and 
authorities could provide loans and guarantees for project developers and manufacturers 
allowing  them  to  leverage  private  finance.  At  the  EU  level,  mechanisms  such  as  the 
Connecting Europe Facility or the European Regional Development or Cohesion Funds can 
be used to leverage other public and private investment. The authorities could also provide 
guidelines  for  private  investors  to  include  storage  in  an  asset  class  (e.g.  infrastructure) 
that facilitates access to finance,  or to evaluate the bankability of projects.  In 2019 the 
European Investment Bank (EIB) updated its energy lending policy,148 indicating storage 
technologies in general have a high alignment with it. 

However,  storage  is  still  at  an  early  stage  of  development  (with  the  main  exception  of 
pumped hydro) and needs further R&I. Due to the large number of storage technologies 
and  applications  at  various  maturity  levels,  there  is  generally  room  to  improve  many 

148 EIB (2019) Energy lending policy – supporting the energy transformation 

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aspects. These include cost, conversion efficiencies, weight, size, material use, reliability 
& durability, supply chain lead times, and environmental impacts. 

The  EU  and  MS  have  an  important  role  to  play  in  providing  public  funds  to  support 
promising  technologies  in  achieving  market  maturity  and  supporting low  readiness  level 
technologies through fundamental and applied R&I. DG Research & Innovation is involved 
in two windows of InvestEU: the R&I Window and the SME Window. The R&I window aims 
to  make  financing  for  innovation  available  across  the  innovation  cycle  and  corporate 
development  cycle.  The  challenge  will  be  to  develop  a  window  that  is  both  inclusive 
(accommodating  financing  for  R&I  of  all  types)  and  at  the  same  time  aligned  and 
complementary to the priorities of Horizon Europe. For the SME window, DG Research & 
Innovation is in charge of the equity sub-window. 

In December 2019 the EU Parliament and Council have reach an agreement regarding the  
EU  taxonomy  for  classifying  eligible  environmentally  sustainable  economic  activities. 
However, the actual eligible activities will be defined through delegated acts between 2020 
and  202.  Given  the  political  agreement  did  not  mention  energy  storage  explicitly,  a 
stakeholder argued that the Taxonomy only partially recognised energy storage as a key 
player in a carbon-neutral economy. The stakeholder highlighted it was necessary to have 
a clear framework for the inclusion of storage in the eligible sustainable activities. 

This framework was further defined in the final report by the Technical Expert Group on 
Sustainable Finance,149 which will be a main input to draft the delegated acts. The report 
provides  criteria  for  projects  contributing  to  climate  mitigation  or  adaptation,  as  well  as 
criteria  for  guaranteeing  the  projects  do  no  significant  harm  to  the  other  Taxonomy 
objectives. 

The  report  indicates  that  all  investments  in  electricity  and  thermal  storage  are  eligible 
under  the  taxonomy  climate  mitigation  criteria,  subject  to  regular  review.  However, 
pumped  hydro  storage  is  subject  to  the  criteria  for  production  of  electricity  from 
hydropower. The construction of hydrogen storage assets is eligible under the Taxonomy 
climate  mitigation  criteria,  while  the  assets  may  store  only  Taxonomy-eligible  hydrogen 
(that is, they may not be used to store hydrogen which do not meet the criteria, such as a 
maximum level of direct CO2 emissions per ton). Electricity, thermal and hydrogen storage 
is furthermore subject to standard screening criteria concerning climate adaptation. 

Storage  projects  should,  in  addition,  implement  certain  measures  to  avoid  harm  to  the 
other  environmental  objectives,  such  as  maximising  recycling  through  the  use  of  best 
available techniques and ensuring an environmental impact assessment is completed.  

4.  CONCLUSIONS  AND  POLICY  RECOMMENDATIONS  FOR  ENERGY 

STORAGE 

The  Long-Term  Strategy  published  by  the  European  Commission  includes  pathways 
towards  a  fully  decarbonised  economy  by  2050.  One  of  the  key  elements  to  achieve  
carbon-neutrality is a large-scale deployment of variable renewable electricity sources (PV 
and wind) for direct and indirect electrification (e.g. via use of synthetic gases and liquids 
produced  with  electrolysers).  The  variability  of  this  renewable  electricity  production  will 
substantially increase the need for flexibility.  

According  to  our  study,  energy  storage  can  make  a  significant  contribution  to 
these  flexibility  needs  and  to  reaching  the  security  of  energy  supply  and 
decarbonisation objectives at least-cost. Daily and weekly flexibility needs are directly 
related  to  the  increase  of  RES  installed  capacity.  In  particular,  solar  capacity  drives  the 
need  for  short-term  flexibility,  while  wind  power  has  a  significant  effect  on  weekly 

149 EU Technical Expert Group on Sustainable Finance (2020) Taxonomy Final Report and Technical Annex. 

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flexibility. By 2030, up to 108 GW of electricity storage150 would be necessary for the EU-
28,  with  a  large  development  of  stationary  batteries.  By  2050,  the  decarbonisation  of 
industry, transport and heating will require important capacities of electrolysers (around 
550 GW based on our modelling scenarios, c.f. section 2.4.2.2). Combined with hydrogen 
and  methane  storage,  these  electrolysers  will  be  able  to  provide  essential  flexibility  to 
integrate  the  renewable  electricity  production  and  to  meet  the  demand  fluctuations. 
Electricity storage will also be necessary at the 2050 horizon, but the required capacities 
would decrease from 103 GW in 2030 to 50 GW in 2050 due to increasing flexibility services 
provided by electrolysers and electricity demand response.  

In order to enable storage technologies to effectively deliver this contribution in 
a  competitive  market-based  approach,  different  barriers  should  be  addressed. 
The most important barrier is the lack of a viable business case for many energy storage 
projects.  The  cost  and  technical  performance  of  storage  technologies  gradually  improve 
their  viability,  which  will  significantly  improve  the  business  case,  and  already  has  for 
several  technologies.  But  in  the  shorter  term,  various  policy  barriers  still  hamper  the 
development of energy storage in the EU and lead to uncertainty concerning the revenues 
streams to cover the project costs and risks, but could be removed in the coming years. 

The  main  responsibility  of  policymakers  is  to  provide  an  enabling  environment 
and level playing field to storage. The adequate implementation of the clean energy 
package  should  be  a  priority,  in  order  to  enable  storage  to  participate  in  energy  and 
ancillary  services  markets  as  well  as  in  eventual  capacity  mechanisms,  and  to  be 
remunerated in a transparent, non-discriminatory way. Positive externalities provided by 
storage, such as system flexibility and stability, as well as environmental benefits, should 
be adequately valued, primarily through appropriate remuneration in the different markets, 
and  through  cost-reflective  network  charges  and  appropriate  taxation  rules  (discussed 
further  below).  Adequate  energy  price  signals  should  also  guide  the  investment  and 
operational decisions of private actors. 

The European Commission, ACER and other EU authorities should prioritise policy 
measures that address barriers to storage identified in the majority or all Member 
States, and that hinder the deployment of several storage technologies and applications. 
Relevant barriers specific to only a few Member States should be addressed at the national 
level.  The  proposed  measures  are  hereafter  separated  according  to  whether  they  are 
(partially) addressed by the Clean Energy Package provisions: 

1.  Tackled by the CEP, but requiring monitoring at EU level to ensure adequate and 

timely implementation by Member States: 

o  MS:  Ensure  that  storage  is  coherently  defined  across  the  national  legal 

framework 

o  MS: Eliminate the double charging of grid tariffs 

2.  Partially tackled by the CEP, and requiring further actions at EU and/or MS level: 

o  MS: Develop a policy strategy for storage 
o  EU+MS: Weigh network investments vs the procurement of flexibility from 

other resources 

o  EU+MS: Develop non-discriminatory procurement of non-frequency ancillary 

services 

o  MS: Foster dynamic electricity prices and time-of-use grid tariffs  
o  MS: Phase out net metering 
o  EU+MS: Guarantee the interoperability of flexibility resources and access to 

data 

3.  Not tackled by the CEP, and requiring actions at EU and/or MS level: 

o  EU+MS: Increase the energy and GHG-reflectiveness of taxation across the 

electricity, gas and heat sectors 

o  EU: Eliminate the double taxation of stored energy 

150 Electricity storage includes pumped storage and stationary batteries. Current capacities represent around 40 
GW. 

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Specific conclusions and policy recommendations 

This below section provides specific conclusions and policy recommendations to 
address  the  identified  policy  barriers.  At  the  EU  level,  upcoming  revisions  of  EU 
instruments relevant for energy storage provide an opportunity to address barriers where 
EU action would be adequate. Actions under the European Green Deal should also consider 
storage, where appropriate, for example within the smart sector integration strategy and 
the ‘renovation wave’ initiative. The proposed actions at the EU and Member State level151 
per  policy  topic  are  discussed  next  in  detail,  with  further  details  provided  for  the  EU  in 
Table 4-1 and for Member States in Table 4-2. 

1. Energy storage requires a clear strategy addressing system flexibility and stability needs as 
well  as  policy  barriers,  accompanied  by  support  adapted  to  the  different  technological 
maturities 

National  (or  regional  where  applicable)  authorities  should  develop  a  policy 
strategy  for  storage  based  on  an  assessment  of  the  system  flexibility,  adequacy  and 
stability  needs,  and  of  gaps  in  national  regulatory  frameworks  [MS  action].  Such 
assessments of policy gaps have been developed by some Member States (e.g. FR and FI), 
in particular within studies assessing barriers for developing smart grids. An appropriate 
identification  of  the  flexibility  needs  per  country  and  per  timescale  is  key  to  assess  the 
possible  contribution  of  storage  technologies  in  the  future.  Power  storage  technologies, 
such as pumped storage or batteries, can only provide short-term flexibility (daily and to 
some extent weekly flexibility). For most of the weekly and for all seasonal flexibility needs, 
other  solutions are required.  In  our analysis,  conventional technologies such as thermal 
power plants and interconnectors provide most of this flexibility at the 2030 horizon, while 
in our 2050 scenarios a large part of this flexibility is provided by electrolysers. However, 
there is still the need to develop robust methodologies to assess and differentiate short- 
to  medium-term  flexibility  from  long-term  adequacy  needs,  complementing  the 
methodology  being  developed  by  the  ENTSO-E  for  the  European  Resource  Adequacy 
Assessment.152 

The  National  Energy  and  Climate  Plans  are  a  central  instrument  for  Member 
States to provide transparency and visibility to market actors regarding the objectives for 
increasing the flexibility of the national energy system, including the deployment of storage 
technologies, and to signal the main policy actions to be undertaken [CEP implementation]. 
NECPs which comprehensively address energy storage include for instance AT, FR, EL and 
ES;  they  comprise  specific  policy  actions  to  remove  barriers  and  provide  forecasts  of 
technology-specific  storage  deployment  that  can  guide  investment  decisions  of  market 
actors. The European Commission is expected to thoroughly assess the NECPs in view of 
Member States’ targets, policies and measures reaching the EU energy & climate objectives 
[CEP  implementation].  Member  States  with  less  detailed  NECPs  could  be  stimulated  to 
provide further details in their future progress reports. The update of the NECPs in 2024 
will  allow  the  European  and  national  authorities  to  take  stock  of  the  advances  made  on 
storage  policies  and  to  chart  further  actions  necessary  in  the  medium-  and  long-term 
[EU+MS action]. 

The EU and Member States should continue providing R&I guidance and support 
to  promising  storage  technologies  [EU+MS  action].  The  upcoming  EU  Framework 
Programme of Horizon Europe highlights the need for research in storage, including on key 
technologies such as batteries, hydrogen and thermal storage. Further actions should be 
undertaken  regarding  raw  materials,  especially  for  batteries,  given  the  significant 
deployment  in  the  2030  and  2050  horizons.  Actions  identified  at  the  EU  level  comprise 
mainly  improving  knowledge  on  battery  raw  materials,  boosting  primary  and  secondary 
battery materials production in the EU, and ensuring access to battery raw materials on 
global  markets  [EU  action,  batteries].  These  actions  are  interconnected  to  the  EU  R&I 

151 Indicated as an [EU action], [MS action], [CEP implementation] or [EU+MS action]. Specific affected 
storage applications or technologies are also indicated, otherwise, the action affects all or most. 
152 ENTSO-E (2019) European Resource Adequacy Assessment - Methodology Proposal 

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support to battery technologies, for instance to reduce or substitute the use of critical raw 
materials. 

There  is  still  uncertainty  on  the  mid-term  deployment  of  electrolysers;  according  to  our 
assessment, investments in electrolysers would be limited in the 2030 time horizon, while 
after 2030 the decarbonization of the energy sector would strongly rely on P2X, and hence 
on electrolysers (around 550 GW estimated installed capacity in 2050, c.f. section 2.4.2.2). 
For  storage  technologies,  stationary  batteries  appear  to  be  an  interesting  solution  to 
provide daily flexibility for the mid-term (up to 67 GW in 2030, c.f. section 2.4.2.1). But 
their profitability will be challenged in 2050, with direct competition with the daily flexibility 
provided by electrolysers, and the important development of electricity demand response 
(smart  charging  of  electric  vehicles,  heat  pumps  with  thermal  storage).  Given  the  large 
range of storage technologies and applications at various maturity levels, there is room to 
improve several aspects, including cost, efficiency, weight, size, material use, reliability & 
durability, supply chain lead times, and environmental impacts. Some Member States, e.g. 
DE  and  NL,  are  already  setting  up  pilot  projects  using  ‘new’  conversion  and  storage 
technologies.  Storage  is  part  of  the  R&I  agendas  of  several  Member  States;  they  have 
specific budgets to support energy storage related R&I, either directly or in the context of 
system integration and smart grid technologies (e.g. FR, IE, HU, NL, PL and SK). 

The EU and Member States may furthermore consider providing economic support 
to  higher  readiness-level  storage  technologies  based  on  dynamic  efficiency 
considerations [EU+MS action]. Specific support for storage investments exist for example 
in FI, BE and NL, often in the form of reduced grid tariffs. Nonetheless, achieving business 
case viability for energy storage projects should primarily be based on market revenues; 
most EU countries effectively do not grant specific economic support to energy storage. As 
the combination of energy storage and renewable energy generation offers in general also 
system benefits, support mechanisms to renewable energy should not exclude such hybrid 
projects [MS action, generation+storage]. For  example, support mechanisms in AT, DE, 
GR consider storage, e.g. through an adder or multiplier in support levels. Therefore, the 
State  Aid  Guidelines  on  Energy  and  the  Environment  (EEAG)  may  consider  including 
support to hybrid projects (combining generation and storage of renewable electricity, gas 
or heat) as an explicitly eligible state aid measure [EU action, RES generation+storage]. 
The EEAG could explicitly entitle conversion technologies to state aid (subject to notification 
and  approval).  Only  use  of  non-supported  renewable  energy  inputs  (e.g.  renewable 
electricity)  should  be  allowed  (to  avoid  double  support)  [EU+MS  action,  RES 
generation+storage]. 

To stimulate the market uptake  of energy storage,  access to finance should be 
facilitated  by  measures  that  improve  the  bankability  of  storage  assets  [EU+MS 
action].  Between  100  and  300  billion  €  will  be  needed  to  finance  new  energy  storage 
systems  and  electrolysers  in  the  EU  up  to  2050,  including  to  scale-up  deployment  of 
electrolysers from 2030 to 2050. In order to increase the ability of market actors to finance 
their  investments  in  mature  or  promising  storage  technologies,  European  and  national 
public  investment  banks  and  authorities  could  provide  loans  and  guarantees  for  project 
developers and manufacturers allowing them to leverage private finance. The authorities 
could also provide guidelines for private investors to include storage in an asset class (e.g. 
infrastructure) that facilitates access to finance, or to evaluate the bankability of projects 
[EU+MS action]. 

EU instruments can help address this financing challenge, such as the Connecting 
Europe Facility or the European Regional Development or Cohesion Funds [EU action]. To 
enable  the  Connecting  Europe  Facility  to  provide  support  to  a  large  range  of  storage 
projects, the TEN-E eligibility criteria and electricity infrastructure categories should be re-
assessed, and if appropriate enlarged to storage with a cross-border impact connected to 
lower  transmission  voltages  and/or  at  the  distribution  level.  This  along  with  other 
necessary changes to ensure non-discrimination of alternative flexibility resources such as 
demand response, for example those eligible for the TEN-E smart grids thematic area [EU 
action, front-of-the meter storage].  Moreover, innovation requirements are at present not 
applied  in  a  technology-neutral  way  in  TEN-E,  discriminating  electricity  storage,  and 

119 

 
 
 
 
 
particularly hydropower, against transmission projects [EU action, pumped hydro storage]. 
It  is  therefore  recommended  to  examine  and  adapt  where  necessary  these  innovation 
requirements, and to assess the opportunity to add innovation as an explicit objective of 
TEN-E and Connecting Europe Facility [EU action, front-of-the meter storage]. 

2. Member States should address permitting barriers, while further action at the EU level is 
warranted for standardisation, such as regarding safety and EV interoperability 

Permitting of energy storage is in general not considered a major obstacle for the 
development  of  storage,  except  for  larger  scale  projects  such  as  (pumped)  hydro  or 
compressed air energy storage. Most Member States do not have specific permitting rules 
applicable  to  storage,  only  in  some  Member  States  specific  national  legislation  and 
practices apply that can hinder storage. National action addressing permitting barriers may 
hence  be  more  adequate  than  at  the  EU  level  [MS  action,  large-  and  medium-scale 
storage].  

Interoperability is central to leverage the potential of behind-the-meter and EVs 
storage. Specific EU action is to be considered to encourage/develop EU-wide harmonised 
standards for device communication and system operation. Currently, the digital layer of 
battery management systems, notably application programming interfaces, is often based 
on proprietary solutions, and a move to open interfaces would desirable. In addition, access 
to data of battery management systems is often limited, depending, among other things, 
on how data encryption is done. The standards or protocols currently being developed for 
data  encryption  and  communication  (so-called  Public  Key  Infrastructure)  between  the 
vehicle and the charging point are proprietary, and created according to specific interests. 
The relevant developments should be followed to prevent data hoarding and ensure EVs 
and stationary batteries can be used in “plug-and-play mode”.  

Adequate safety and security standards are also needed, based on actual risks and 
without jeopardizing the uptake of storage [EU+MS action]. Few Member States have yet 
introduced  mandatory  standards  for  the  installation  of  the  different  relevant  storage 
technologies, particularly for batteries. The disposal of batteries is addressed by only a few 
countries, requiring further measures [MS action, batteries]. Austria adresses storage from 
a holistic point of view, considering all impacts and potential risks related to manufacturing, 
storage, transport, installation and operation. 

Member States should implement the best practices identified in the context of 
the  Water  Framework  Directive  for  advancing  hydropower  development,  including 
pumped hydro storage. These best practices include pro-active planning in collaboration 
with stakeholders, focus on modernisation and repowering, and conducting always a cost-
benefit  analysis.153  Permitting  should  be  facilitated  by  increased  public  involvement  and 
consider  the  differences  between  large-  and  small-scale  projects.  [MS  action,  pumped 
hydro storage]. Although the permitting procedure of large-scale projects comprises wide 
public hearings, public acceptance remains a major hurdle across the EU. Increased public 
participation may be warranted for not only large-scale projects such as pumped hydro but 
also other technologies, for instance batteries. 

3. Member States should prioritize the full implementation of the new electricity market design, 
and  address  remaining  barriers,  especially  regarding  adequate  price  signals  and  access  to 
ancillary services markets 

Member  States  should  ensure  that  storage  is  coherently  defined  across  the 
national legal framework [CEP implementation]. An appropriate definition of storage is 
provided in the new Electricity Directive. But at present, most EU Member States do not 
have yet a coherent definition of storage nor have transposed the Directive, and definitions 
in secondary legislation often are not aligned with the rest of the legal framework. BE, FR 

153 Kampa et al. (2011). Issue paper of the Common Implementation Strategy Workshop - Water management, 
Water Framework Directive & Hydropower. 

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and HU are examples of countries with a definition of storage in their primary legislation 
of  the  electricity  market.  A  few  stakeholders  have  indicated  moreover  that  clarifications 
are  welcome  on  the  interpretation  of  the  definition,  for  example  on  the  inclusion  of  the 
various power-to-gas possibilities. 

Member  States  should  facilitate  active  participation  of  storage  in  electricity 
markets  and  eventual  capacity  mechanisms  by  properly  implementing  the 
Electricity  Directive  and  Regulation.  This  including  the  provisions  regarding  market 
prequalification and bidding parameters, which are at present in some Member States still 
hindering  the  participation  of  storage  in  e.g.  ancillary  services  procurement  [CEP 
implementation].  Rules  for  electricity  and  ancillary  services  markets  as  well  as  capacity 
mechanisms should not discriminate between technologies nor between large and small-
scale installations. Adequate design parameters for trading and procuring energy, capacity 
and ancillary services are crucial in order not to hinder participation of storage. Allowing 
aggregation of storage with other flexibility resources is key to facilitate the deployment of 
(especially behind-the-meter) storage. Likewise, market rules should allow the behind-the-
meter combination of storage with other resources such as renewable energy generation 
or demand response for participation in electricity markets and capacity mechanisms [CEP 
implementation, storage+generation]. 

Dynamic  electricity  price  signals  as  well  as  time-of-use  grid  tariffs  should  be 
provided in order to guide investment and operational decisions of market actors towards 
system-optimal decisions. The development of time-of-use grid tariffs and dynamic retail 
prices  (and  the  limitation  to  new  net  metering  schemes  discussed  below)  are  crucial  to 
increase  the  responsiveness  of  consumers  and  the  development  of  behind-the-meter 
storage, including electric vehicles [CEP implementation, behind-the-meter storage]. For 
instance, at the 2030 horizon, we find that enabling vehicle-to–grid services could enhance 
the provision of flexibility and stability by the mobility sector, and avoid up to 25 GW of 
large-scale storage investments. Presently, locational grid tariff signals are limited given 
the zonal approach for European energy markets, while the use of time-of-use grid tariffs 
or  dynamic  electricity  price  signals  for  residential  consumers  are  still  also  limited.  As 
recently  as  2018,  fixed  electricity  prices  were  still  the  dominant  type  available  to 
households in most Member States, while dynamic end-user price offers were available in 
only  7  Member  States.  However,  demand-response  to  electricity  prices  enabled  by  heat 
storage in e.g. CHP, water gas boilers and heat pumps is relevant in an increasing number 
of Member States, especially in Scandinavian and Eastern European Member States. 

Participation  of  storage  in  wholesale  electricity  markets  is  properly  being 
addressed in most EU countries with liquid and deep markets, but requires further 
initiatives in less developed markets. Specific energy market design parameters still 
act as participation barriers to storage in some countries, such as minimum bid sizes and 
price caps. While minimum bid sizes of e.g. 1 MW are common, they may frequently be 
met  through  aggregation  of  resources,  effectively  reducing  the  participation  barrier  to 
storage. While implementing  the new electricity market design, Member States should set 
thresholds  which  effectively  enable  the  participation  of  storage  [CEP  implementation, 
aggregated resources]. Moreover, at supra-national and EU level,  the implementation of 
harmonized day ahead and intraday wholesale electricity market products should facilitate 
the (cross-border) participation of storage [EU+MS action]. Different product definitions in 
neighbouring  countries,  such  as  block  or  exclusive  offers,  when  combined  with  other 
elements (such as aggregation), may hinder participation of storage facilities in multiple 
countries or in the day-ahead and intraday markets simultaneously. 

Participation of storage in national capacity mechanisms is in general possible, 
but its effective participation and the impact on its profitability are still limited.  
Certain national capacity mechanisms were recently contested by market actors. Specific 
design aspects such as the derating factors applied to storage can act as a barrier, including 
by grouping storage with other technologies, or by applying a generic derating factor to all 
storage technologies. Member States should carefully design capacity mechanisms in order 
not to discriminate, in practice, storage against other technologies [CEP implementation]. 

121 

 
 
 
 
 
The new Irish capacity mechanism for example has specific de-rating factors for pumped 
hydro and other storage technologies considering the storage size and duration. 

The increasing maturity of balancing markets (energy and reserve) will help to 
adequately  remunerate  storage  for  its  contribution  to  system  flexibility  and 
stability. One such positive development for the participation of storage technologies is 
the cross-border integration of balancing markets. Balancing markets should allow for the 
aggregation of flexibility resources. Besides providing adequate prequalification rules and 
bidding  thresholds,  Member  States  are  considering  new  approaches  to  improve  the 
remuneration of flexibility and stability resources in balancing markets [MS action], which 
may eventually be deployed at the EU level [EU action]. Fees (and eventual penalties) for 
residual imbalances should be set at an appropriate level in order to stimulate balancing 
responsible parties to reduce their residual imbalances by using flexible assets, including 
storage.  Multiple  projects  are  ongoing  for  improving  market-based  procurement  of 
balancing reserves, for example in IT, FI, DK, NL and PT. These measures should allow to 
generate  additional  revenue  streams  for  storage  and  thus  avoid  the  need  for  specific 
economic  support  for  mature  storage  technologies.  Moreover,  the  development  of  fast 
response balancing markets for frequency regulation reserves may allow to take advantage 
of the very short activation times of some energy storage technologies. Real-time scarcity 
pricing in balancing markets, as is being considered in BE, could also incentivise capacity 
availability, providing additional remuneration to resources that specifically contribute to 
security of energy supply. 

Implementing  enabling  rules  in  non-frequency  ancillary  services  markets  may 
require more medium-term efforts. At the moment, the possibility of storage to provide 
non-frequency ancillary services is rare across Europe, especially batteries, which in most 
Member  States  cannot  provide  voltage  control  nor  black-start  services.  Moreover,  large 
conventional power plants are in multiple Member States obliged to provide such ancillary 
services, with the consequent inexistence of organized markets. Participation of storage in 
grid  congestion  management  is  at  present  limited  to  pilot  projects  focusing  on  battery 
systems, but albeit limited in scale, these projects are taking place in multiple countries. 
Member States need to provide a level playing field for the procurement of such services, 
while  guaranteeing  that  all  flexibility  resources  are  considered  equally  with  network 
expansion  in  network  development  plans  [CEP  implementation].  The  Commission  and 
Member  States  should  guarantee  locational  information  in  congestion  management  and 
other products to foster market-based procurement [EU+MS action]. 

4. Double charging of network tariffs and net metering (partially tackled by the new electricity 
market design) as well as network codes (to a lesser extent) are still a major barrier to storage 

Some  specific  grid  tariff  aspects  both  hamper  market  participation  and  distort 
price  signals.  Double  imposition  of  grid  tariffs  (that  is,  during  storage  charge  and 
discharge)  on  stored  energy  are  especially  detrimental  and  should  be  eliminated  [CEP 
implementation].  The  current  tariffication  practices  across  Member  States  are  still  quite 
diverging. For example, concerning the application to existing and new storage facilities, 
the inclusion of conversion losses, whether the energy is traded in wholesale markets or 
supplied to end consumers, and the application of tariff rebates on all volumes or only for 
electricity providing specific services (e.g. balancing). 

Member  States  should  ensure  a  proper  implementation  of  the  grid  related 
provisions in the new electricity market design, considering also cases where storage 
is  combined  with  generation  or  consumption,  front-  and  behind-the-meter  [CEP 
implementation]. The new electricity market design makes network tariffication more cost-
reflective  (e.g.  by  removing  the  double  network  charges).  It  also  comprises  the 
requirement  for  network  charges  not  to  include  costs  supporting  unrelated  policy 
objectives. Only few countries such as DE and NL (the latter by introducing capacity-based 
network tariffs at DSO level) have already wholly or partially addressed the double charging 
issue. 

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Net  metering  is  another  important  grid-related  barrier  to  the  deployment  of 
small-scale  storage,  still  existing  in  at  least  9  Member  States.  Member  States  should 
prioritise the phasing out of net metering schemes [MS action]. The new electricity market 
design  already  introduces  limitations  to  new  schemes,  and  Member  States  should 
implement  these  preferably  ahead  of  the  2023  deadline  [CEP  implementation].  Net 
metering of not only network charges should be avoided, but also of the energy, taxes and 
levies components. 

There is also an opportunity for improving price signals through network tariffs. 
EU  and  national  authorities  could  assess  the  feasibility  and  opportunity  to  implement 
further locational and/or time-of-use signals in transmission tariffs, also based on lessons 
learned from current practices in EU Member States. The advantages and disadvantages 
of  introducing  time-of-use  signals in distribution  tariffs  could  also  be  evaluated  [EU+MS 
action]. 

Adequate  network  rules  for  storage  connection  and  access  should  also  be 
developed. Network codes usually do not explicitly address storage, which can then be 
treated as generation or consumption (or both). Only a limited number of Member States 
have already grid codes addressing specifically storage, such as DK or shortly FR. In some 
Member States, storage is addressed through the regulatory framework for smart grids. 
The Commission, ACER and ENTSO-E could consider updating the electricity network codes 
in this regard, also taking into account the combination of storage with front- and behind-
the-meter generation [EU action]. 

5. The revision of the taxation, principally through the  Energy Taxation Directive (ETD), is 
pivotal to eliminating undue burdens to stored energy, such as double taxation, and reducing 
cross-energy vector distortions 

Full  or  partial  imposition  of  electricity  consumption  taxes  and  other  levies  to 
stored  energy  is  still  common  in  a  majority  of  Member  States.  In  some  Member 
States,  as  storage  is  not  properly  defined  in  national  legislation,  the  rules  applicable 
regarding levies and surcharges are not clearly defined and remain subject to diverging 
interpretation.  Member  States  should  review  and  adapt  the  taxation  rules  for  stored 
energy,  considering  also  the  specific  cases  of  behind-the-meter  storage  and  the 
combination with generation [MS action]. Only storage losses should be subject to taxes 
(as well as losses in energy production and transport across all energy carriers), in order 
to stimulate highly energy-efficient processes. Only a few Member States (including AT, 
FI, NL and SE) have taken measures to address this barrier. 

The  revision  of  the  Energy  Taxation  Directive  (ETD)  is  pivotal,  not  only  for  the 
development  of  energy  storage,  but  also  to  foster 
low-carbon  energy 
technologies in general. This by introducing a carbon component in the energy taxation, 
and to reduce cross-border market and cross-energy vector distortions (within the EU and 
with its trade partners). In addition to that, storage-specific updates to the Directive would 
be useful in the upcoming revision, as storage technologies are largely unaddressed in the 
current version. It is necessary to differentiate in the ETD energy transfer to storage from 
end-use consumption, and make the former a non-chargeable event. Only storage losses 
should be subject to taxes [EU action]. 

The increasing system integration will also require the elimination of diverging 
taxation  levels  across  energy  sectors  and  energy  carriers.  Taxation  signals  have 
been eroded since the publication of the Energy Taxation Directive (ETD), which also does 
not  require  taxes  to  be  based  on  the  carbon  nor  (for  fuels)  on  the  energy  content,  and 
whose coverage of energy products is outdated. A revision of the ETD is needed to avoid 
cross-sectoral distortions regarding taxation or the internalization of carbon costs, and to 
seize  the  synergies  between  the  electricity,  heat  and  gas  sectors  [EU  action].  These 
synergies  are  potentialized  by  new  technologies  and  the  increased  participation  of 
consumers  in  energy  markets.  In  the  2050  scenarios,  large  installed  capacities  of 
electrolysers  are  expected  to  be  used  for  the  production  of  synthetic  gases  and  liquids. 
Thanks  to  the  flexibility  on  the  end-use  side  and  dedicated  gas  storage  (hydrogen  and 
123 

 
 
 
 
 
 
others), the operational management of electrolysers can be adapted to match with the 
system conditions.  

According to our assessment, 50%-65% of the daily flexibility, 60%-70% of the 
weekly  flexibility  and  70%-80%  of  the  annual  flexibility  could  in  2050  be 
provided  by  electrolysers.  Heat  pumps  with  thermal  storage  also  make  significant 
contributions  to  flexibility  requirements  in  our  scenarios,  highlighting  the  interactions  of 
the electricity and heat sectors. Stakeholders have indicated other thermal energy storage 
such as underground (UTES) or in aquifers (ATES) have also a significant potential. 

6.  Competitive  flexibility  resources  should  be  considered  on  an  equal  footing  to  network 
investments, across all energy vectors 

Energy storage is primarily a competitive activity and the possible role of network 
operators in storage investments and operations should be clearly defined in the 
national  regulatory  frameworks,  following  the  new  electricity  market  design  [CEP 
implementation]. The EU (e.g. through ACER) could provide recommendations for national 
regulators to decide on derogations for unbundling requirements, and on the definition of 
fully  integrated  network  components  [EU  action].  Due  to  the  limited  deployment  of 
electricity  storage  in  the  past,  most  national  regulatory  frameworks  did  not  explicitly 
address the ownership and operation of storage by network operators, and storage is in 
most  countries  not  defined  in  primary  legislation.  In  the  cases  where  ownership  and 
operation of storage by network operators is addressed in national  legislation, it is most 
commonly not allowed. National frameworks which do allow ownership and operation by 
grid operators usually do not indicate requirements which need to be fulfilled. In rare cases 
storage may still be considered a  regulated activity,  reserved to network operators. But 
regardless of actual unbundling requirements in Member States, network operators do in 
practice not own nor operate storage in most countries. 

National  regulators  should  require  network  operators  to  weigh  network 
investments  against  the  procurement  of  flexibility  resources  by  market  actors, 
following  the  provisions  in  the  new  electricity  market  design.  Additional  efforts  will  be 
required to develop appropriate methodologies for this, as there is not a robust and widely 
accepted method at the moment [CEP implementation]. Security of supply standards (e.g. 
N-1 requirements) should be assessed considering the possibility of storage deployment 
[MS  action].  The  procurement  of  ancillary  services  should  also  be  conducted  in  a  non-
discriminatory way, starting with (more mature) balancing markets and moving onto non-
frequency ancillary services [CEP implementation].  Improvements need also to be made 
regarding  the  provision  of  information  on  e.g.  network  congestions  to  market  actors  in 
order to guide their decisions to investing and providing flexibility resources to prevent or 
reduce congestion [MS action]. 

Improving  the  integrated  cross-vector  planning  and  operation  of  the  energy 
system will likewise be crucial. Member States need to improve the consideration of 
electricity-gas-heat interlinkages in National Development Plans, and need to ensure that 
investment  options  are  equally  considered  across  sectors,  which  requires  transparent 
modelling methodologies, tools and data [MS action]. These interlinkages should similarly 
be increasingly considered in the electricity and gas Ten-Year Network Development Plans 
(TYNDP) and the PCI selection process, ideally leading to the employment of a single EU 
electricity-gas investment and operation model [EU action]. The TYNDP should moreover 
adequately  value  all  benefits  of  storage,  considering  the  recommendations  made  in  the 
study on the benefits of electricity storage to the CBA 2.0 methodology [EU action]. 

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Table 4-1 EU-specific policy measures to address energy storage barriers154, with priorities highlighted in bold 

Topic 

Issue 

A limited number of MSs address storage holistically in 
their NECPs. 

lower 
The  TEN-E  scope  excludes  storage  at 
transmission voltages or the distribution level, does not 
treat storage equally, and is not aligned to the storage 
definition in the new electricity market design. 

Support 

New  energy  storage  systems  and  electrolysers  in  the 
EU up to 2050 will require hundreds of billions of Euros, 
particularly to scale-up deployment from 2030 to 2050 

Further  actions  should  be  undertaken  regarding  raw 
materials use and dependence, especially for batteries. 
The combination of storage with renewable energy in 
support schemes is possible under state aid rules, but 
not explicitly addressed by the EEAG. 
The EEAG’s scope on energy infrastructure excludes 
storage at lower transmission voltages or at the 
distribution level. 

Measure 
Thoroughly  assess  the  NECPs  in  view  of  providing  recommendations  to  MSs 
regarding  the  development  of  storage  and  stimulate  MSs  to  provide  further 
guidance to storage in future progress reports.  

Take stock of the advances made on storage policies and chart further actions in 
the medium- and long-term with the 2024 update of NECPs. 

Assess the TEN-E eligibility criteria and electricity infrastructure categories, and 
consider enlarging scope to storage connected to lower transmission voltages or 
at the distribution level. This along with other necessary changes to ensure non-
discrimination of alternative flexibility resources. 

Align the TEN-E infrastructure categories for electricity storage to the definition of 
the Electricity Regulation. 
Reconsider the exclusion of hydro pumped storage to eligibility for Union financial 
assistance for works. 
Examine the innovation eligibility requirement for financial assistance to works for 
electricity  storage  PCIs.  Supporting  innovation  could  be  added  as  an  explicit 
objective of TEN-E and CEF. 
Use EU financing  instruments such as loans and guarantees to leverage private 
investments 

Provide guidelines for private investors to include storage in an asset class that 
facilitates access to finance, or to evaluate the bankability of projects. 

Develop  actions  in  the  categories  identified  in  the  Commission  2018  Report  on 
Raw Materials for Battery Applications. 

- 

EU Instrument 

- 

- 

TEN-E and CEF 
regulations, 
others 

CEF Regulation, 
others 

TEN-E Annex 2, art. 1 

TEN-E Art. 14 (2) 

- 

- 

- 

Consider including support to hybrid projects (combining generation and storage 
of renewable electricity, gas or heat) as an explicitly eligible state aid measure. 

EEAG 

Section 3.3 

Align the EEAG scope with the upcoming, revised TEN-E regulation. 

EEAG 

Art 1.3, point 31.iii 

The EEAG does not consider conversion technologies 
such as power-to-gas eligible to support. 

The EEAG in several provisions do not refer to storage 
as a potential capacity provider. 
There is a lack of visibility on small-scale installed 
storage capacity in MSs 

Consider  explicitly  entitling  conversion  technologies  to  state  aid  (subject  to 
notification  and  approval).  Only  use  of  non-supported  renewable  energy  inputs 
(e.g. renewable electricity) should be allowed (to avoid double support). 
Align  the  EEAG  with  the  general  principles  (art.  21)  and  design  principles  for 
capacity mechanisms (art. 22) of the Electricity Regulation. 
Maintain and expand the study’s storage project database, above all for behind-
the-meter storage. 

Permitting & 
standardisation 

There is no consensual standard for interoperability of 
flexibility resources. Despite the DAFI, gaps remain 
for e-roaming. 

Support  EU-wide  harmonised  standards  for  device  communication  and 
system operation, e.g. for vehicle-to-grid technologies. 

Cooperate with market actors for developing a consensual communication protocol 
for e-roaming. 

EEAG 

EEAG 

Art 1.3 or new article. 

Article 3.9, several 
provisions. 

New instrument  

DAFI, new 
instrument 

- 

- 

- 

154 DIR = Electricity Directive; REG = Electricity Regulation; DAFI = Directive on Alternative Fuels Infrastructure, CEP imp. = implementation of the Clean Energy for All Europeans 
Package. 

125 

 
                                           
Topic 

CEP 
implementation 
and market 
design 

Grid / role of 
network 
operators 

Issue 
Wholesale energy  market products may not  be fit  for 
(cross-border) energy storage participation. 
The  multiple  possible  combinations  of  storage  with 
other  technologies  are  not  all  addressed  in  EU  or 
national electricity market designs. 
Market-based procurement of non-frequency ancillary 
services  needs  to  be  fostered  and  derogations 
minimized. 
Mature  balancing  markets  can  help  to  adequately 
remunerate storage. 
Markets  for  non-frequency  ancillary  services  and  the 
participation  of storage are  incipient in  most  Member 
States. 

Further  temporal/location  signals  in  network  charges 
may be beneficial but overtly complex. 

Behind-the-meter  energy  storage  deployment  may 
shift network costs to passive network users. 
Network  codes  usually  do  not  explicitly  address 
storage,  which  can  then  be  treated  as  generation  or 
consumption (or both). 
National  regulatory  frameworks  may  diverge  in  the 
the  storage  definition  and 
implementation  of 
unbundling requirements. 

The  ENTSOs  cost-benefit  analysis  methodology  does 
not consider all benefits of storage. 

Double  charges  for  storage  (in  the  charge  and 
discharge  cycle)  are  still  applied  in  most  Member 
States, at the transmission and/or distribution level 

Taxation 

The  Energy  Taxation  Directive  does  not  provide 
adequate signals to market actors and generally does 
not consider energy storage.  

Measure 
Advance  harmonized  day-ahead  and  intraday  market  products  that  facilitate 
participation of storage. 
Monitor  the  implementation  of  the  new  electricity  market  design,  including  for 
cases combining storage with other resources, such as local production and self-
consumption of (renewable) energy. 
Provide clarity on criteria for granting derogation from market-based procurement 
of  non-frequency  ancillary  services  to  TSOs  and  flexibility  services  to  DSOs, 
considering decentralised storage. 
Consider  approaches  to  improve  the  remuneration  of  flexibility  and  stability  in 
balancing markets, such as real-time scarcity pricing or fast response markets. 

EU Instrument 

CEP imp. 

REG Art. 7-8 

CEP imp. 

DIR/REG several 
articles. 

DIR Art. 40 

CEP imp. 

REG Art. 6 

Promote the availability of locational information in congestion management and 
other products to foster market-based procurement. 

CEP imp. 

DIR art. 40 

Assess the feasibility and opportunity to implement further locational and/or time-
of-use  signals  in  transmission  and  distribution  tariffs,  also  based  on  lessons 
learned from current practices in EU Member States. 

Assess the risk of cross-subsidisation via network tariffs between end-users with 
and without energy storage, and mitigate the risk when it is identified. 
Commission, ACER and ENTSO-E could consider updating the electricity network 
codes  in  this  regard,  also  taking  into  account  the  combination  of  storage  with 
front- and behind-the-meter generation. 
Provide  recommendations  for  national  regulators  to  decide  on  derogations  for 
unbundling  requirements,  and  on  the  definition  of  fully  integrated  network 
components. 
Increasingly consider sector coupling in the electricity and gas Ten-Year Network 
Development Plans (TYNDP) and the PCI selection process. 
Implement  the  relevant  recommendations  of  the  study  on  the  benefits  of 
electricity storage to the CBA 2.0 methodology. 

Ensure the adequate implementation of the Electricity Regulation art. 18 
regarding  non-discrimination  and  cost-reflectivity  of  network  charges 
lead to the elimination of double charges. 
Increase the energy and GHG-emission reflectiveness of taxation across 
the electricity, gas and heat sectors. 
Differentiate  in  the  ETD  energy  transfer  to  storage  from  end-use 
consumption, and make the former a non-chargeable event. Only storage 
losses should be subject to taxes. 
Update the ETD scope to include new energy products (including storage-related), 
and use dynamic references. 
Guarantee  that  storage  of  energy  products  does  not  cause  the  loss  of  their 
preferential  ETD  treatment  rights  (e.g.  renewable  energy),  when  they  are 
appropriately tracked. 
Exempt  energy  stored  behind-the-meter  subsequently  injected  back  to  the 
network, and provide guidelines. 
Treat  losses  equally  for  energy  production,  storage  and  transport 
processes, preferably by taxing them similarly to end-use to stimulate the 
implementation of highly-efficient technologies. 

- 

- 

New instrument 

- 

- 

- 

CEP imp. 

DIR art. 36, 54 

DIR/REG, TEN-E 

Several articles. 

ENTSO-E CBA 2.0  Various provisions. 

CEP imp. 

REG Art. 18 

Various articles. 

ETD 

New art. 

Art. 2(1) 

Art. 2(4b) 

New art. 

Art. 21(3) 

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Table 4-2 MS-specific policy measures to address energy storage barriers, with priorities highlighted in bold 

Topic 

Issue 

Measure 

Support 

The majority of MSs recognize storage as a key enabling solution 
in energy and climate policy but a limited number address storage 
from  a  broad  perspective  and  with  concrete  objectives  and 
measures addressing all barriers 

Frequently,  RES  support  mechanisms  do  not  consider  the 
interaction with storage 

Permitting & 
standardisation 

Among  storage  technologies,  permitting  barriers  may  affect 
especially medium- to large-scale storage, and batteries 

The correct implementation of the new electricity market design 
should be the priority of Member States to address existing policy 
barriers to storage. 

Temporal signals in retail energy prices are a central instrument 
to accelerate the development of energy storage. 

Storage technologies and increasing participation of consumers in 
energy markets are accelerating sector coupling and augment the 
benefits of heat storage. 

Market design 

Develop an assessment of national policy barriers to storage and accompanying policy strategy (supported by 
the study’s MS fiches). 

Ensure storage is properly addressed in the NECP and recognised as key enabling solution for the energy system, including 
in future progress reports and the 2024 NECPs update. 

Develop a strategic research agenda for storage, if missing, as part of the R&I dimension of NECPs and aligned with priorities 
established at the EU level. 

Ensure support mechanisms to renewable energy do not exclude hybrid projects combining storage and RES generation. 

Implement  the  Water  Framework  Directive  identified  best  practices  for  advancing  hydropower  development,  including 
pumped hydro storage. 

Improve permitting for storage projects, by increasing public involvement and properly considering the differences between 
large- and small-scale projects. 

Consider defining mandatory standards for the installation of the different relevant battery technologies. 

Ensure storage is coherently defined across the regulatory framework. 

Implement the new electricity market design with adequate parameters for participation of storage in all  markets, as well 
as eventual capacity mechanisms. Also considering aggregation, hybrid generation+storage, and behind-the-meter storage 
projects. 

Facilitate where possible dynamic/ToU price signals in retail energy prices. 

Address regulatory barriers for heat storage (e.g. coupled with CHP), including for participation in wholesale electricity and 
ancillary services markets. 

Mature  balancing  markets  can  help  to  adequately  remunerate 
storage. 

Consider approaches to improve the remuneration of flexibility and stability resources in balancing markets, such as real-
time scarcity pricing or fast response markets. 

Markets  for  non-frequency  ancillary  services  and  distribution 
flexibility  services,  as  well  as  the  participation  of  storage  are 
incipient in most Member States. 

Implement  market-based  procurement  of  non-frequency  ancillary  services  with  standardized  products, 
minimizing the use of derogations and permitting the participation of storage. 

Foster the market-based procurement of flexibility services at distribution level, with standardized products, minimizing the 
use of derogations and allowing the participation of storage. 

Use  pilot  projects  to  advance  the  contribution  of  decentralised  storage  to  congestion  management,  using  standardized 
products when possible and sharing best practices between MSs. 

Guarantee the availability of locational information in congestion management products to foster market-based procurement. 

Double charging and net metering schemes are important specific 
grid  barriers  to  energy  storage  tackled  in  the  new  electricity 
market design, requiring Member State action. 

Suppress double grid charging where existing. 

Phase out net metering schemes. 

Grid / role of 
network 
operators 

Further provision of signals in network charges may be beneficial 
but potentially overtly complex. 

Clean  Energy  Package  requirements  for  network  planning  and 
service procurement by network operators are central to weighing 
network investments vs the procurement of flexibility resources. 

Approaches  to  develop  transmission  locational  and  time-of-use  signals  could  be  assessed.  Advantages  and 
disadvantages of introducing time-of-use signals in distribution tariffs could also be evaluated. 

Assess  the  need  to  develop  specific  rules  in  the  network  code  for  storage  connection  and/or  access  (compared  to  those 
applying to consumers and producers). 

Require network operators to weigh network investments against the procurement of flexibility resources by 
market actors, e.g. in National Development Plans. 

127 

 
 
ANNEX 1: INSTALLED CAPACITIES OF CURRENT STORAGE FACILITIES  

Figure 4 - Power capacity by technology and country (Operational + Projects) 

(MW) 
Austria 
Belgium 
Bulgaria 
Croatia 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Lithuania 
Luxembourg 
Netherlands 
Norway 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
Switzerland 
United-Kingdom 

Chemical 

Electrochemical 
3 
59 

1 

250 

1 

3 

1 

5 
3 
3 

14 
72 
509 
16 
7 
1337 
81 
1 

41 

1 
6 
1 
1 
28 
195 
5 
19 
4790 

Mechanical  Thermal 

6456 
1854 
2263 
1863 

1175 

550 

4207 
12754 
1881 

1402 
7331 
1125 
1294 
320 
1392 
1746 
3345 
1120 
1017 
605 
13850 
91 
4197 
8027 

21 
4 
52 

5 
5 

1130 
10 

128 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
EUROPEAN COMMISSION 

Figure 5 - Entries in the database (Operational + Projects), by country and Figure 6 - 
Entries in the database (Operational + Projects, PHS excluded), by country 

Number of entries 

Austria 

Belgium 

Bulgaria 

Croatia 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Lithuania 

Luxembourg 

Netherlands 

Norway 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

Switzerland 

All 

28 

18 

4 

10 

1 

11 

4 

2 

7 

57 

115 

26 

2 

60 

56 

6 

11 

10 

21 

20 

28 

9 

11 

7 

98 

4 

25 

United-Kingdom 

318 

PHS excluded 

1 

10 

1 

4 

4 

7 

36 

62 

4 

2 

54 

29 

1 

10 

11 

1 

4 

1 

1 

5 

38 

2 

2 

293 

129 

 
 
 
 
 
 
 
 
Figure 7 - Electrochemical Storage - Power capacity by country (Operational + Projects) 

Austria 
Belgium 
Cyprus 
Czech Republic 
Denmark 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Lithuania 
Netherlands 
Norway 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
Switzerland 
United-Kingdom 

Electrochemical Power Capacity (Operational + 
Project) - MW 
3 
59 
5 
3 
3 
14 
72 
509 
16 
7 
1337 
81 
1 
41 
6 
1 
6 
1 
1 
28 
196 
5 
19 
5499 

Figure 8 - Electrochemical storage - Operational Capacities by Country 

Austria 
Belgium 
Czech Republic 
Denmark 
Finland 
France 
Germany 
Hungary 
Ireland 
Italy 
Netherlands 
Norway 
Poland 
Portugal 
Romania 
Slovenia 
Spain 
Sweden 
Switzerland 
United-Kingdom 

Electrochemical Power Capacity 
(Operational) - MW 
3 
34 
3 
2 
6 
19 
406 
7 
11 
56 
37 
6 
1 
6 
1 
13 
11 
5 
19 
570 

130 

 
 
 
 
 
 
EUROPEAN COMMISSION 

ANNEX 2: REVIEW OF SELECTED DOCUMENTS ON ELECTRICITY POLICY 
BARRIERS, BEST PRACTICES AND RECOMMENDATIONS 

This annex reviews selected studies on energy storage policies, focusing on studies which 
are recent than the Commission papers on energy storage, or which were conducted by 
other  EU  institutions.  Two  main  aspects  are  extensively  discussed  in  these  studies:  the 
large diversity and interaction of storage technologies and applications, and the resulting 
large diversity of barriers and corresponding policies for energy storage. 

Diversity and interaction of storage technologies and applications  
One  aspect  which is apparent  from the studies is the  important interaction of  electricity 
storage with generation, transmission, distribution and consumption. This interaction may 
occur in two levels. First, storage may be deployed together with power generation projects 
(especially based on renewable energy) or at the end-user level (especially when combined 
with self-production of renewable electricity). The studies discuss a number of barriers and 
associated  policies  arising  from  the  hybrid  nature  of  projects  combining  generation  and 
storage.  The  second  level  of  interaction  between  storage  and  the  rest  of  the  electricity 
system  is  that,  being  essentially  a  provider  of  flexibility  services,  storage  interacts  on  a 
system  level  with  these  segments  of  the  energy  system  which  affect  the  demand  and 
supply for flexibility, in a way which may be complementary or competitive to storage. 

Another common aspect in the studies is the acknowledgement of the diversity of storage 
technologies  and  associated  characteristics.  Despite  differences  in  technologies,  studies 
consistently support technology-neutral policies, not only regarding storage technologies 
but generally all potential flexibility resources. This taking appropriate consideration of the 
differing  technology  readiness  level  of  the  technologies  and  the  need  for  corresponding 
support instruments in line with the SET-Plan and national priorities. 

The  reviewed  studies  also  acknowledge  the  multiple  potential  applications  of  energy 
storage.  A  frequently  addressed  aspect  is  the  importance  of  stacking  of  revenues  from 
multiple  applications  in  order  to  achieve  a  viable  business  case  for  storage,  while 
considering  appropriate  technology-neutral  requirements  for  the  provision  of  storage 
services  in  each  application.  An  aspect  which  is  more  rarely  discussed  is  how  to  avoid 
conflicts in the provision of services in multiple markets and guarantee the delivery of the 
contracted services, in particular in the ancillary services and capacity mechanisms. While 
the issue is sometimes acknowledged, it is less clear how it could be dealt with.  

The  fact that the  energy system and mix (including deployment of  renewable electricity 
sources)  and  resulting  flexibility  needs  vary  across  EU  Member  States,  adds  a  further 
complexity dimension, as not only technologies and applications vary, but also the storage 
needs per Member State. 

Barriers and policies for energy storage 
The reviewed studies conclude that barriers and policies for energy storage cover a wide 
array of topics, from electricity market design to grid tariffs, taxation and power market 
structure to the legal classification of assets.  

The first aspect is the lack of coherence across Member States concerning policies for or 
affecting  energy  storage.  Regardless  of  the  different  storage  needs  of  Member  States, 
there is a frequent observation of important disconnection among national legislation and 
regulation,  which  can  lead  to  cross-border  distortions  in  investment  and  operational 
decisions by market participants. This involves multiple aspects such as electricity market 
design, double charging of grid fees and electricity consumption tax and ownership rules 
for system operators. 

These cross-border interactions already hint that there are not only policy gaps regarding 
storage, but also that existing policies and regulations often constitute barriers themselves. 
This comment refers to storage-specific policies (e.g. inadequate definition of storage) and 
also to policies targeting related aspects such as aggregation, RES support mechanisms, 

131 

 
 
 
 
 
 
 
 
grid tariffication or taxation. Poorly designed policies may have been developed in a time 
where the deployment levels of storage and/or renewable energy were still low and hence 
led  to  only  limited  distortions  in  electricity  markets.  A  fitting  example  are  inadequate 
support schemes incentivizing renewable energy producers to still produce in moments of 
negative  prices,  which  in  turn  increase  the  need  for  system  flexibility  and  hence 
inadvertently improve the business case of storage. 

Furthermore, the studies indicate a strong interaction between the EU and Member State 
levels. Within the boundaries set by EU legislation, Member States have an important role 
to play in policies for storage, especially considering the national differences in renewable 
energy  deployment  and  available  flexibility  options.  Besides  national  competences 
regarding  storage  and  energy  policies,  the  transposition  of  EU  directives  and  guidelines 
also leaves room for specific policies at national level. 

The more recent studies do indicate that multiple barriers to energy storage are due to be 
addressed with the changes brought by the new electricity market design. In line with the 
European Commission papers, changes such as the right for self-production of electricity, 
furthering  the  deployment  of  a  time  component  in  electricity  end-user  prices  and  the 
introduction  of  a  definition  of  energy  storage  are  highlighted  as  addressing  important 
issues. Nonetheless, the variety of barriers implies not only that no study discusses them 
all, but also that not all barriers are covered by the new electricity market design, according 
to the studies surveyed. 

132 

 
 
 
 
EUROPEAN COMMISSION 

Study 

Policies discussed 

Policy barriers/best practices 

Selected policy recommendations 

DG energy, 
“Energy storage – the Role of 
electricity” 
2017 

1. Support 
3. Energy markets 
4. Ancillary services 
5. Grid aspects 
7. Involvement TSO-DSO 
8.  Other & General 

- Regulated prices to end-consumers 
- RES support surcharges applied to storage 
- Lack of a common regulatory framework across 
MSs 
- Insufficient consideration in grid planning 
- Availability of EV refuelling infrastructure 
(electricity/hydrogen) 
- Cost and performance of some storage 
technologies 

- Best practice: Early development of storage in 
intra-day markets which have larger volumes 
- Best practice: Use of second life batteries 

- Definition of storage 
- Inclusion of storage in PCI selection process 
- Guarantee of right to electricity self-generation 
- Recognition and support of aggregators 
- Non-discriminatory access to the grid at the national level 
- Removal of price caps and regulated prices at the EU 
level 
- Consideration of storage as a market activity 
- Opening of electricity markets to storage, with 
standardised products 
- Cost recovery for system operators of storage service 
procurement 
- Revision of the ETS with the Market Stability Reserve 
providing adequate investment signals 

133 

 
 
 
 
Study 

Policies discussed 

Policy barriers/best practices 

Selected policy recommendations 

European Smart Grids Task 
Force Expert Group 3, 
“Demand Side Flexibility - 
Perceived barriers and 
Proposed recommendations” 
2019 

1. Support 
3. Energy markets 
4. Ancillary Services 
5. Grid Aspects 
7. Involvement DSO-TSO 
8. Other & General 

- General lack of customer awareness about DSR 
opportunities. The diversity and complexity of offers 
complicates this. 
- Business case for DSR is often negatively impacted 
by the lack of opportunities. 
- Standardization and prequalification for market 
access differs across Europe, and limitations for bids 
need to be justified 
 - Lack of framework for DSR providers concerning 
allocation of energy volumes and balancing 
responsibility, baseline methodology and 
remuneration vs other technologies 
- Although data access and sharing is agreed on a 
generic level, it is not implemented satisfactorily 
- No clear EU product definition other than for 
balancing markets 
- Locational information is not provided in any kind 
of bids except if introducing in balancing following 
the balancing guidelines 
- The interaction of long- vs short-term products has 
not been addressed regarding DR availability, 
liquidity and TSO-DSO coordination 
- Market access for flexibility services could be 
limited depending on location, voltage, service and 
asset type 
- The variety of markets and products can lead to 
market fragmentation 
- There is low observability in the low voltage grid 

- NRAs could ensure TSO and DSO revenue regulation and 
network tariffs structures take into account costs and 
benefits of flexibility for the system and are non-
discriminatory 
- There is a need for harmonisation of market rules and 
energy products 
- A comprehensive aggregator framework should be 
implemented, following the new electricity market design 
and electricity balancing guidelines 
- Locational information in flexibility products should be 
mandatory for congestion management products, with 
minimum granularity to the extent necessary 
- An EU framework shall be developed to ensure an equal 
and transparent level playing field for all service providers 
- TSOs and DSOs, in coordination with all market actors, 
should strive for efficient coordination, especially in 
designing, buying and settling flexibility products. 
- Categorise best practices and develop a methodology for 
selecting and validating a baseline methodology to value 
flexibility services against a counterfactual 
- Share and develop best practices for value stacking 
- Develop market monitoring, at national level or 
potentially at EU level, to provide a view how much 
flexibility is active in the market, and to monitor and 
prevent strategic behaviour and gaming by market players. 
- Improve forecasting at distribution level 
- Develop other options for mitigating grid constraints with 
MS studies/national codes 
- Regulators across sectors should collaborate more and 
consider relevant updates to license conditions in order to 
address the new complexities that flexible electricity 
services will bring  

134 

 
 
EUROPEAN COMMISSION 

Study 

Policies discussed 

Policy barriers/best practices 

Selected policy recommendations 

BRIDGE initiative, Horizon 
2020 working group on 
regulations, 
“Recommendations on 
Selected Regulatory Issues” 
2018 

2. Permitting 
4. Ancillary Services 
5. Grid Aspects 
6. Taxes & Levies 
7. Involvement DSO-TSO 
8. Other & General 

CROSSBOW, “Legislation and 
Regulatory Frameworks” 
2018 

1. Support 
3. Energy Markets 
4. Ancillary Services 
7. Involvement DSO-TSO 

EASE, 
“European Energy Storage 
Technology Development 
Roadmap” 
2017 

1. Support 
4. Ancillary Services 
5. Grid Aspects 
6. Taxes & Levies 
7. Involvement DSO-TSO 
8. Other & General 

- Storage unbundling not addressed in 3rd energy 
package 
- Barriers for self-consumption + storage, e.g. “sun 
tax” in Spain or impossibility to create islands in 
black-outs 
- Power-to-gas plants still classified as chemical 
instead of energy industry 
- Lack of MS ancillary services markets or access for 
storage 

- Best practice: multi-building storage in Germany 
and Switzerland 

- Lack of rules on ownership, procurement of storage 
by TSO/DSO and support measures for storage in 
South East Europe (SEE) 
- Existing regulation covers only pumped hydro 
- Some form of price regulation still exists in all SEE 
countries 
 - Developing cross-border integration of day-ahead 
markets, more limited for balancing 

- Regulatory complexity prevents viability of critical 
demonstration projects 
- Fair market design is lacking for energy storage 
- Lack of clarity on the rules for ownership and 
operation of storage by system operators 
- Unwarranted double-charging of grid tariffs 
- Confusion over the classification of energy storage 
- Certain “requirements in the Network codes” 
identified as unduly onerous 

- MSs and Commission to clarify possibility to combine RES 
+ storage 
- Explore and draft safety regulations for less mature 
technologies (e.g., P2G, CAES) 
- Support development of local microgrids 
- Promote grid flexibility through support for smart meters, 
pricing mechanisms 
- Define ownership regime, with potential regulatory 
sandboxes (potentially with sunset clause) 
- Allow flexible interpretation of storage definition in new 
Electricity Directive 
 - Incentive for grid operator to purchase storage services, 
including through ambitious transposition at MS level 

- Main recommendation is implementing regulations from 
3rd Energy Package, supported by further cross-border 
interconnection in the region and the rest of Continental 
Europe, as the report focuses on South East Europe 
countries (including Member States of Croatia, Bulgaria 
and Romania) 

- Fund further demonstration projects 
- Clarify market access and unbundling requirements for 
system operators 
- Exempt storage from double grid charges in a 
coordinated approach, consider further exemptions for new 
techs 
- Establish storage as a separate asset class to prevent it 
being considered either generation, T&D or loads 
- Remove regulatory barriers to enable innovative projects, 
by after due consideration waive ownership and/or 
connection requirements 
- Establish a definition of energy storage in the EU 
regulatory framework 
- Designate energy storage as an Important Project of 
Common European Interest (IPCEI) 
- Ensure the procurement of all energy and ancillary 
services is market-based, subject to a cost-benefit analysis 
- Allow system operators to own storage upon approval of 
the NRA only for regulated infrastructure services, in the 
absence of market interest or for promotion of new 
technologies, on a temporary basis 

135 

 
 
Study 

Policies discussed 

Policy barriers/best practices 

Selected policy recommendations 

NETfficient, 
“Social, socio-economic and 
regulatory measures for 
local/small storage market 
uptake” 
2017 

2. Permitting 
3. Energy Markets 
4. Ancillary Services 
5. Grid Aspects 
6. Taxes & Levies 
7. Involvement DSO-TSO 
8. Other & General 

 - Trend of increasingly complex regulation on RES 
and storage systems 
- Unbundling requirements impedes grid operators of 
maximizing utilization of storage from grid 
perspective 
- Historic asset classes not adequate anymore for 
storage 
- Not all EU markets fit for the participation of 
storage, aggregated or not 
- Complex technical and contractual process for 
aggregation of distributed storage 
Heterogeneity of national rules and regulations, e.g. 
definitions on balancing market products and rules 
for self-consumption 

SQ Consult, Fraunhofer et al. 
for the European Parliament, 
“Energy Storage: Which 
Market Designs and 
Regulatory Incentives Are 
Needed?” 
2015 

1. Support 
3. Energy Markets 
4. Ancillary Services 
5. Grid Aspects 
6. Taxes & Levies 
7. Involvement DSO-TSO 
8. Other & General 

- Technological maturity 
- Lack of definition in Electricity Directive 
- Double charging of grid fees in specific MSs 
- Lack of common EU regulatory approach to 
decentralized self-production + storage 
- Regulation at MS level of net metering, feed-in 
tariffs and self-production and consumption 
- Exclusion of pumped hydro from Europe 
Infrastructure Package 
- Decentralized production + storage risk of resulting 
in grid defecting and affecting grid operators’ 
business case 

- Technical and non-technical standards, regulations and 
requirements should be formulated as simple and 
understandable as possible 
- Translation of regulations and requirements to small 
businesses and households 
- Legal and regulatory requirements should be scaled 
depending on the technical system size 
- Adapt regulations to specific nature of energy storage 
(generator and load) and interaction with self-production 
- Evaluate current market produces for ease of access to 
storage 
- Consider unconventional market products (e.g. 
incorporating delivery probability) 
- Simplification of regulatory and technical requirements 
for storage aggregation 
- Develop technical and legal requirements for shared 
ownership of storage, e.g. in  apartment complexes 
- Common European tax principles, e.g. exemption of final 
electricity consumption tax 
- European standardization of rules and products 

- Public support to storage R&D technologies aligned with 
Energy Union strategy, to industrial structures and smart 
grids/cities 
- Common approach to incentives to storage + RES, 
combined with access/connection priority rules 
- Improved merit order, e.g. through better scarcity pricing 
- Technology-neutral balancing markets and storage 
definition in new market design 
- Clarify unbundling rules and allow grid operators to own 
and operate storage for balancing and other ancillary 
services 
- EU guidance to MSs for harmonized stimuli to storage at 
end-user level 

136 

 
 
 
 
 
 
 
EUROPEAN COMMISSION 

ANNEX  3:  PROVISIONS  ON  THE  ELECTRICITY  DIRECTIVE  (2019/944)  AND  REGULATION  (2019/943) 
RELATED TO ENERGY STORAGE 

Directive (EU) 2019/943 

Regulation (EU) 2019/943 

Policy 
category 

Topic 

Article 

Description 

Non-discrimination in 
all electricity markets 

Art. 
3(j) 

Art. 
3(m) 

Generation, energy storage and demand response shall participate on equal footing in markets for electricity, 
including over-the-counter markets and electricity exchanges, markets for the trading of energy, capacity, 
balancing and ancillary services in all timeframes, including forward, day-ahead and intraday markets. 

Market rules shall enable the efficient dispatch of generation assets, energy storage and demand response. 

Art. 12 

Customers are entitled to independently contract electricity supply and electricity services (including 
aggregation). 

Aggregation (including 
with other resources) 

Electricity 
markets 

Active customers 

Citizen communities 

Art. 
17(1) 

Art. 
17(5) 

Art. 
15(1) 

Art. 
15(2) 

Art. 
15(5) 

Art. 
16(3) 

Final customers should have equal access to all electricity markets including for ancillary services, whether or not 
aggregated (including independent aggregators). 

NRAs or system operators should establish the technical requirements for participation of demand response 
(including aggregated) in all electricity markets. 

Enables active customers and impedes disproportional or discriminatory requirements (technical, administrative 
and related to network charges). 

Active customers should be: 
- Subject to cost-reflective, transparent and non-discriminatory network charges that account separately for the 
electricity fed and consumed; 
- Existing net metering schemes that do not account separately for the electricity fed into the grid and 
the electricity consumed from the grid should not grant new rights after 2023. Customers under such net 
metering schemes should be able to opt to a scheme that accounts for injections and withdrawals separately; 
- Financially responsible for imbalances if they are a BRP or delegate their balancing responsibility. 

Active customers owning an energy storage facility should: 
- Have the right to a timely grid connection if requirements are fulfilled; 
- Are not subject to double charges for self-consumption or when providing flexibility services; 
- Are not subject to disproportionate licensing requirements or fees; 
- Are allowed to stack services if technically feasible. 

Citizen communities should be: 
- Able to access all electricity markets (including through aggregation); 
- Financially responsible for balancing; 
- Treated like active customers regarding self-consumption; 

137 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Directive (EU) 2019/943 

Regulation (EU) 2019/943 

Policy 
category 

Energy 
markets and 
capacity 
mechanisms 

Topic 

Article 

Description 

Day-ahead and 
intraday market design 

Art. 
8(3) 

Art. 
8(4) 

Nominated electricity market operators shall provide products for trading in day-ahead and intraday markets with 
minimum bid sizes of 500 kW or less 

Nominated electricity market operators shall provide products for trading in day-ahead and intraday markets with 
a period at least as short as the imbalance settlement period. This amounts to 15 minutes from 2021 on, with 
possible derogations not being longer than 30 minutes from 2025 on. 

Dynamic pricing 

Art. 11 

Capacity mechanisms 

Art. 
22(1h) 

The national regulatory framework should enable suppliers to offer dynamic electricity pricing, including 
monitoring and reporting obligations to Member States. 

Capacity mechanisms need to be open to energy storage and demand side management. 

Ancillary 
services 

Balancing markets 
design 

Procurement of 
balancing services by 
TSOs 

Procurement of non-
frequency ancillary 
services by TSOs 

Redispatching 

Procurement of grid 
management services 
by DSOs 

Art. 
6(1) 

Art. 
6(4) 

Art. 
6(9) 

Art. 
6(9) 

Art. 
40(4) 

Art. 
40(5) 

Art. 
40(6) 

Art. 
13(1) 

Art. 
13(2) 

Art. 
32(1) 

Art. 
32(2) 

Balancing markets (include pre-qualification processes) shall not discriminate energy storage, whether 
individually or aggregated. 

Balancing energy gate closure times shall not be before the intraday cross-zonal gate closure time. 

Upward and downward balancing capacity procurement shall be carried out separately, unless derogation is given 
by the NRA. 

Contracting window and contract duration are set to one day, unless derogation is given by the NRA. 

TSOs should procure balancing services in a transparent, non-discriminatory and market-based procedures from 
qualified electricity undertakings and market participants, including energy storage facilities and aggregators. 

TSOs should procure non-frequency ancillary services in a transparent, non-discriminatory and market-based 
procedures from qualified electricity undertakings and market participants, including energy storage facilities and 
aggregators, unless the NRA derogates this obligation due to lack of economic efficiency. 

TSOs or NRAs should specify the non-frequency ancillary services procured, and where appropriate standardised 
market products at the national level. 

Redispatching market shall be objective, transparent and non-discriminatory, and open to energy storage. 

Redispatching markets shall use market-based mechanisms and financially compensate market actors (with 
defined exceptions). 

Regulatory framework should ensure DSOs procure flexibility services in a non-discriminatory, effective way from 
providers including storage and demand response when economically efficient. 

DSOs or NRAs should specify the flexibility services procured, including standardized market products at least on 
a national level when appropriate. 

138 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directive (EU) 2019/943 

Regulation (EU) 2019/943 

Policy 
category 

Grid aspects 

Involvement 
DSO/TSO 

Topic 

Article 

Description 

Connection of storage 
to the transmission 
system 

Non-discrimination in 
network charges 

Locational signals in 
network charges 

Time-differentiated 
network charges 

Ownership and/or 
operation of storage 
facilities by TSOs and 
DSOs 

Art. 
42(1) 

The TSO shall publish transparent and efficient procedures for non-discriminatory connection of new energy 
storage facilities. 

Art. 
42(2), 
42(3) 

Art. 
18(1) 

Art. 
18(2) 

Art. 
18(7) 

Art. 36 
Art. 54 

The TSO is not entitled to refused the connection of a new storage facility based on future limitations on available 
network capacities (close or far to the connection point). TSOs may limit the guaranteed connection capacity or 
offer connections subject to operation limitations, upon regulatory approval. This shall not apply when costs are 
borne by the storage facility. 

Network charges shall be cost-reflective, transparent and non-discriminatory, and not discriminate either 
positively or negatively against energy storage or aggregation. Charges shall not include unrelated costs 
supporting unrelated policy objectives. 

Where appropriate, the level of the tariffs applied to producers or final customers, or both, shall provide locational 
signals. 

Where Member States have implemented the deployment of smart metering systems, NRAs shall consider time-
differentiated network charges. 

TSOs and DSOs shall not own, develop, manage or operate energy storage facilities. Exceptions comprise fully 
integrated network components or a regulatory process certifying the lack of market interest at reasonable cost 
and length and the necessity of the storage system or services for the network. The article includes a phase-out 
of system operator activities in 18 months in the case of sufficient market interest, with possible compensation. 

Other and 
general 

Definition of storage 
and storage facilities 

Art. 
2(59) 

Definition comprises “deferring the final use of electricity to a moment later than when it was generated”, or the 
conversion and storage in other energy forms, with the subsequent reconversion or not to electricity. Thus 
includes power-to-gas technologies. 

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EUROPEAN COMMISSION 

ANNEX 4: MEMBER STATE STORAGE POLICIES FICHES 

Austria 

Topic 

1. Public 
Support 

Austria - Policy description 

Austria plans to integrate storage within the energy system in the next 5 to 10 years 
through: 
* Energy consumption optimization for photovoltaic systems: Home storage, swarm 
solutions, district storage 
* Mobility : Storage at electric vehicle fast-charging stations, increasing electrification 
of the transport sector 
* Heating / cooling supply in buildings : component integration, load balancing in smart 
grids, power-to-heat 
* Industry & commercial : Waste heat utilization, load management for heat and 
electricity, power-to-heat / power-to-power 
* Storage in the heating / cooling supply : Large water storage in combined heat and 
power plants at the interface of electricity / gas / heat networks, buffering of power 
peaks in critical network areas, use of the heat network as storage for load 
management, seasonal large-scale storage with undergrounds storage / geothermal 
fields 
* Storage in the electricity supply : Balancing fluctuating demand and generation 
(short-term and seasonal), buffering of performance peaks in critical areas of the 
network, short-term compensation for forecast deviation, provision of system services 

The final 2019 NECP version refers to electricity storage 
* small-scale photovoltaic and storage system programme 
* Increase the share of efficient renewable energy sources and district heating/cooling 
for heating, hot water and cooling, including component activation, active use of hot 
water storage tanks and buildings as reservoirs for load balancing and load flexibility 
Investments in storage facilities, including heat storage facilities, rewarding storage 
facilities for system capacity 
* Storage (including hydrogen technologies) is currently addressed as a high priority 
cross-cutting issue with cross-references to the mission-oriented priorities and the 
broad implementation initiatives 
* Increase of pumped storage capacity in Kaunertal 
* The countries of the Pentalateral Energy Forum address the impact of the 
implementation of flexibility options, including the role of demand response, PTX and 
hydrogen as well as the role of storage and electro-mobility, and analyse specific 
electricity-related barriers to sector coupling 
* In addition to storage and pumped storage, a particular role is played by high-
efficiency combined heat and power (CHP) plants, which are necessary to maintain the 
supply of electricity (for balancing purpose) and heat, particularly in agglomerations. 
* Activation of components, the active use of hot water storage tanks and the use of 
buildings as reservoirs for load balancing and load flexibility increase or adapt 
investments in storage infrastructure (from short-term storage to seasonal storage) 
and transmission and distribution networks to increased demand 
* Digital and smart energy: Ensuring system integration of new energy storage and 
energy supply system flexibility technologies as basic enablers for a high proportion of 
renewable energy, coupled with security and resilience 
* particularly in the interests of the system, to establish as far as possible the control 
and controllability of decentralised small and medium-sized storage units 
* The long-term storage of electricity by hydrogen is to be made possible and 
encouraged. 
* The 100.000 roofs of photovoltaics and small-scale storage are intended to stimulate 
the increased use of roofs through photovoltaic modules for individuals and economic 
operators. There will also be implicit guidance to combine photovoltaics and storage by 
implementing self-supply as a ranking criterion for investment support 
* In future, buildings should not only have high energy standards, but above all play an 
active role in the supply of energy and its storage for self-consumption 
* Photovoltaics and small-scale storage : Prolongation of support for a further three 
years, taking into account self-consumption ; a total  of EUR 108 million in investment 
support (per year PV:EUR 24 million, storage: EUR 12 million) ; production limits for 
electricity storage is 50 kWh  
* Significant investments in storage infrastructure and transmission and distribution 
networks, adapted to increased needs, will be made 
* Electrochemical energy storage is to be accelerated, as these are large-scale or small-
scale storage units as a solution to compensate for the demand-driven production 
characteristics of renewable energy (for mobile and stationary applications) 
* As new storage technologies make a vital contribution to the transformation of the 
energy system, their flexibility in the design of network tariffs will be rewarded. Storage 

141 

 
 
facilities should be exempted from end-use charges and benefit from support for green 
electricity 
* The availability of competitive energy storage facilities that can store electricity from 
renewable energy sources on a larger scale and for longer periods of time will be of 
great importance. Particular attention will therefore be given to the promotion of such 
applied research projects with pilot plants demonstrating the market maturity of 
scalable storage technologies 
* Key elements of a new electricity market law : Definition of new actors: Storage 
facilities, PTX facilities, aggregators, … 
* Austria already has an important position in storage, which is to be developed and 
strengthened through research and development 
* Technology Roadmap155 – Energy Storage Systems in and from  Austria (2018). 

2. Permitting  * Lithium battery storage standards are foreseen in the OVE guideline R20. Although 
the industry is responsible for the production, consumer safety is the responsibility of 
installers. The current standard ÖVE EN 50272 covers lead-acid batteries and nickel-
cadmium storage. 
* The Electrical Engineering Ordinance sets binding standards for the construction, 
testing and operation of electrical systems. However, storage is not explicitly treated 
but is arguably within the ordinance scope. 
* The transport of batteries is subject to hazardous goods legislation and have to be 
labelled accordingly (highly flammable), there is no specific legislation for the storage 
and transport of lithium batteries. 
* In the area of fire protection, the ÖVE guideline R11 must be supplemented with 
storage in internal and external environments. 
* Storage facilities can participate in the electricity markets (including intraday and 
balancing). In 2018 the EPEX energy exchange introduced loop block orders, where two 
block orders are executed or rejected together, representing for example the storage 
cycle. 
* Heat and electricity systems are integrated in several ways, e.g. in co-generation of 
electricity and heat, or when DH is produced with electric boilers or heat pumps. Heat is 
stored more easily than electricity, and thermal storages are used to improve the 
system balancing of variable power generation. By utilising co-generation, heat pumps 
and thermal storages, a DH supplier can respond to price signals on the electricity 
market. In times of high electricity prices, DH production can be adjusted to maximise 
the power generation and thermal storage used to cover heat demand, and in times of 
excess power, DH suppliers can utilise more heat pumps. These large water storage 
tanks in CHP and district heating will increase in the future. 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

* Pumped hydro participates in the provision of aFRR/mFRR services; 
* batteries are under the same requirements (such as prequalification) as other units 
eligible to provide services  
* In distribution networks, storage will provide additional services such as voltage 
control, reactive power or used as a phase shifter 
* The qualification of storage facilities as consumer and producer makes the storage 
operator a network user, who is obligated to pay system usage fees twice (according to 
SNE-VO 2012 as amended in accordance with § 51 ff ElWOG 2010) 
* Being considered generators, storage has the following obligations: join a balance 
group; comply with generator technical specifications of the network operators 
including maximum balance deviation, fault tolerance, frequency and voltage control 
(reactive power capability); pay fees for the provision of primary balancing power in 
proportion to their annual production quantities, provided that the generating plant has 
a capacity of over 5 MW; have a metering point; follow data exchange obligations 
above a certain size 
* No new grid usage fee or network loss fee is payable for new installations of pumped-
storage power plants and plants for the conversion of electricity into hydrogen or 
synthetic natural gas, and for the purchase of electrical energy until the end of 2020 
(ElWOG 2010). 
* For existing pumped hydro storage power plants, § 4 Z 8 SNE-VO 2012 as amended 
provides for preferential regulation in the form of a lower charge for electricity 
consumption 
* Providers of the reserve services (including storage) are exempted from paying grid 
usage fee 
* (battery) storages are to be operated as integrated grid assets for non-frequency 
ancillary services 
* (battery) storage can be used at meshed grid nodes (Quartierspeicher) and at Energy 
Communities 
* Market-sourced (battery) storages services can/will be used for congestion 
management to avoid curtailment of local renewable generation. Alternatively, they 
must undergo the procedures laid out in Art. 36/54 of the IEM-Directive 

155 https://www.klimafonds.gv.at/wp-content/uploads/sites/6/Technologieroadmap_Energiespeichersysteme2018.pdf 

142 

 
 
 
                                           
EUROPEAN COMMISSION 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

* Storage operators also pay renewable electricity sources support surcharges, which 
are paid by the end-users connected to the network. 
* Storage operators, with the exception of pumped hydro, pay the surcharges for the 
promotion of CHP systems, which are paid by all end-users connected to the network, 
according to the CHP Act. 
*  System operators are currently testing/running (battery) storages in the framework 
of scientific research projects for frequency and non-frequency ancillary services 
*  System operators run (battery) storages as integrated grid assets for congestion 
management of meshed (medium voltage) nodes and to balance the power fluctuation 
of energy communities (in the framework of scientific research projects) 
* There is no general definition of the term 'storage' in the electricity and heat sectors. 
* All electricity traders and other suppliers who supply end customers in Austria are 
legally obligated to inform the end customers of the primary energy sources of the 
power generation (with proof of origin). A special provision is made in the Electricity 
Labelling Ordinance for those quantities of electricity that are delivered by pumped 
storage power plants (adjusted with an efficiency of 75%) 
* There is no common definition of energy storage in the regulatory framework 
* There is no separate standard for lithium-ion storage 
* Storage should be included in the ÖVE guideline R11 (fire protection) 
* There is a need for legal certainty for power-to-gas plants in Austria 
* The unbundling provisions of the recast Electricity Directive need to be transposed in 
national law 
* Development of regional hydraulic-thermal models for overall concepts of 
groundwater management in areas with high degree of utilization of geothermal fields 
or groundwater wells as heat storage 
* (battery) storages shall be acknowledged as grid integrated assets for (non-frequency 
ancillary services) system operation 
* A special provision is made in the Electricity Labelling Ordinance for those quantities 
of electricity that are delivered by pumped storage power plants (adjusted with an 
efficiency of 75%), so the impact of storage is considered in the energy labelling value 
chain. 
* Electricity consumption tax for PV has been abolished, according to the recently 
adopted government programme the electricity consumption tax shall be removed for 
all RES (previously suppliers and consumers had to pay the electricity consumption tax, 
except for self-produced renewable electricity up to a limit of 25 MWh/y, following § 2 
of the Electricity Supply Act (Elektrizitätsabgabegesetz)) 
* (battery) storages (also used in regulatory sandboxes) which are used for frequency 
ancilliary services (e.g. Prottes battery) and non-frequency ancilliary services as 
meshed node integrated grid asset (e.g. Quartierspeicher, Heimschuh battery, 
Lichtenegg battery) and for Energy Communities (e.g. Südstadt Battery). 

143 

 
 
 
 
 
Belgium 

Topic 

1. Public 
Support 

Belgium - Policy description 
* Support for R&I projects for energy storage : the law of 28 June 2015 has created a 
legal basis to set up specific funding, financed by the tax on nuclear electricity 
production, to support R&I projects related to energy production and storage, as well as 
energy demand. In this context, several publicly funded R&I projects which also include 
storage, are being performed by Belgian research centres. The funding for energy 
related R&I projects in 2019 amounts to 30 million €.  
* The Government of Flanders has in May 2019 approved a budget of 6 million € to 
subsidise home batteries. The subsidy amounts to 250 € per kWh, with a maximum of 
3,200 € per connection point or 35 % of the investment costs. The subsidy scheme will 
be available until end 2020. 
* In addition to the National Energy and Climate Plans, there is no national strategy 
addressing storage from a holistic perspective 

The draft NECP 2018 refers to electricity storage 
* Storage will be one of the solutions in addressing need for flexibility in internal energy 
market 
* Greater emphasis will be placed on flexibility (including storage and demand 
management) and interconnections to ensure security of supply 
* Different levels of government will ensure the continuous development of new 
centralised and decentralised storage systems 
* The regions are working on a clear regulatory framework, intended to place storage 
behind-the-meter or at the neighbourhood level  
* Objective to create energy storage potential as means to integrate intermittent, 
decentralised renewable energy into the grid 
* Residential, SME, local, electric vehicle storage methods expected to increase further 
by 2030  
* Legal frameworks revised to different regional contexts to allow prosumers to choose 
whether generated energy should be fed back into the grid at peak times, or a battery 
storage system should be used 
* Clear regulatory framework needed to govern installation of individual home or 
neighbourhood batteries 
* 2018 National Investment Pact with private sector to foster public-private 
partnerships within six strategic sectors, including 'the development of storage facilities 
for heat and electricity' 
* Particular area of focus for research in Wallonia (i.e., energy storage technologies): 
expertise developed in batteries, phase-change materials, compressed air storage, 
accumulators, hybrid batteries, storage management tools 

3. Energy 
Markets and 
Capacity 
Mechanisms 

2. Permitting  * For stationary batteries a notification OR permit (depending on the overall risk level 
of the concerned company) is necessary if the installed capacity is higher than 10.000 
VAh. For pumped hydro storage, both a building and environmental permit (based on 
an environmental impact assessment are always required. 
* Storage facilities in Belgium can participate in the electricity spot and balancing 
markets, either directly (with a minimum bid volume increment of only 0.1 MW), or via 
aggregators. 
* In 2018 the EPEX energy exchange introduced loop block orders, where two block 
orders are executed or rejected together, representing for example the storage cycle. 
* A new CRM will be implemented in 2020 (law of 22 April 2019); energy storage will 
be eligible for participation, either directly (if concerned capacity > threshold) or 
indirectly (via aggregation). The introduction of a CRM could be positive for the 
development of storage. However, there are no incentives for low-carbon emissions 
flexible units 
* Net metering during 15 years is in place for existing and new PV installations < 10 kW 
commissioned until 2020 
* Despite the fact that the concept of storage has been recently defined in the 
electricity law, the grid cost exemption mechanism that is foreseen in the transmission 
tariffs (and the CREG tariff methodology) remains difficult to implement and is more 
constraining than in neighbouring countries. 
* Storage applications like heat storage (e.g. water as a heat storage medium, powered 
by cogeneration or electrically powered), borehole thermal energy storage (BTES), 
storage heater (accumulator) are already implemented in Belgium 
* Pumped hydro as well as batteries are eligible to provide FCR and aFRR/mFRR 
services. 
* The rules for procurement of ancillary services by the TSO have been adapted (lower 
threshold for direct participation and aggregation possibility) to allow battery storage to 
also participate. At the present, batteries provide FCR services, either directly or via 
aggregators, but other reserve services are open to these resources. 
* Pumped hydro as well as batteries are eligible to provide voltage control services. 

4. Ancillary 
Services 

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5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

EUROPEAN COMMISSION 

* Pumped hydro as well as batteries are eligible to provide black start services subject 
to their technical ability to provide the service. 
* Pumped hydro has historically had an important role in the procurement of ancillary 
services. 
*  Double  charging  is  applicable  for  end  users  with  an  energy  storage  installation  or 
energy storage installation that is (directly) connected to the low-voltage and medium-
voltage distribution grid that have separate distribution tariffs for off-take and injection. 
This will probably partly be solved due to the transposition of Directive (EU) 2019/944 
article 15 5 b) which states  that  ”Member States  shall ensure  that  active customers 
that  own  an  energy  storage  facility:      (b)  are  not  subject  to  any  double  charges, 
including  network  charges,  for  stored  electricity  remaining  within  their  premises  or 
when providing flexibility services to system operators;” 
* Exemption mechanism is already available. Art. 4. of the Electricity Law of 2017: For 
storage facilities connected to transmission or networks with a transmission function, 
the tariff methodology contains incentives that encourage the storage of electricity in a 
non-discriminatory and proportional manner. A separate tariff regime for the storage of 
electricity may be determined by the CREG (Federal Regulator). The first special 
transmission tariff has been implemented for storage plants commissioned 1) After 1 
July 2018: exemption from network tariffs during first 10 years or 2) before 1 July 
2018: can benefit from 80% reduction in transmission tariffs during 5 years if they 
increase both the energy stored volume and capacity by at least 7.5%.  
* National/regional connection requirements and tariffs contain no specific connection 
tariffs for storage assets. For production and storage facilities with an injection capacity 
above 1 MW, specific technical connection requirements apply 
* For small scale storage connected to DSO grids, no specific grid tariff measures exist 
* The new transmission tariff structure applicable since 1 January 2016 (tariff period 
2016-2019) has slightly improved access conditions for transmission-connected storage 
* Compensation of avoided transmission network losses is under consideration 
* in Flanders, the network tariff structure will change in 2022 and will be both based on 
kWh-use and kVA (peak-use), which is supposed to provide additional incentives to 
storage. 
* Double taxation for energy storage installation connected to the distribution grid 
where the energy storage is used as an intermediate is the general rule for all storage 
* Since 2018 electricity consumption by storage is exempt from the federal electricity 
contribution, following art. 7(1bis) of the Electricity law (2017): 'Electricity withdrawn 
from the network for the purpose of supplying an electricity storage facility shall be 
exempted from the federal contribution'  
* Exemption of electricity storage from the green certificate federal levy is under 
consideration. 
* Investors in energy storage assets are eligible for a federal tax discount; for physical 
persons the deduction on the taxable income amounts to 20% of the eligible 
investment amount, versus 13.5% for companies. 
* All consumers are obliged to submit regional green certificates (directly linked to the 
volume consumed). In Wallonia, all storage is now exempted with the order of 
11/04/2019 (art 10.6°). It was previously the case only for pumped hydro located in 
Wallonia 
* No further exemptions exist for electricity storage with regard to taxes, surcharges 
and other obligations imposed on off-take and injections 
* In Wallonia (=<70kV), the DSOs are allowed to own and operate storage systems but 
only if it is for strict support of the grid and only after the market fails to provide 
* At federal level (>70kV), the regulator does not allow the TSO to own and operate 
storage 
* 'Electricity storage' : any process whereby, through the same installation, electricity is 
withdrawn from the grid for the purpose to be completely re-injected into the system 
later on, subject to efficiency losses. (Electricity Law of 13th of July 2017, modifying the 
29th of April 1999 Electricity Law) 
* The profitability of Belgian pumped hydro was impacted by transmission tariffs 
(before the recent law providing investment incentives) 
* 2018 National Investment Pact with private sector to foster public-private 
partnerships within six strategic sectors, including 'the development of storage facilities 
for heat and electricity' 
* Notification OR permitting requirement depends on storage capacity 
* CRM design allows the participation of storage directly or through aggregation 
* Regulatory framework explicitly allows the regulator to provide specific tariffs to 
storage 
* Storage is exempted from some electricity taxes 
* Storage is exempted from the obligation to submit green certificates 

145 

 
Bulgaria 

Topic 

1. Public 
Support 

Bulgaria - Policy description 
* The national energy strategic documents do not address nor recognize the importance 
of new energy storage technologies. 
* The potential and regulation of electricity batteries, electric vehicles, power to gas, 
other innovations are not yet a subject of any policy and legal documents.  
* The renewable energy projects in Bulgaria developed between 2007 – 2014 were 
incentivised by way of a FiT. As a result, in the times of curtailment of production or 
offtake (due to grid-related or balancing reasons) developers were incentivised to 
develop electricity storage facilities. Since the changes to the Renewable Energy Act, 
which entered into force in 2014, there is a cap of the electricity produced under FiT 
and therefore this indirect support mechanism has been eliminated. 
The draft NECP 2018 refers to electricity storage 
* Intent to increase the flexibility of the national energy system, partly by increasing 
electricity and natural gas storage capacity (developing existing storage facilities as well 
as building new ones) 
* Project underway to expand the capacity of underground gas storage (completion 
scheduled for 2024) 
* PCI Bulgaria-Yadenitsa hydro-pumped storage project - considered key to balance the 
system 
* Need to use energy storage systems identified as important measure from 2021-2030 
* 'From 2021 to 2030, Bulgaria will benefit from [...] investment support [...] from the 
Modernisation Fund and the option for funding projects related to [...] energy storage'  
* REM: the NECP does not include policy and measures to ensure the non-
discriminatory participation of energy storage in the energy market. There is no 
provision to cover aspects of energy storage and the services they can provide to the 
energy system.' 

2. Permitting  * Licensed activities (generation license) are explicitly listed in the Energy Act. Those 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 
7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 

are for example production, trading, distribution, but storage is not addressed. The 
production license is required for a capacity above 5 MW, and as legislation does not 
distinguish between technology types, any production above 5 MW must have a license, 
including e.g. pumped hydro. 
* Licensing reported by stakeholders as a costly and time-consuming process 
* There are various small projects where consumers utilise battery storage technology 
for domestic purposes, such as reducing the demand charges of large energy users 
* There are currently three operational pumped hydro storage projects in the Republic 
of Bulgaria. Their combined capacity is around 1.4 GW, operated by the National 
Electricity Company EAD 
* Electricity storage is not economically competitive in Bulgaria, and there is revenue 
uncertainty. Despite recent efforts, electricity is still cross-subsidised in Bulgaria, 
hampering price signals to investors. 
* According to the electricity market rules, pumped hydro shall be considered as 
dispatchable load when in a pump regime 
* Storage is not allowed to provide any services as they are not regulated by the 
market rules and thus not listed as an eligible market participant 
* The DSO cannot procure services in the market 
* Stakeholders indicate TSO procurement procedures are not transparent 
* There are no specific rules for connection or access charges for storage facilities 
* Consumer network charges are based on energy consumption and capacity to all 
consumers (households only pay network charges based on consumption) . The RES 
pay grid taxes on injected energy, as well.  
* All producers network charges are based on energy injected (kWh).  
* No specific rule identified on exemption, meaning storage charging is subject to the 
electricity consumption tax 
* Regulation does not address ownership and/or operation of storage by network 
operators. 

* Energy storage is regulated under the Energy Act (of 9 December 2003). But while 
gas storage is specifically regulated by the Energy Act, the electricity storage is not 
addressed in the legislative framework. 
* There is no common definition of energy storage in the regulatory framework 
* There is a large variation between summer and winter as well as daily electricity 
loads. Heating is primarily based on electricity, with low penetration of gas for 
households and lack of use of district / building complex heating. 
* Multiple regulations need to be adapted, like the Energy Act, market rules, 
permitting. It is of importance also to introduce clear rules for service procurement, the 
rules for cost recognition and cost coverage of the grid operators in case such services 
are procured. 

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EUROPEAN COMMISSION 

10. Best 
practices 

* The PCI Bulgaria-Yadenitsa hydro-pumped storage project is considered key to 
balance the system 

147 

 
 
 
 
 
 
Croatia 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 
4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 
7. 
Involvement 
of TSO/DSO 
8. Other & 
General 
9. Barriers 
10. Best 
practices 

Croatia - Policy description 

* Electricity storage is not specifically regulated or supported by Croatian law. The 
Renewable Energy Act prescribes that renewable energy demonstration projects shall 
not be supported through market premium or feed-in tariff incentive models but 
through general research and development and innovation support programmes. 
* Pumped hydro storage (PHS) should be supported through a scheme which would 
guarantee recovery of the investment cost, with feed-in tariffs – for instance – which 
would 
guarantee payment for discharging wind-originated power as a reward for boosting the 
integration of renewable energy sources (RES). Electricity Market Act (OG 22/13, 
102/15, 68/18, 52/19) 

The final 2019 NECP version refers to electricity storage 
* Two to three large hydropower plants are expected to be built up until 2030, a few 
hydro power plants (both in watercourses and water supply systems) and a pumped-
storage power plant. The regeneration of existing plants is expected to extend their 
lifetime with a slight increase in hydro power 
* Among the national energy security objectives are, comes the increase of storage 
capacity of gas and energy in the electricity system 
* Energy storage in the EES will allow for the construction of pumping plants, thus also 
providing more flexibility for the system and greater integration of variable renewable 
energy sources, mainly solar and wind. 
* Croatia will increase (by 2030 and 2050) investment in research, development and 
innovation in low carbon technologies, among which advanced energy storage systems 
* Existing legal solutions need to be complemented by the development of a regulatory 
framework for active customers, aggregators, energy communities, renewable energy 
communities (participation in local energy production, distribution, storage, supply and 
provision of energy and aggregation services) and own-account production of energy, 
in accordance with the provisions of the Directive on the promotion of the use of 
energy from renewable energy sources, the electricity directive and the regulation on 
the internal market for electricity 
* In order to increase the energy storage capacity of the system and the increased 
control power of the electricity system, the development of battery tanks, the 
introduction of recharging points for electric vehicles and the use of other innovative 
energy storage technologies (financed by EU funds) are planned. 
* Behind-the-meter installations of battery storage are allowed (for self-production or 
hybrid storage and renewable energy projects). 
* Market barriers include a minimum bid capacity of 1 MW in wholesale markets, 
availability requirements, and limiting the price spread. 

* Pumped hydro can participate in provision of FRRm services; 
* Storage plants (incl. batteries) are allowed to provide ancillary services to the TSO 
* Storage plants (incl. batteries) can be used to guarantee the N-1 criterion for a 
limited amount of time to radial networks, but are not deployed in practice. 
* There is double charging of network charges for storage 
* There is no regulatory framework for procurement of flexibility services allowing for 
the deferral of network investments. 
*  electricity consumption for charging is taxed like other consumers. 

* TSOs and DSOs are prohibited from owning storage assets. 

* Energy storage is not defined in the national regulatory framework. 

* There is no common definition of energy storage in the regulatory framework 

148 

 
 
 
 
 
 
 
 
Cyprus 

Topic 

1. Public 
Support 

EUROPEAN COMMISSION 

Cyprus - Policy description 
* In Cyprus, the framework for storage is still at the initial stages of development. The 
Cyprus Energy Regulatory Authority (CERA) has issued a decision titled “Principles of 
the regulatory framework regarding participation of electrical storage in the whole sale 
electricity market” addressing the storage systems installed in-front-of-the-meter. 
* There is no public support until now in Cyprus for energy storage. 
* Storage is considered a positive insertion in the system in support of the net 
metering and the net billing tariff systems. Currently PV owners are allowed to cover 
80% of their load with the PV production. When operating a storage system, this can 
increase up to 100%. 

The National Energy and Climate Plan (NECP) refers to electricity storage. 
* If Cyprus remains electrically isolated from other electricity networks, the penetration 
from  RES-e  will  only  be  increased  once  RES-e,  coupled  with  storage  technologies, 
materialises. The need of storage systems (both behind and after the meter) is included 
in the electricity system investments, but their need might be limited if the Cyprus will 
get electrically interconnected by 2023. 
* Similarly, the batteries in electric vehicles (with PV), can facilitate the use of higher 
shares of variable renewables and they might be charged when there is an increase in 
generation. This enables the grid operator to use them as demand response and a means 
of electric storage from which it can draw (together with selective load shedding) in cases 
of generation shortage or to smoothen out fluctuations in electricity demand 
* The pumped hydro storage facility was used as an option, but its deployment is delayed 
until 2027 (estimated 130MW pumped storage potential by 2030 in Cyprus) 
* The objective to deploy an Advanced Metering Infrastructure, including the roll-out of 
400.000 smart meters by January 2027 will enable the optimization and control of the 
distribution  system,  increase  the  penetration  of  distributed  renewable  sources,  enable 
aggregation  of  RES,  demand  response  and  storage  and  increase  direct  final  customer 
participation in all market stages (active customers) 
* the use of Interconnector can help the RES to further penetrate earlier, while in the 
WEM scenario it seems that more RES will be introduced in the post 2030 period with 
technologies  that  using  storage  behind  the  meter.  These  technologies,  based  on  the 
existing  available  data,  include  Concentrated  Solar  Thermal  (CSP)  and  other  storage 
technologies  like  Li-Ion  Batteries  and  Pumped  Hydro.  A  detailed  overview  of  Storage 
technologies  that  can  be  deployed  in  Cyprus  was  made  under  an  SRSS  study  by 
University of Cyprus156 and JRC157 
* The country is 'exploring ways to introduce smart grids in the national network.  
* Possibility to use batteries in electric vehicles to offset the variability of renewables 
(Vehicle to Grid). 
* In its scenario modelling, several storage options play a role in the further 
penetration of RES due to the absense of Electricity Interconnector, including: pumped 
hydro storage; lithium-Ion battery storage; concentrated solar power storage (thermal 
Storage that is converter to electricity). 
* Enabling participation of storage is one of five objectives to promote competitively-
determined electricity prices & increase system flexibility: 'revise the regulatory 
framework to enable the participation of storage in the electricity market'. Ensure that 
generators, aggregators and consumers will be allowed to own and operate storage 
systems, buy on the day-ahead market, and sell stored energy on the forward and day-
ahead markets; also enable participation in the balancing market. 
*Storage Technologies, can be used also as a support for conventional power 
generating units and limit the start-up and shut-down cost. This will increase both the 
performance and the efficiency of the conventional power generating units. 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

* No specific requirements have been put forward for authorization permits at the 
moment. Stakeholders indicate that once network codes are finalised regarding e.g. 
battery storage, special environmental requirements will be developed especially 
concerning fire hazard. 
* Ground contamination by leakages is already covered in the law for the environment, 
requiring appropriate measures. 
* Cyprus currently has approved new market rules but not yet operational (a transitional 
arrangement  is  in  force  until  the  new  market  rules  take  place).  A  regulatory  decision 
(03/2019)  has  been  issued  by  Cyprus  Energy  Regulatory  Authority  (CERA)  so  that  by 
mid of 2020 the Transmission System Orerator Cyprus (TSO Cyprus) submit adaptations 

156 http://www.mcit.gov.cy/mcit/EnergySe.nsf/All/4CFADF62B303D228C22584D6004AAB42/$file/JRC%203-

%20Storage.pdf  

157 JRC study for storage 

149 

 
 
 
                                           
to market and network codes to facilitate the connection, and participation of front-of-
the-meter  storage  in  all  electricity  markets,  including  through  aggregation.  The  new 
market rules and updated network codes are expected to become operational by end of 
2021,  so  when  in  operation  storage  facilities  in-front-of-the-meter  will  be  able  to 
participate in all electricity markets. Behind-the-meter installations can be licenced with 
existing framework. 
* There are no rules for the participation of behind-the-meter storage and active 
customers in wholesale markets. 
* Currently there are no capacity remuneration mechanism. 
* Presently the only service of storage for end-users is to increase self-consumption to 
100% when using the net metering and net billing tariffs. The time of use tariff for net 
billing users provides an additional signal. 
* Current market design does not allow for the provision of ancillary services by 
storage. 
* A regulatory decision by CERA 03/2019 has been issued so that by mid of 2020 the 
Cyprus TSO  will  submit adaptations to markets and network codes to facilitate the 
connection, and participation of front-of-the-meter storage in all electricity markets, 
including through aggregation. The new market rules and the updated network codes 
are expected to become operational by the end of 2021, so when in operation storage 
facilities in-front-of-the-meter will be able to participate in all electricity markets. 
Behind-the-meter installations can be licenced with existing framework. 
* There are no specific connection rules for storage, so same connection rules for other 
generators and/or loads apply. Upcoming regulatory changes should not change this. 
* According to regulatory decision by CERA 03/2019 in-storage is currently excempt 
from network tarriffs.  
* The regulatory framework does not address storage in relation to taxation, thus there 
are no specific levies or taxes on storage 
* A levy per kWh consumed is charged from the end-user in the net billing tariff (i.e. 
for dispersed installations), irrespective of whether it is supplied by the network or self-
produced, and of whether it is directly consumed or supplied at a later time by a 
battery system. 
* By law the TSO is unbundled from the Transmission Grid Owner, which is the EAC, 
the utility of Cyprus and who functions under the special regime of Functional and 
Accounting unbundling. The EAC is allowed other roles related to electricity (meaning 
Generator, Distribution Owner and Operator and Supplier) 
* According to the latest Directive and Regulations the TSO and/or DSOs are not 
allowed to own and operate storage systems but only except for strict support of the 
grid and only after the market fails to provide. 
* DSO are enabled to procure flexibility services, including congestion management in 
their service area, especially from distributed generation, demand response, storage 
and other market participants (including those engaged in aggregation). 
* There are  four research projects on storage : StoRES, PV-ESTIA, ERIGENEIA and 
FLEXITRANSTORE. Through the R&I (with EU partners) there is willingness to diffuse 
best practice solutions for the deployment of storage in Cyprus 
* With the amendments of the market rules and network codes for the participation of 
in-front-of-the meter starage in the electricity market a first step for addressing the 
regulatory framework barrier will be made. Behind-the-meter installations can be 
licenced with existing framework. Alignment with the requirements of the Clean 
Package for All Europeans will give the right platform to pursue the match needed 
storage solutions. 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

150 

 
 
 
 
 
 
EUROPEAN COMMISSION 

Czech Republic 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

Czech Republic - Policy description 
*  Pumped  hydro  storage  is  in  the  Czech  energy  law  considered  as  a  specific  form  of 
power generation and is not considered as storage 
* The Czech Republic has implemented a specific support scheme for small-scale home 
batteries as a part of subsidy program for residential PV  
*  The  National  Action  Plan  for  Smart  Grids  (NAP  SG)  includes  relevant  provisions  on 
storage : 'By 2015/2016, create conditions for gradual deployment of energy storage; 
By  2017,  issue  a  license  for  energy  storage  operations',  although  this  was  still  not 
addressed in early 2020. 
* The Updated State Energy Concept (ASEK) also includes specific references to storage 
: 'Support for development of energy storage systems (both distributed and centralized); 
R&I in the field of energy storage' 
* The Study of the Electricity Market Operator (OTE) assesses four scenarios of possible 
developments by 2050, two of which count on energy storage (all types) on a daily basis: 
Conceptual  scenario:  4.3  GWh;  Decentralized  scenario:  19.4  GWh,  with  electricity 
storage (batteries) in the range of higher hundreds/lower thousands of megawats. 
*  The  Operational  Program  Enterprise  and  Innovations  for  Competitiveness  addresses 
storage in two ways: 
 - Implementation of economic measures, incl. installations of RES and energy storage 
(2018-2019) 
 - Use of low-carbon technologies, incl. energy storage pilot projects  

The draft NECP refers to electricity storage 
*  Electric  vehicle  batteries  are  acknowledged  as  potential  storage  option  within  the 
electricity market 
* 'Electricity storage, including the use of hydropower' is mentioned as a specific sub-
area in the national priorities for research, experimental development and innovation 
* There is no specific licence issued by the Regulator for battery storage systems yet. 
The licence parameters are foreseen to be addressed in the market design of the 
Energy Act. 
* Pumped hydro is operated on the basis of a license for production, granted through 
the standard process as for other power plants. 
*  Storage  facilities  can  participate  in  the  electricity  markets  (including  intraday  and 
balancing)  only  together  with  the  spinning  reserves.  Stand-alone  batteries  are 
completely forbidden for any kind of use in the energy markets in the Czech Republic, 
use with RES officially allowed, but technically infeasible.  
* Storage is used primarily for active customers to avoid network charges. 
*  Large boilers, usually inside of district-heating and power plants, are used for 
ancillary services 
*  Pumped  hydro  can  in  the  Czech  Republic  participate  in  the  provision  of  Frequency 
Restoration  Reserve  (FRRm).  Facilities  can  be  involved  in  the  provision  of  ancillary 
services  when  (virtually)  aggregated  with  generation.  Changes  in  ancillary  service 
procurement rules according to Commission Regulation (EU) 2017/2195, establishing a 
guideline on electricity balancing (EBGL).  
* However, the EBGL did not fully allow batteries to participating in the ancillary services. 
As  mentioned,  stand-alone  batteries  cannot  participate  in  the  ancillary  services  at  all, 
BESS with RES is infeasible. Only installations BESS + spinning reserves (coal and gas 
power  plants).  There  is  growing  interest  among  traditional  energy  producers  due  to 
generous conditions for providing fastest types of ancillary services (FCR, aFRR etc.).  
* Czech TSO (CEPS) recently indicated the network code should be revised at the end 
of 2020 in order to allow a broader use of energy storage on the Czech eletricity 
market.  
* Czech legislation doesn’t allow direct connection of batteries to the grid, only 
together with the generation site. 
* Network charges are applied only to consumers. Therefore no network (or other) 
charges are paid for any electricity supply to the system. In the case of storage 
facilities, no specific discounts on network charges apply, except that some of the 
distribution-connected pumped hydro storages are partially exempted from 
transmission-related withdrawal charges. 
* Support for the development of storage facilities is primarily provided in the form of 
investment grants. 
* No tax exemptions or rebates are applied or considered at the moment. 
* DSOs and TSOs are not allowed to own storage plants, but can operate them for the 
time being (the 4 MW project between CEZ and CEPS (Czech TSO) in Tusimice is 
partially operated by CEPS, but only in the testing regime) 
* The sector did propose some amendments of the Energy Act to address energy 
storage, but there is finally no mention at all of energy storage. It was considered an 
important opportunity to integrate storage issues, however, amendments proposed for 

151 

 
 
the topic were not accepted. A first proposal of the Energy Act was defining storage as 
: “Electricity storage means the storage of electricity by storage facilities in the form of 
energy, which can be stored and subsequently used or converted into electricity or 
other form of energy and used at a later point in time than when it was produced.” This 
has since been removed. 
* Works on the completely new Energy Act (not a revision, but brand new law) started 
and relevant stakeholders participate in its preparation, including the Association for 
Energy Storage & Batteries AKU-BAT. However, this new act should come into force not 
earlier than in 2022. 
* Some changes in the ancillary services are not completely addressing storage : 
stand-alone batteries still cannot provide ancillary services, only in connection with 
spinning reserves. 
* Stand-alone batteries can be connected to the grid (only in testing mode), but cannot 
supply electricity to the grid, their use in hybrid installations is hence limited, except at 
the same site. 
* There is no common definition of energy storage in the regulatory framework, and it 
was removed from the Energy Act amendment draft. 

9. Barriers 

10. Best 
practices 

152 

 
 
 
 
 
Denmark 

Topic 

1. Public 
Support 

2. Permitting 
3. Energy 
Markets and 

EUROPEAN COMMISSION 

Denmark - Policy description 

* The Danish energy policy is strongly focusing on short-term heat storage (which 
allows CHP producers to balance supply and demand for heat and electricity), while 
electricity storage is referred to in policy documents but there is no comprehensive 
policy, also due to the fact that electricity storage is in Denmark currently not 
competitive compared to other available flexibility options. According to the IEA 
(country assessment 2017), the double taxation of electricity stored in batteries (when 
purchased and when resold) is considered as a barrier to a wider use of batteries by 
district heating companies and end-users. 
* The Energy Technology Development and Demonstration Program (abbreviated in 
Danish EUDP), one of the largest public sources of research investment, includes 
funding for storage projects 
* On the basis of act No. 121 of 25 April 2019, a budget of DKK 13 million has been 
made available for grants to development and demonstration projects that facilitate 
renewable energy storage 
* Energinet, the national electricity and gas TSO, has included energy storage in its 
energy system outlook for 2035. Electricity storage is expected to play a role for short-
term flexibility (hours, a few days) while seasonal flexibility would be provided by 
Power-to-Gas coupled with gas storage. Energinet has also included energy storage in 
its three-year RD&D strategy that aims to catalyse solutions which are to be market-
ready in 2020-50. 

The final 2019 NECP version refers to electricity storage: 
* Policies and measures adopted with the 2018 Energy Agreement includes, among many 
others, the energy storage fund of 2019, developing markets for flexibility and ancillary 
services,  
* Energy storage could be a useful tool to ensure sufficient supplies of energy, by 
levelling out demand peaks and by making use of surplus wind energy from times of 
high wind power generation to store for later times of shortage. Today, the 
technologies available for storing electricity are rather limited and expensive. Yet, the 
technologies will possibly continue to be developed and become profitable with time, as 
current trends in prices of storage technologies are indicating. This means that in the 
future it is not unlikely that for instance power-to-gas and the hydrogen sector could 
play a larger role in ensuring supply security and that batteries will become more 
prominent in the energy markets. 
* The flexibility of the energy system is expected to be facilitated largely by market-
based solutions. Therefore, it is an objective to support structures that favour demand 
response and energy storage markets. Especially the integration with the district 
heating sector and its vast energy storage capacity is expected to provide a basis for 
increasing flexibility through increased demand response and energy storages 
* The Danish electricity market is open for participation from renewable energy, 
demand response and storage, including via aggregation 
* In order to accommodate future needs, the Danish Government has established a 
fund supporting development and demonstration projects on energy storage. The 
fund’s size is 128 million DKK and it was in December 2019 granted to two Power-to-X-
projects 
* Increased flexibility in energy system is crucial for the green transition and storage 
can contribute to that flexibility 
* NER (Nordic Energy Research) has identified seven key areas that could enhance joint 
Nordic research efforts, among which Energy Storage  
* While smart grids specifically address the problem of moving consumption to other 
times during the day and matching supply with demand, system integration is also a 
growing and very important area. In the future, many factors will be competing to 
supply this dynamic: electric cars, electric cartridges, heat pumps, etc. system 
integration also covers aspects relating to energy storage and smart energy 
* A larger share of intermittent RE leads to greater demand for energy storage 
solutions. In this context, battery storage, in particular, is expected to play a significant 
role (including small scale PV) 
* Furthermore, energy storage could be a useful tool to ensure sufficient supplies of 
energy, by levelling out demand peaks and by making use of surplus wind energy from 
times of high wind power generation to store for later times of shortage 

* Ambitious targets and plans to decarbonise the energy supply : more than 1 million 
green cars by 2030; a new gas strategy; a roadmap for smart energy, expected to 
provide increasing flexibility through demand response and energy storage 

* Storage devices (including batteries) can participate in the electricity markets. 
* District heating companies own and operate large thermal storage facilities and are 
active in the electricity market to respond to short-term changes in electricity prices. 

153 

 
 
 
 
Capacity 
Mechanisms 
4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 
7. 
Involvement 
of TSO/DSO 
8. Other & 
General 
9. Barriers 

10. Best 
practices 

* Pumped hydro is eligible to provide FCR and FRR services, while batteries are eligible 
to provide FCR services. 
* Energinet is running a pilot program allowing electric vehicles to provide balancing 
services. In the Parker project, specialists and car manufacturers are developing a 
universal definition for network integration, enabling electric vehicle batteries to 
support renewables integration and participate in intra-day and balancing markets in 
the future. 
* District heating companies own and operate large thermal storage facilities, often 
equipped with electric boilers. Their fast response is offered to the balancing market. 
* The TSO Energinet has published grid codes specifically for the connection and access 
of batteries 
* The DSO Danish Energy has recently participated in several research projects 
analysing the impact of batteries on distribution systems  
* Self-producers (companies) shall not pay the grid tariff for the part of their 
production covering their own consumption 
* Customers with their own 132 kV transformers with settlement on the 132 kV side 
pay a reduced grid tariff 
* There is no exemption of taxation and fees, storage is considered as a common 
consumer 
* While in 2014 stationary Li-ion batteries were installed by TSOs and DSOs on a test 
basis, it is assumed the grid operators are allowed to own and operate storage plants 

* No definition of storage in the national legislation 

* There is still an absence of technical specifications for how batteries are expected to 
participate in all of the Nordic ancillary services markets. The Danish requirements for 
batteries are currently being revised, and a new version is expected in late 2019. 
* There is a degree of regulatory uncertainty surrounding future grid codes for energy 
storage devices. EU regulations (RfG and DCC network codes) have omitted specific 
treatment of energy storage systems, leading to a patchwork of national requirements. 
* Parker project is developing a universal definition for grid integration, enabling 
electric vehicle batteries to participate in intra-day and ancillary services markets 
* District heating companies are actively participating in energy markets. 
* The TSO Energinet has published grid codes specifically for the connection and access 
of batteries 

154 

 
 
 
 
 
 
EUROPEAN COMMISSION 

Estonia 

Topic 

1. Public 
Support 

Estonia - Policy description 
* PCI project 4.6 hydro-pumped storage in Estonia was scheduled to start construction 
in 2019 and be completed by 2026-2027 
* Public R&I budget - Electrical storage (2014): 0.51 M€, Energy storage (2018): 0.51 
M€ 

The final 2019 NECP version refers to electricity storage: 
* Hydrogen could be one of the main options for the storage of renewable energy and 
more favourable options for the storage of electricity for days, weeks or even months 
* seasonality need for temporary storage on the part of the proprietor 
* Estonia’s economy needs investment in the transition to cleaner energy and more 
sustainable jobs, including the acquisition of wind farms (including national defence 
aerial surveillance radars), electricity storage solutions, cogeneration plants, transport to 
biofuels and electricity transfer, electricity railways and modern rental housing funds, 
renovation of apartment buildings, demolition of buildings that fall out of use, 
decarbonisation of the cement and lime industries, recycling of industrial residual gases. 
* Chapter deals with measures to increase the flexibility of the energy system to 
produce renewable energy, such as smart grids, aggregation, demand response, 
storage, distributed generation, distribution, redispatching and curtailment mechanisms 
and real-time price signals, including the introduction of intraday coupling and cross-
border balancing markets 
* As regards independent aggregators and energy storage, the regulation will be 
complemented by Directive 2019/944 on the EU internal electricity market 
* The trends of Estonia’s renewable energy sector in 2040 viewpoints depend heavily on 
the megatrends we can see in Europe and also in the world, where carbon-neutral 
energy production, energy saving and storage and smart consumption are the keywords 
* To ensure security of electricity supply in Estonia, a combination of renewable energy 
production facilities and storage solutions (including seasonal storage), … may be used 
in the future 
* As regards energy storage, Estonia is already on the world map, with Skeleton 
Technologies, the leading European producer of super-capacitors, producing facilities in 
Germany and developing in Tallinn 
* on RD&I, be at the forefront of next generation renewable energy technologies, 
storage, smart grid and home solutions, smart cities, buildings neutrality, clean 
transport, clean carbon capture and utilisation and nuclear energy, building on Horizon 
2020. 
* No specific permitting provisions identified. 

* The Electricity Market Act indicates that the regulator may oblige the TSO to tender 
new production, energy storage devices or energy efficiency/demand-side management 
measures if generation reserves fall below requirements or if this is necessary for the 
promotion, of new technologies 
* In April 2010 the Nord Pool power exchange started operations in Estonia. Nord Pool 
day ahead and intraday markets are open to storage. The day ahead products include 
hourly and block orders, while the intraday market offers 15-minute, 30-minute, hourly 
and block products. 
* In January 2018 the Baltic common balancing market came in operation, covering 
mFRR. Storage is allowed to provide mFRR services. For mFRR the product duration is 
15 min , the minimum bid size is 1MW. The ENTSO-E ancillary systems survey of 2018 
however still indicates storage cannot participate in FRRm markets. 
* Currently only FRR is used in the Baltic balancing market. The Russian Unified Power 
System (UPS) provides FCR and FRRa, while Baltic TSOs provide also RR. 
* Aggregated generation and loads can participate only in the FRRm market. They 
cannot provide other ancillary services such as black start or voltage control. 
* Loads use the same market mechanisms and activation procedures as generation to 
provide balancing services (both capacity and energy) 
* All power plants that are connected to the main grid must have voltage control 
capability. The service is partly remunerated by the TSO. 
* Black start service is provided by power plants which are included in the restoration 
plan as black start service providers. It is not a mandatory service and is remunerated 
by the Elering. 
* The Electricity Market Act indicates that the regulator may oblige the TSO to tender 
new production, energy storage devices or energy efficiency/demand-side management 
measures if generation reserves fall below requirements or if this is necessary for the 
promotion of new technologies 
* According to an Elering 2015 report, a DSO was already then looking at flexibility 
projects such as energy storage, as it had already 'been forced to curtail the maximum 

155 

2. 
Permitting 
3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

 
 
 
output of a wind farm due to local network constraints. In the long term, the DSO is 
expecting overloaded substations in all types of distribution network areas (rural, 
suburban and urban).' 
* The feed-in scheme was kept for installations under 50 kW following the 2018 update 
of the Electricity Market Act. Net metering is not allowed. 
* No specific mention of electricity storage in the tax legislation, thus assumed that 
storage charging pays the electricity consumption tax. 
* Regulation does not address ownership and/or operation of storage by network 
operators. It could be used to compensate network losses. 

* Storage is not defined in the new 2018 electricity market act. 

* The Baltic states implemented the Baltic common balancing market, with storage 
being able to provide the first product, mFRR. 
* Regulation specifically indicates TSO roles to tender for new flexibility resources 
including storage due to generation adequacy or innovation considerations 

6. Taxes & 
Levies 
7. 
Involvemen
t of 
TSO/DSO 
8. Other & 
General 
9. Barriers 
10. Best 
practices 

156 

 
 
 
 
 
 
 
Finland 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

EUROPEAN COMMISSION 

Finland - Policy description 
* The Energy Aid government investment programme provides co-financing for projects 
that (among others) promote the transition towards a low-carbon energy system. 
Storage is eligible if they involve investments in renewable energy production or energy 
efficiency. Energy-storage-related costs of a project may not exceed 50% of total 
costs. 
* In Mission:Innovation Finland wants to double by 2020 RD&D investments in clean 
energy (including energy storage) from 2013-2015. The Smart Energy programme 
provides EUR 100 million for co-funding of Mission Innovation initiatives to fund new 
opportunities in fields including energy storage. 
* The 2019 government programmes indicates Finland will improve the security of 
energy supply together with Finnish industry operators [by among others developing] 
new possibilities for energy storage. 
* Public R&I budget for electrical energy storage in 2014 was 2.50 M€ 
* Ongoing work to create Sectorial Climate Roadmaps may identify barriers. Sector 
coupling including energy storages will be included in these roadmaps. 

Thefinal 2019 NECP version refers to electricity storage: 
* The transition to a low-carbon economy will require additional investments, particularly 
in  bioeconomy,  the  circular  economy,  clean  energy  solutions,  energy  efficiency, 
emissions-free  forms  of  energy  production,  energy  storage  solutions,  carbon  recovery 
and energy utilisation, along with research, development and innovation activities and 
measures to bring these solutions to market 
* Among the three most popular proposals of the citizens survey :  
Promotion of decentralised energy production (electricity, heat, transport, storage) 
through sustainable and cost-effective measures  
* As for ensuring generation adequacy in the light of the renewable energy 
contribution, including demand response and storage, the Finnish strategic reserve 
system plays a significant role. 
* Demand response and storage are further promoted by applying the proposals by the 
Smart Grid Working Group as discussed in Chapter 3.4.3 
* In October 2018, the Smart Grid Working Group set up by the Ministry of Economic 
Affairs and Employment proposed an extensive operational programme to increase the 
demand-side response of electricity and the opportunities for customers to participate. 
The working group’s key proposals were: 1/ clarifying the roles of actors in the market-
based implementation of demand-side response (e.g. principles for the storage of 
electricity, discontinuation of the flexibility implemented by distribution networks) ; 2/ 
highlight the significance of market-based solutions for demand response and storage 
* Finland committed to doubling public innovation funding for clean energy by 2020. 
The baseline was the average of the funding granted by TEKES to projects on 
renewable energy sources, storage of energy, energy systems and energy networks 
between 2013 and 2015 
* Finland is also active in Set-Plan key action no 7. “Batteries for e-Mobility and 
Stationary Storage”, where Finland is leading the working group related to battery 
recycling. 
* Total use of electricity in the transport sector is not more than 1–2 % of the total 
electricity demand during the assessed period. Its impact on electricity generation is 
small on a yearly level, but charging batteries and active use of them as two-way 
electricity storage can affect both the short-term electricity market and the local grid. 
* In Finland there is no specific rules (legislation, procedures) for the storage 
permitting. 
* Small-scale batteries need only the city planning acceptance, but when locating 
battery in the existing industrial site, the permitting is typically only light notification. 
* Large-scale storages like pumped hydro or hot water storage (based in natural rock) 
need also permission according the water body legislation when affecting water 
body/ground water levels or other hydro-morphological issues. The permission of the 
large-scale projects comprises public hearings as part of permitting procedure. 
Stakeholders indicate there are also rights for contestation through courts, which can 
lead to prolonged delays if there is no social acceptance. 
* In 1998-1999 the Nord Pool power exchange started operations in Finland. Nord Pool 
day ahead and intraday markets are open to storage. The day ahead products include 
hourly and block orders, while the intraday market offers 15-minute, 30-minute, hourly 
and block products.  
* The government's Smart Grid Working Group recommended in 2018 that 
independent aggregators should be allowed to operate in all electricity marketplaces. 
* There is integration between district heating, cooling and electricity both in supply 
and demand, with extensive use of water boilers and other water heating systems as 
storage and an estimated 1800 MW of heat storage controllable through smart meters. 
Night-day-tariffs have been used to shift electricity consumption to night hours, mainly 

157 

 
 
4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

due to water heat storages. Large heat storages especially connected with combined 
heat and power plants supplying district heating networks are common. 
* In Helsinki there are underground cooling storages. 
* Heat pumps are used to produce district heating and cooling. 
* Energy storage use for consumer energy management (e.g. peak shaving) and 
electric vehicle integration is limited. Small scale storage (also by EVs) is growing in 
interest but not economical yet. 
* In 2018 batteries could provide FCR services, while loads could provide FCR/FRRm. 
Dedicated rules to batteries apply to the management of the state of charge and to the 
restoration of full activation capacity in FCR. 
* The government's Smart Grid Working Group recommended in 2018 that 
independent aggregators should be allowed to operate in all electricity marketplaces. 
* Fingrid is conducting a pilot to allow the participation of independent aggregators in 
the mFRR balancing market, to last until the end of 2019 at least. 
* Using storage in non-frequency ancillary services is allowed. 
* There is no separate connection or access rules and/or standard terms of contract for 
storage. Storage is considered a consumer when charging and a producer when 
discharging. There is thus double charging of network tariffs to storage. Grid tariff for 
production is in LV- and MV-networks limited to up to 0.07 €/kWh. 
* Net metering is not applied. Self-production within a consumption site (behind a 
meter) is allowed. 
* Taxation of electricity for large batteries has been eliminated in 2019. Electricity is 
transferred to large storages without any excise duty on electricity. The excise duty is 
paid when electricity is transferred to be consumed.  
* The government programme foresees that taxation on electricity storage for pumped 
storage facilities and smaller batteries will also be removed. 
* The government's Smart Grid Working Group recommended in 2018 that system 
operators should not be allowed to own or operate storage. 
* Current Finish regulation does not support DSOs owning storage or contracting it 
from the market, but instead making network investments. in practice storage is not 
included in the DSO's regulatory asset base. 
* Electricity storage is defined only in the law concerning electricity and fuel taxes: 
'electrical storage' means a functional unit of equipment, machinery and buildings 
required for the short-term electrochemical storage of electricity. 
* The register of independent aggregators in the mFRR balancing market is slow and 
has required the extension of the pilot to the end of 2019, at least. 
* Double taxation for pumped hydro and small batteries still needs to be eliminated. 
* A stakeholder supports a regulatory framework where DSOs may procure storage 
capacity from markets and that this is evaluated in equal footing to other solutions 
such as network investments. 
* A stakeholder finds the DSO unbundling requirements and the market test of the new 
electricity market design burdensome, especially for small projects. 
* The government formed a Smart Grids working group, addressing multiple aspects 
related to e.g. storage, aggregation and active consumers. 
* Double taxation of electricity for large batteries has been eliminated in 2019, 
elimination for other storage planned. 
* The Finnish energy market is generally based on open market driven policies and 
competition on level playing field. This applies to electricity retail and wholesale 
markets as well as heating markets. 
* TSO pro-activity (e.g. with a mFRR pilot project) is seen as a positive aspect, as well 
as co-operation between TSO, DSOs and market actors. 
* Using storage in non-frequency ancillary services is allowed. 
* One of the largest virtual batteries in the EU is located in Finland. It aggregates and 
controls distributed energy assets (mainly water heaters) owned by customers, for grid 
balancing purposes. 

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EUROPEAN COMMISSION 

France 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

France - Policy description 

* The Energy Transition for Green Growth Act of 17 August 2015 is a comprehensive 
legal framework with the aim of tackling climate change and reinforcing energy 
independence and energy security. One of the five action principles is to develop 
energy research and innovation, including in energy storage. A specific target has been 
determined for the development of pumped hydro storage : expansion of 1 to 2 GW in 
2025-30. 
* There is at present no specific support scheme for storage, but storage 
projects/technologies can be subsidised via other schemes. In isolated and remote 
areas (non-connected zones, ZNI in French) with small scale, low reliability and 
stability, and higher electricity production costs, battery storage does already represent 
an economically interesting solution. 
* The industrial Branch Strategic Committee for new energy systems was created in 
2018 and includes a thematic project on storage 

The draft NECP 2018 refers to electricity storage 
* Power systems flexibility tools including storage must be developed on the medium-
term, especially due to the penetration of renewable energy 
* The multi-annual energy plan should anticipate the energy system change and enable 
the development of energy storage158 
* Storage is identified as a specific R&I need  
* Storage is a flexibility pillar to handle fast supply and demand fluctuations 
* The 2018 Low-Carbon National Strategy reference scenario includes storage, 
including measures to develop geothermal heat storage 
* Plan to confirm by 2023 the gas storage needs post-2026 
* Identify sites for decommissioning in the next multi-annual energy plan 
* Plan to develop in the first period of the multi-annual energy plan (by 2023) the 
framework to develop storage as an alternative to grid expansion from 2028 
* Plan to continue R&I efforts in storage through various government mechanisms 
* Plan to study the reutilization of salt caverns for hydrogen storage 
* Plan to review support framework to enable solar thermal heat storage 
* Storage needs to 2035 occur only in scenario with faster decrease of nuclear power 
generation 
* The standard permitting rules for power generation plants apply to energy storage 
plants e.g. planning permission (which covers environmental issues), power generation 
licence (at the moment, electric storage plants have not been submitted to power 
generation permit application, this question will be discussed in the next few months) 
and authorisation to construct. 
* Pumped hydro and batteries can participate in the electricity markets. 
* The threshold for direct participation in wholesale markets was lowered to enable 
other flexibility resources. 
* A storage unit can individually participate in the CRM if its capacity is above 1MW, or 
through aggregation for a total of minimum 1MW, for lower capacities. 
* In 2018 the EPEX energy exchange introduced loop block orders, where two block 
orders are executed or rejected together, representing for example the storage cycle. 
* French NRA and TSOs are working to open the ancillary services markets to energy 
storage (especially regarding FCR), including for small-scale storage facilities, in a 
technology-neutral approach. 
* Storage operators must sign the same regulated contract to provide ancillary services 
as other providers. 
* Pumped hydro can provide a wide range of ancillary services (FCR, FRRm, FRRa and 
RR), while batteries are eligible to provide FCR. To this end, the Frequency System 
Services rules are currently being reviewed in order to open the participation to 
batteries 
* The DSO Enedis launched a call for contribution of local flexibility products, including 
storage, in order to introduce market mechanisms in the frame of grid congestion 
management 
* The TSO RTE participates in the RINGO project which also aims at introducing market 
mechanisms in the frame of grid congestion management 
* Storage operators pay 'postage stamp' transmission charges as a consumer (for their 
offtake) and do not pay injection charges. A discount on the transmission grid tariff up 
to 50% applies for energy storage plants, if their utilization rate during off peak hours 
exceeds 0.53 and if their efficiency rate is higher than 70%.  

158 CRE (French regulator) has achieved a review of the regulatory issues for the development of storage. Results, including 

recommendations and special requests to the system operators are reported in a document available here (in French): 

https://www.cre.fr/Actualites/La-CRE-publie-sa-feuille-de-route-pour-le-stockage-de-l-electricite 

159 

 
 
                                           
* There are in France no locational network tariffs. 
* Rules for grid connection currently applicable for 'utility scale' batteries are 
considered efficient and do not jeopardize the development of storage. 
* Network connection procedures for small network users are currently are separate for 
demand and production. 
* The specific legal provisions regarding self-production also stimulate flexibility 
solutions including storage. 
* Specific tariff exists for multi-locations customers. This tariff considers a unique 
virtual site, summing all load of the concerned sites, and calculating an annual fee 
proportional to the necessary length of network to connect these sites. 
* Industrial customers connected to the transmission grid can benefit from a reduction 
of their transmission invoice from 5% to 90% depending on whether they have storage 
capabilities or not, their demand (annual consumption, annual usage duration, usage 
duration during peak period vs. usage duration during off-peak period) and on the 
importance of electricity in their process, and the degree of international competition 
* Storage charging needs to pay for taxes, levies and network tariffs for the electricity 
consumed (even in isolated systems, ZNI) 

* The EU Electricity Directive 2019/944 states that TSOs and DSOs cannot own, 
develop, manage or operate energy storage facilities because it’s a market-based and 
competitive activity; except if a derogation is given by the NRA in very specific 
conditions. 
* A definition of storage exists (order of 7th of July 2016) : 'a set of stationary 
electricity storage equipment allowing the storage of electric power in one form and its 
reconversion, while being connected to the public power grids. The technologies of 
these equipment are [pumped storage], hydrogen, electro-chemical batteries […]. The 
facility is connected to the public power grid directly or indirectly, through facilities 
belonging to a user of the grid.' 
* There is at the moment no legal status of storage 
* Uncertainties still remain regarding the implementation of the new Electricity 
Directive 
* There is a lack of a connection framework for batteries conducting to the risk that 
new existing constraints for other assets (non-synchronous generation) would apply to 
batteries 
* A general evolution of the TURPE structure (network tariffs) in the way of a better 
cost reflectivity should be positive. For example an access tariff mainstreaming per 
user category the costs it does generate to the network, without considering the final 
use of electricity. Reinforcement of fixed and capacity component (€/y or €/kW) and a 
stronger seasonal signal on the energy component (€/kWh) could be considered also. 
* A simplification of the contractual grid access framework and of connection 
procedures is necessary for decentralized storage (vehicle-to-grid, residential, 
commercial and industrial), like a single connection demand. 
* Draft NECP addresses storage extensively, including in R&I strategy, multi-annual 
energy plan, and industrial strategy. 
* On-going work by the NRA, TSO and DSOs on pilot projects, including for ancillary 
services 
* Many task forces have been set up to discuss storage, one being co-chaired by the 
NRA and the ministry. 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

160 

 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Germany 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 
5. Grid 
Aspects 

Germany - Policy description 

* Power storage facilitates are increasingly built at the same location as renewable 
energy-based electricity plants (without necessarily being used for self-production), as 
this combination leads to an advantage in terms of the market premium for EEG 
installations and improves the profitability.  
* An energy storage plant which contributes to balancing the system by taking off 
'excess' electricity during periods of oversupply and hence relieves the network and 
prevents curtailment of renewable energy production, is in the current system 
compensated accordingly. Clarify how 

The draft NECP 2018 refers to electricity storage 
* Central strategy in renewable energy: expansion of funding programmes for heat 
storage systems  
* The Federal Government has set the goal of building a flexible electricity system 
consisting of well-developed electricity networks and flexible power plants and 
consumers. Storage facilities will be integrated into this system wherever appropriate. 
It has also confirmed its ambition to enhance research into storage technologies. 
* The market incentive programme for supporting renewable energies in the heating 
market provides funding for large-scale storage facilities for heat from renewables 
* The Seventh Energy Research Programme covers five main topics, including 'System 
Integration,' with a focus on networks, storage reservoirs and sector coupling as a new 
area of research 
* Plans exist to set up a new Fraunhofer Institute for Storage Technologies 
* Federal Battery Act (Batteriegesetz – BattG, https://www.bmu.de/en/law/batteries-
act/) is transposing Directive 2006/66/EC of the European Parliament and of the 
Council of 6 September 2006 on batteries and accumulators and repealing Directive 
91/157/EWG.  The new Act (amendment) deals with the placing on the market of 
portable batteries containing cadmium and intended for use in cordless power tools, 
and of button cells with low mercury contents. 
* Regarding the installation of storage units, the applied legislation is the Federal 
Building Code (Baugesetzbuch - BauGB) and the Federal Emission Protection Act 
(Bundes-Imissionschutzgesetz - BImSchG) 
* Transposed Directive 2013/56/EU on (waste) batteries and accumulators addresses 
the placing on the market of portable batteries and accumulators containing cadmium 
intended for use in cordless power tools, and of button cells with low mercury content 
* The general legal framework consists of three legislative pieces: the Energy Act 
(Energiewirtschaftsgesetz - EnWG); the Renewable Energy Act (Erneuerbare Energien 
Gesetz - EEG); the Framework of the prequalification and the provision of the PRL: 
Eckpunkte Freiheitsgrade bei der Erbringung von Primärregelleistung 
* There is globally non-discriminatory market access (EEX/EPEX). In 2018 the EPEX 
energy exchange introduced loop block orders, where two block orders are executed or 
rejected together, representing for example the storage cycle. 
* Electricity storage (pumped hydro and batteries) can individually or via aggregation 
participate in the electricity markets (threshold for direct participation of 1 MW) as long 
as storage is part of a nomination for which a balancing responsible party exists. 
* CHPs are using heat storage to take benefits of the electricity market price volatility; 
this option is in general economically more attractive than storing electricity 
* Network users increasingly combined PV systems with local storage, to increase self-
consumption from 30% to up to 80%, also driven by the low feed-in tariff for new PV 
installations of 12.31 cents (up to 10 kWp) or 11.97 cents (10-40 kWp). 
* Pumped hydro is eligible to provide FCR and FRRa/FRRm services, while batteries are 
eligible to provide FCR services. 
* In the German energy Law, there are currently no injection-charges for electricity. 
However, by February 2020, a new legislative proposal changing, among others, the 
“Energiewirtschaftsgesetzt” will be presented. The new law would include a provision 
stating that any generation in Germany which asks for connection will have to pay for 
the connection. This would not hamper renewable generation installation, as costs 
would be funded by a surcharge on consumers following an auction system based on 
the Erneuerbare Energien Gesetz (EEG 2017). But those connection costs will hamper 
the installation of energy storage, which cannot pass these costs through to the 
consumer. The sector sees as a possible solution to directly exempt in this national 
legislative text energy storage 
* The conditions for connection/access to the grids are regulated through: Technische 
Anschlussregel Mittelspannung VDE-AR-N-4110 & Technische Anschlussregel 
Hochspannung VDE-AR-N-4120 (Implementation Network Codes „Requirements for 
Generators“ (RfG)) 
* Since stored electricity taken off from the grid is considered as final consumption, all 
final consumer levies must be paid for this offtake (incl. EEG surcharge, grid charges, 

161 

 
 
others), and the charge applies a second time when the final consumer off-takes. But 
some exemptions apply : 
- Grid charges do not have to be paid for electricity that provides upward balancing 
energy in the balancing market. In this special case, there are no grid fees for both the 
injection and the withdrawal. Depending on full load hours, the grid fee has to be at 
least 10, 15 or 20 % of the 'normal' grid fee.  
- There are network charge reductions for customer with an exclusive usage of storage 
(not less than 20% of yearly power price). 
- Grid-connected storage facilities are exempted from the grid charges for storage for 
20 years after commissioning. This applies for pumped hydro storage plants 
commissioned from August 2011 (or for 10 years when existing plants increased 
electrical capacity by at least 7,5% or storage capacity by at least 5% after August 
2011). 
- Hydrogen electrolysis plants, like electricity storage systems, are exempted from 
electricity grid charges for 20 years if they are connected to the grid by 4 August 2026 
* Unlike stationary electricity storage devices, storage in electric vehicles does not fall 
under exemption rules, full network charges are due. 
* There is a network tariff reduction for energy intensive customers (typically heavy 
industry customers) with energy consumption that exceeds 7 000 full load hours per 
year and 10 GWh. Depending on full load hours, the grid fee has to be at least 10, 15 
or 20 % of the normal grid fee 
* For industrial electricity users, the level of grid charges is largely determined by their 
peak load. To lower their peak offtake and related grid charges, electricity storage is 
often considered as an option. 
* A monthly instead of yearly capacity component is offered for final customers with a 
temporary peak electricity consumption 
* An individual tariff is available to final customers with a peak load not coinciding with 
system peak demand. The individual tariff must not be lower than 20 % of the 
published regular tariff. 
* Storage is treated as final consumption and thus bears network charges, taxes and 
levies since 2009. The following exemptions apply: 
   * Battery electricity storage is regarded as a network component, and therefore not 
subject to the electricity consumption tax (StromStG §5, Abs. 4) 
   * Pumped hydro plants are considered generators. Generators are not subject to the 
electricity consumption tax (StromStG §9, Abs. 1, Nr. 2 and StromStV §12, Abs. 1, Nr. 
2) 
   * Electricity from storage fed into the network for balancing purposes (i.e. upward 
balancing energy) is exempt from the EEG surcharge, as the electricity is supplied to 
the balancing group. 
   * A storage facility according to the EEG is treated like an EEG installation. In order 
for a self-supply constellation to exist, there must be personal identity between the 
self-supply system, the storage plant and the consumption of the electricity 
   * Self-production plants are existing plants that have already generated electricity for 
self-production before 1 August 2014. These plants are currently exempt from the EEG 
surcharge. 
   * Self-consumption systems are all those installed from 1 August 2014. These plants 
must pay the full EEG surcharge, unless they are combined heat and power plants 
(CHP) or renewable energy plants (RE), or are not connected to the network. Rebates 
exist depending on the utilization, use of biogas for self-generation. E.g. Batteries and 
thermal storage which can prove with a costly measurement system that they only use 
renewable energy are exempted from levies for renewable energy (below 10 KWp). 
   * The electricity consumed for the generation of green hydrogen has to pay fees, 
levies and taxes. The long-term stored hydrogen is charged again when it is used by 
the next end user. However, electricity used for power-to-gas is exempted from 
charges and levies if hydrogen is transformed directly into electricity again. In this case 
no state-imposed costs have to be paid. The difference in production costs plus state-
imposed costs to other forms of hydrogen can exceed total investment costs. Green 
hydrogen costs about 6 Ct/KWh. If levies, fees and taxes apply the costs are increasing 
to 28 Ct/KWh. Hence, electrolysers could be clearly defined as time buffer and 
facilitator for PtX in the energy law to get the state-imposed costs down and attract 
investments. 
* Due to the unbundling between network operation and the other actors according to 
the Energy Industry Act (EnWG), the operation of a storage facility for the distribution 
network operator is only possible for a few services. 
* Electricity storage is not clearly defined in the German Legislation 
* The Electricity Tax Act defines stationary battery storage: 'a rechargeable storage for 
electrochemical-based electricity that remains exclusively at its geographical location 
during operation, permanently connected to the utility grid and not part of a vehicle. 
The geographic location is a point determined by geographic coordinates' 
* TenneT  and Sonnen are working on blockchain-based projects to sources flexibility 
services from residential storage to the TSO. 

162 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

 
 
EUROPEAN COMMISSION 

9. Barriers 

10. Best 
practices 

* There is a regulatory gap concerning the application of EEG dispositions when 
renewable electricity is stored, for example regulation in § 60 (3) EEG 2014 cannot be 
applied directly because the electricity was not obtained from the public grid.  
* In the further development of the electricity market, balancing deviations will be 
more heavily punished, resulting in suppliers taking their customers under liability. 
Storage can then be part of the corporate strategy to avoid such deviations 
* Network tariff exemption does not remove the obligation for storage facilities to pay 
some other regulatory charges not directly related to TSO activities. There is legal 
uncertainty as to whether the exemption from the network charges also applies to the 
concession fee and the levies that are charged. This concerns the CHP surcharge, the 
§19 surcharge and the offshore liability charge. 
* There are no feed-in tariffs in the gas network for such installations (§ 118 (6) 
EnWG). 
* Delivery to a sister company in a corporation is not considered as self-supply 
according to the strict interpretation of § 61 EEG by the national regulator. 
* There is no common definition of energy storage in the regulatory framework. 
Considering storage as both a consumer and producer has a considerable impact on the 
economic efficiency of storage projects due to the volume of network charges, taxes 
and levies. There are also legal differences as to whether the electricity originates from 
a self-generating or self-supply system or is sourced from the public grid, and whether 
the stored electricity is fed into the public grid or consumed directly in the site. It would 
be necessary to have a clear definition about energy storage as time buffer as it has 
been pointed out in Article 2 Point 59 of the Directive on common rules for the internal 
market for electricity (EU) 2019/944. 
* In the German energy statistics, stored electricity is considered as removal from the 
grid and as the return of electrical energy to the grid. The current adaptation of the 
energy statistics of the Federal Ministry of the Interior (Bundesinnenministerium – BMI) 
for the determination of the primary energy factor provides factually and statistically 
accurate results. 
* Highlight placed on developing a flexible energy system, including through system 
integration and use of storage 
* Heat storage for industrial and tertiary CHP is a flexible and cheap option for the 
indirect storage of electricity 
* In the further development of the electricity market, balancing deviations will be 
more heavily punished, resulting in suppliers taking their customers under liability. 
Storage can then be part of the corporate strategy to avoid such deviations 

163 

 
 
 
 
 
Greece 

Topic 

1. Public 
Support 

Greece - Policy description 

* Currently, there is no regulatory framework for distinct storage facilities. The 
Regulatory Authority for Energy (RAE) has published on 2019 a public consultation “for 
the formulation of a new regulatory framework for the installation, operation and 
pricing of storage stations in electricity transmission and distribution networks”. It will 
address : relationship between electricity markets and storage; viability of investments 
on storage; mechanisms for remuneration; energy storage participation in the 
electricity markets; licensing and permitting for behind-the-meter storage; possible 
differentiation between small-scale and large-scale storage; other barriers. RAE 
published its thoughts on the major issues related to such a framework in October 
2019, and up to early January 2020 no draft text had been prepared. 
* In the non-interconnected islands, hybrid facilities are compensated based on a 
regulated combination of capacity payment for the storage component, plus a feed-in-
tariff for the energy from the storage , plus a feed-in-tariff for the energy from the 
renewable generation. For the three existing commercial hybrid systems installed, 
special provisions apply. This scheme is due to change, and RAE has submitted to the 
Ministry of Energy a new compensation scheme. 

The final  2019  NECP version  foresses  the  addition of  aproximately  2.7  GW of  electical 
storage capacity by 2030, split between around 1.4 GW in pumped hydro and 1.2 GW in 
batteries. Two explicitly named pump storage projects (one of which is a PCI project) are 
to be implemented by 2025. The NECP contains furthermore the following references to 
storage: 
* To achieve high levels of penetration of uncontrollable RES plants, as set out in the 
NECP,  in  an  economically  rational  way  (sufficiently  low  cuts  in  their  output),  there  is 
generally a need for energy storage. For several decades, pumped storage has been the 
most  widespread  international  method  for  large-scale  storage  of  electricity.  Today, 
international developments are rapid in terms of other forms of storage, for large or small 
installations,  especially  for  batteries  of  different  kinds.  The  coupling  of  markets  via 
interconnectors in accordance with the provisions of the new electricity market model is 
important for achieving high levels of penetration. There is also interest in power-to-gas 
(e.g.  hydrogen)  storage  applications,  in  the  context  of  which  the  interconnection  of 
electricity  and  gas  networks  is  also  investigated.  Moreover,  given  the  international 
interconnections of the Greek mainland system, the investigation of the needs for storage 
and coverage thereof at a regional level may also prove efficient.  
* The full regulatory framework for the operation of storage systems in the electricity 
market will have been developed and it will be possible to develop these systems as part 
of generation units with simplified administrative procedures to authorise their operation 
by 2020. Already in the energy offsetting scheme, provision is made to operate storage 
systems exclusively for the storage of energy generated by self-generation RES systems 
and for its use by end consumers to meet their electricity needs at a later time. 
* As regards power generation in particular, RES will be the major domestic source  of 
power as early as in the middle of the following decade, with a share exceeding 65% of 
the domestic power generation by 2030, by utilising in the most cost-effective manner 
Greece’s high potential especially for wind and photovoltaic plants. A tool in this direction 
will  be  the  full  functioning  of  the  new  electricity  market  model,  the  simplification  and 
speeding  up  of  the  licensing  procedure,  the  digitisation  of  the  energy  system  and  the 
enhancement  and  expansion  of  energy  infrastructures  to  allow  for  maximum  RES 
penetration in power generation, focusing on storage systems, and in general the gradual 
electrification and the energy coupling of final consumption sectors to allow for maximum 
RES  share  in  final  energy  consumption.  Another  priority  is  promoting  electromobility, 
which will now rely heavily on RES power generation. 
*  A  further  aim  is  to  combine  consumption  sectors  to  the  greatest  and  most  efficient 
extent possible, placing emphasis on maximising the use of RES. The electrification of 
different  uses  in  final  consumption  is  an  essential  component  in  achieving  this  aim.  A 
typical  example  is  heat  pumps  which,  together  with  the  future  greater  use  of  energy 
storage systems and self-production schemes, will make a decisive contribution in this 
direction. 
* At a technical level, it is also critical for the following period to develop an appropriate 
institutional  framework  for  storage  units  and  have  them  participate  in  the  electricity 
market.  The  participation  of  these  units  is  considered  to  be  crucial  for  attaining  high 
shares  of  RES  in  the  electricity  market.  In  this  context,  plans  have  to  be  made 
immediately also for making possible the deployment of storage units within a RES plant, 
using simplified procedures. 
*  The  main  categories  of  flexibility  sources  are  dispatchable  power  plants,  storage, 
interconnections and demand response.  
* For islands that are not expected to be interconnected, a significant reduction in the 
use of diesel for power generation is also being promoted, with the setup of state-of-the-
art RES plants combined with storage technologies  

164 

 
 
 
EUROPEAN COMMISSION 

* in RD&I, Transformation of the transport sector, to be achieved by reducing the cost 
of small-scale electricity storage technologies and of electromobility  
*  the  development  of  both  centralised  and  decentralised  storage  units  is  expected  to 
contribute towards the attainment of the goal of optimal integration of RES in electricity 
networks. 
* Storage systems are expected to play an important role in reducing RES cuts in the 
system as a whole, to address local congestion problems and to ensure more adequate 
capacity  and  better  system  flexibility.  Combining  RES  plants  with  energy  storage 
systems,  i.e.  where  they  share  a  common  connection  point  (storage  system  installed 
behind the meter or at a point in the distribution network downstream the same point of 
connection  with  the  high  voltage  system),  can  mitigate  the  impact  of  RES  plants  on 
system  operation,  smoothing  out  variations  in  generation,  provided  that  there  are  no 
operating problems. 
*  Both  centralised  and  decentralised  storage  units  require  the  development  of  a 
comprehensive regulatory and statutory framework for their operation in energy markets 
and their integration in electricity networks. 
*  The options for coupling the electricity and gas sectors (power-to-gas) through storage 
applications that include conversion of electricity into renewable gas, such as hydrogen, 
are  equally  important.  The  gas  produced  by  using  RES  energy  may  be  fed  into  the 
existing gas network and used as fuel for heating in buildings or in transport.  
* A key objective of centrally distributed storage systems is the development of storage 
units,  including  existing  ones  (Sfikia-Thisavros  ~  700  MW)  and  including  projects  of 
common  interest  (PCIs).  The  precise  additional  required  power  of  storage  systems, 
capacity,  and  technology of storage  units  will  result  from  relevant  studies  that  will  be 
based on both the economic benefits they provide to the operation of the system and 
their contribution to power adequacy and flexibility of the System. 
*  Policy  measures  to  promote  the  installation  of  electricity  storage  systems  may  vary 
depending  on  the  technology  and  type  (centralised,  dispersed)  of  the  storage  system 
(such  as  pumped  storage  projects  in  the  area  of  Amfilochia  and  Amari,  Crete).  In 
particular,  the promotion of  centralised electricity  storage systems  is  possible  through 
the  implementation  of  an  appropriate  purchasing  mechanism,  which  will  motivate  the 
construction of storage systems over other electricity generation plants. 
* With regard to energy storage, measures will be taken to strengthen the development 
of  new  or  improved  electricity  or  thermal  energy  storage  technologies  with  higher 
efficiency, availability, durability, security and at the lowest cost. Support will be provided 
for  electrochemical  energy  storage  technologies,  which  relate  primarily  to  RES 
applications for utilisation in non-interconnected electricity networks or in remote points 
in the electricity network. 
* The essential characteristics of the electricity generation system until 2030, in line with 
the  objectives  achievement  scenario,  the  NECP  indicates  1.4GW  Power  of  new  central 
storage systems (batteries) 
* Permitting process for hybrid facilities (cf. section 8 for hybrid facility definition) 
follows the same rules which apply for the renewable generation component of the 
station 
* The participation of front-of-the-meter storage facilities in the upcoming target model 
has not yet been announced 
* In the interconnected system, hybrid facilities participate in the market with the 
same rules as renewable energy facilities. There is currently neither a market for the 
storage services nor a special remuneration for hybrid facilities. 
* Electricity storage is not yet eligible to provide ancillary services 

* Stand-alone front-of-the-meter storage is not described as a specific asset in the 
network code and therefore should comply to the consumer and producer's rules. 
* Net metering for self-producers allows behind-the-meter storage. No injection to the 
network is allowed, as defined by the regulatory framework (Law 4513/2018) and 
corresponding Ministry of Energy regulation 15084/382 (2019). 
* No specific mention of electricity storage identified in the legislation, assumption is 
that charging is treated as consumption for the electricity consumption tax and levy 
purposes. 

* Storage is a necessary component in the definition of a hybrid installation. According 
to the national legislation (definition in Law 3468/2006), hybrid installation is one: 
  - Which uses at least one form of renewable energy source. 
  - Where the total energy which the hybrid installation consumed from the grid, should 
not exceed 30% of the overall energy which is stored, on a yearly basis. 
  - The maximum capacity of the renewable energy generation does not exceed 120% 
the storage capacity. 

* Support mechanisms for renewable electricity in islands addresses and remunerates 
hybrid installations 

165 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 
5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 
10. Best 
practices 

 
 
 
Hungary 

Topic 

1. Public 
Support 

Hungary - Policy description 

* For energy storage, a focus in on manufacturing batteries for EVs, due to the 
economic potential of the electric vehicle industry 
* The National Energy Strategy 2030 does not recommend new pumped hydro storage, 
arguing it could be solved more efficiently with regional cooperation. 
* The Energy & Industrial Development and R&I Action Plan highlights storage as an 
R&I key field among several other technologies. 
* The Hungarian Regulatory Office (MEKH) supports pilots and is acquiring experience 
regarding the market, the technology and the possibilities offered by energy storage. 
* The Ministry of Innovation and Technology supports storage with tenders for pilots, 
also in order to gather knowledge (including for the NRA and system operators) on the 
use of storage and the impact on the transmission and distribution networks. 
 * Pilots established with such support include small ones by DSOs (E.On, NKM in the 
case of fast charging stations) and larger ones by Alteo and ELMŰ (Innogy), focusing 
on balancing markets. 
* The implementation of energy storage projects in Hungary is relatively difficult as 
Hungary is centrally-located and has a developed electricity network. However recent 
developments should improve the business case of storage: 
 a. Several fossil–based power plants were shut down, decreasing balancing capabilities 
 b. Electricity imports increased to 30-35% of traded volume 
 c. Renewable energy share is growing 
 d. 3 to 6 GW of PV should be installed in the 10 years, and could amount to 50-60% of 
the net installed capacity of Hungary 
 e. A minimum 1 GW of additional balancing capacity should be needed to integrate 
renewables. In 2018 reserve capacity already fell in some hours below the reference 
reserve level of around 1.3 GW set by MAVIR. 

The final 2019 NECP version refers to electricity storage 
* The construction of a new gas turbine power plant at the Mátra power plant site, 
which is particularly important for the security of supply in the Eastern part, is under 
investigation, is the construction of a new photovoltaic (PV) power plant and industrial 
energy storage unit, as well as the energy recovery of non-recoverable waste 
(RDF).The Mátra power plant site and/or the Northern Hungary region hosting it offers 
a good opportunity to carry out low carbon energy production and storage projects that 
can relieve other areas of pressure 
* Short-term fluctuations in weather-dependent production can be offset today mainly 
by gas-fired power plants, but there should also be scope for the spread of new 
innovative solutions such as energy storage and demand response 
* The Energy Innovation Council (EIT) composed by the Minister for Innovation and 
Technology, the Hungarian energy and industrial companies, universities, research 
institutes, professional organisations, the Energy Regulator (MEKH) and several 
Ministers identified, among the options for intervention areas: Innovative System 
Balance (Flexibility Storage and Demand Management). 
* regarding the electricity market, it is essential that the domestic electricity system 
(including consumers) has controllable capacities guaranteeing safe operation and 
balancing. (E.g.: generation capacities providing flexibility; new types of flexibility 
services, DSR solutions, energy storage) 
* As regards energy storage, Hungary intends to encourage the use of energy storage 
systems to integrate renewable energy production. In order to ensure cost-effective 
integration of renewables, it will also be necessary to encourage the uptake of 
innovative technologies (energy storage, capacity building of existing network 
elements) and modes of operation (demand response). 
* The spread of seasonal electricity storage and battery storage, as well as grid 
developments and grids, will be supported from OPs and Modernisation Fund grants as 
of 2021 
* Investment in energy storage and micro-grid solutions (facilitating single-site 
operation of renewables and energy storage facilities with regulatory tools) should be 
encouraged. It is necessary to simplify the authorisation process and regulatory market 
accreditation of energy storages, to develop regulatory products making better use of 
the technical potential of storages (e.g. the introduction of artificial inertia-type 
products), to promote innovative solutions in seasonal storage and to encourage the 
storage of heat by cogeneration producers. 
* In order to support the use of the necessary innovative solutions in seasonal energy 
storage, Hungary is also planning pilot projects: Converting excess electricity into heat 
and storing it in district heating systems using electric boilers; Development of optimal 
storage and use of electricity generated hydrogen 
* It is proposed to launch pilot projects on the  distribution and transmission (DSO and 
TSO) side for energy storage systems 

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* The creation of a complex pilot-sized research and development centre to test the 
systemic interconnection of different renewable energy sources and energy storage 
technologies is desirable 
* The aim is to develop complex price regulation that encourages the use of innovative 
smart solutions and the market procurement of flexibility services (e.g. energy storage, 
demand response). 
* Sector coupling is accentuating when the processes of producing different forms of 
energy (electricity and heat as well as fuels) are interlinked. The gas market and the 
electricity market are already interlinked on a number of points. However, in the near 
future, sector coupling could also cover new areas, e.g. replacing gas-based 
heating/cooling with renewable-based electricity or heat pumps in regions with low-use 
infrastructure or not connected to the gas network. The convergence of energy systems 
is also facilitated by the development of energy storage technologies (e.g. battery, heat 
storage, power-to-gas). 
* In digitised energy systems, communication between generation, demand, storage 
and grid is becoming faster 
* Priority is to improve innovation, with sub-focus on development of household and 
industrial scale energy storage technologies 
* Planned measure to develop household-scale small power plants combined with 
smart metering and electricity storage 
* The upcoming Energy Strategy will define the regulatory framework for among others 
electricity storage in batteries 
* The regulator is the competent authority responsible for licensing of all generation 
facilities. In case of any future development e.g. pumped hydro, it would act as the 
licensing body. 
* The Hungarian Act 86/2007 on Electric Energy requires the authorization for the 
operation of an electricity storage facility with a nominal output capacity of 0.5 MW or 
more 
* The Hungarian Act 86/2007 on Electric Energy indicates the provisions (including in 
secondary legislation) for the authorization of power plants shall apply to electricity 
storage facilities, mutatis mutandis 
* There is no specific electricity storage regulatory regime in Hungary. 
* Legally, all markets are open for large and aggregated consumers, however 
participation is currently still limited. 
* Large consumers, retailers and aggregated consumers are allowed to participate in 
the Hungarian Energy Exchange HUPX. However in 2016 entrance was difficult, 
expensive and with liquidity problems. The combination of over-the-counter contracts 
and participation at the exchange was then common. 
* In 2018 batteries could provide FCR services, while loads could provide RR 
* Aggregators are allowed to provide balancing services, as there is no special 
restriction or rules for aggregation. 
* Several battery projects focusing on balancing implemented/planned from 2018 on 1) 
Alteo project delivered in 2018 for FCR and aFRR services, including to the company's 
virtual power plant; 2) ELMŰ-ÉMÁSZ Energiatároló Kft; 3) E.ON battery. 
* Black start is remunerated by the TSO. If the gross installed capacity is more than 
500 MW and the power plant is connected to the transmission grid, the service is 
mandatory. Some of the power plants are able to provide black start capability, but 
their gross installed capacities are less than 500 MW. 
* There is no specific legislation about tariff discounts, transformation losses, or other 
grid aspects. 
* There is no specific taxation regulation for energy storage in Hungary. If energy 
storage is interpreted as consumption, it could be subject to electricity consumption 
taxes. 
* DSO can install and operate a storage facility of max 0.5 MW to optimize distribution 
activities, as long as in accordance with the lowest cost principle (Hungarian Act 
86/2007 on Electric Energy). 
* Hungarian Act 86/2007 on Electric Energy: ‘Electricity storage facility’ shall mean an 
equipment used for storing electricity by way of physical or chemical means, meaning 
that it converts and stores in-put electricity, then releases it back to the electricity 
system minus technical waste; 
* In essence, the current legal situation is that energy storage shares the legal role of 
generators and are handled by the regulator as such. 
* The National Energy Strategy 2030 provides negative signals as pumped hydro is 
deemed as not an adequate option. 
* All potential pumped hydro sites are located close to the River Danube and other 
environmentally sensitive locations, which are Natura 2000 territories. On one such site 
the competent authority refused the necessary environmental license, later confirmed 
in court. 
* Storage is subject to double charging and to the electricity consumption tax. 
* Hungary requires the development of a regulatory regime for the participation of 
storage in energy, capacity and ancillary service markets. 

167 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 
6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 

 
10. Best 
practices 

* The participation of storage in ancillary service markets is very limited, restricting the 
available revenue streams for storage projects. 
* Electrical energy act contains a definition of storage. 
* The government, regulator and system operators are actively exploring storage 
technologies, pilots and system integration. 
* Samsung SDI has completed in 2017 its battery manufacturing plant in Hungary, 
focused on the automotive industry. SK Innovation has also announced the 
construction of plants in the country. 
* Several stationary battery storage installations in development / operational by both 
network operators and non-regulated actors 

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Ireland 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

Ireland - Policy description 

* The national report on climate action refers explicitly to storage: 'Storage of 
electricity through the use of batteries, pumped storage or compressed air storage 
(amongst others) will be of vital importance both in terms of security of supply and in 
the switchover to renewable energy sources.' 
* The government 70% renewable electricity target for 2030 will require significant 
additional system stability services from fast acting energy storage 
* In July 2018, a pilot micro-generation scheme was launched to support PV 
installations coupled with home battery storage for self-production 
Relevant references in the draft NECP 2018 
* Large-scale energy storage is necessary to electrify the heating and transport sectors 
* New efficient energy storage systems should be incentivised  
* Policies related to small scale battery storage should be developed to facilitate self-
production; moreover a regional approach to strategically located battery storage 
facilities is suggested to alleviate pressure on national grid 
* R&I to focus on technologies at advanced readiness levels, prioritising energy storage 
technologies and solutions 
* At the present only one large scale energy storage facility is in operation: pumped 
hydro station at Turlough Hill 
* The standard permitting rules for power generation plants apply to energy storage 
plants e.g. planning permission (which covers environmental issues), power generation 
licence and authorisation to construct. The legislation does not differentiate between 
generation and storage technologies. 
* Energy storage is allowed to participate in the electricity markets (including intra-day 
and balancing). The effective participation varies per technology. 
*  Energy  storage  are  allowed  to  participate  in  the  Irish  Capacity  Remuneration 
Mechanism; the derating factors depend on the duration of storage being provided. The 
CRM offers additional revenues, which may have to be partly reimbursed if the market 
price exceeds the strike price in the contract (€500/MWh). 
* Developments in the area of sector coupling are at an early stage. Some companies 
provide a solution combining heating, cooling, electricity and energy storage 
* Ancillary services are currently both a grid code requirement in terms of capability, and 
units  can  also  contract  under  the  DS3  System  Service  programme  for  availability 
payments for provision of services. The DS3 programme led by EirGrid (TSO) includes 
the development of an enhanced market for system services,14 System Services exist 
which  cover  both  frequency  and  voltage  services,  and  are  open  to  all  technology 
providers. A separate DS3 fixed 6 year contract for provision of 5 services ( fast reserves 
with response provision within 300ms for a duration of 20 mins) is also in place with a 
limited  number  of  providers  (110MW).  The  fixed  6  year  contracts  require  a  response 
within 300ms and there is an incentive to respond within 150 ms. 
*  An  Enduring  Connection  Policy  (ECP-1)  was  published  under  which  generators  can 
apply  for  a  connection  at  a  particular  time  (for  all  types  of  applications).  In  the  first 
“gate”, with 1000MW being processed, 400MW was prioritised for connections for DS3 
system services plants, predominantly batteries. 
*  There  is  double  charging of  tariffs,  as currently storage pays  connection  and  access 
charges on the basis of withdrawal and injection. Some of the transmission-connected 
pumped hydro storages are fully or partially exempted from withdrawal charges. Also, 
the Public Service Obligation charge (applied to all energy consumers in Ireland) which 
is based on Maximum Import Capacity (MIC)  will only apply to the portion of the MIC 
related to house load when it is offline (i.e. neither importing or exporting) and not to 
the full MIC related to energy injection and absorption to/from the grid. This contrasts 
with the treatment of self-producers which only have to pay access charges for whichever 
of their Maximum Import Capacity (MIC) or Maximum Export Capacity (MEC) is higher. 
* The aspect of the network codes which currently applies to energy storage is a generic 
Power Park Module (PPM) code which was originally elaborated for wind generators. TSO 
EirGrid has recognised that some derogations are required the specific characteristics of 
energy storage and its potential to offer grid stability services. 
* There is no net metering at the moment 
* Public service obligation levies are charged only based on the house load 
consumption. The levy is calculated on the basis of the Maximum Import Capacity 
(MIC). The Commission for Regulation of Utilities (CRU) determined in 2019 that the 
MIC for calculation of the PSO for energy storage plants was based on the MIC when 
importing at 'house load' (i.e. when neither importing or exporting).  
* Currently the TSO/DSO do not own any energy storage plants 

* Energy storage is not defined in the national regulatory framework. 

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9. Barriers 

10. Best 
practices 

* The main support for encouraging new build in fast acting energy storage is an auction 
for procuring capacity  under a 6 year fixed-term contract being offered by EirGrid under 
their DS3 program. This auction resulted in a procurement of 110 MW of battery storage 
which concluded in Oct 2019. It is unclear if a similar scheme would be announced for 
securing system  services  in  the  future.  The other  route  to  market  is  an ongoing  tariff 
arrangement but the tariff rates could fall, so there is less certainty of revenue compared 
to the 6 year contract. The 6 year contract is sufficient to make battery projects viable 
but  is  too  short  for  capital  intensive  technologies  such  as  hydro  pumped  storage  or 
compressed air energy storage. 
*  The Capacity  Market  (CRM)  would  not  be  feasible for  short duration  energy  storage 
plants e.g. for grid stability services but it may work for medium and long duration energy 
storage. 
*  In  general,  there  is  a  lack  of  market  mechanisms  for  some  applications  of  energy 
storage and also the lack of long-term market signals (although a small volume of 6 year 
contracts are available for fast acting energy storage). 
*  Currently  Energy  Storage  providers  that  are  over  0.5MW  are  required  to  pay  both 
Transmission generation use of system charges (GTuOS)and distribution use of system 
charges  (DTuOS).  In  addition,  plants  connected  at  distribution  level  will  be  subject  to 
Distribution use of system charges (DuOS) 
*  The  Use  of  System  Charges  rule  places  energy  storage  plants  at  competitive 
disadvantage to generation or distribution technologies. 
*  EirGrid  has  accepted  that  some  Grid  Code  derogations  are  required  but  there  have 
been little signs of progress in addressing these in a coordinated manner * There is no 
market  mechanism  or  regulatory  focus  –  on  utilization  of  storage  devices  to  assist  in 
congestion management/grid investment deferral. 
* There is a lack of understanding of the role of energy storage in the decarbonisation 
of electricity supply and consequently the lack of clear policies and rules for storage 
* EirGrid's DS3 program has facilitated an increase in the instantaneous System Non-
Synchronous Penetration (SNSP) from 50% to 65% with a current target of 75% when 
battery plants are built to provide FFR. This is significantly higher than any other 
country. The 2030 target is likely to be 90% to accommodate the 70% renewable 
electricity target adopted by the Irish government. 
* Public service obligation levy applies only to on-site consumption for storage. 

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Italy 

Topic 

1. Public 
Support 

EUROPEAN COMMISSION 

Italy - Policy description 

* GSE provides a net billing scheme, the Scambio sul Posto. The Italian National 
Energy and Climate Plan (NECP) foresees the revision of such a scheme in order to 
support the installation of storage facilities. GSE (the authority managing the payment 
of incentives) confirmed and regulated the installation of a storage system in an 
existing PV power plant receiving subsidies, in order to remove uncertainties. 
* The public R&I budget for energy storage in 2017 was 9.69 M€. 
* The Lombardy region provided a support mechanism to behind-the-meter storage 
combined with residential PV plant in 2016, renewed for the 2017-2020 period. Due to 
this, the large majority of the behind-the-meter storage installations in the period in 
Italy are in Lombardy. In 2019 also Veneto and Friuli Venezia Giulia regions provided a 
support mechanism as the Lombardy. 
* A tax credit (in 10 years) for residential storage device  was implemented in 2013. In 
2019 the Italian tax authority published the circular n. 13/E, removing the tax credit 
eligibility to PV plants which receive subsidies in Conto Energia. 
* The main goal within the electricity sector is to introduce new market instruments in 
order to channel investments towards new storage systems and generation capacity. 
* The 2020 Italian Budget Law 160/2019 includes tax credits for new high-tech assets, 
qualifying under the Industry 4.0 Plan. Credits amount to 40% for investments up to 
€2.5 million and 20% for investments from €2.5 to €10 million.  

The final 2019 NECP version refers to electricity storage 
* With regard to the safety and flexibility of the electricity system, the promotion of a 
broad participation of all available resources — including accumulations, renewables 
and demand — will need to be taken into account for the transformation of the system 
induced by the increasing role of renewables and distributed generation, testing new 
architectures and management modes, including with the active role of TSOs. Similarly, 
it is necessary to take account of the essential need for storage systems, to avoid over-
generation from installations for the production of electricity from renewable sources 
* Support to the deployment of distributed storage systems 
* Bundling of generating facilities including together with storage systems, and demand 
units for access to services markets 
* It also aims to promote the deployment and use of energy storage systems, including 
electric vehicles, including long-term accumulation, and the integration of the electricity 
system with gas and water systems 
* Among the most stressed topics in the sections on electric RES include positions 
expressed in favour of self-consumption, including in a collective form by enabling 
multi-user configurations within energy communities; the main arguments highlighted 
are the promotion of demand and supply aggregators in the PPPs and the development 
of an enabling environment for the full development of storage technologies, especially 
through pumped storage and batteries, but without neglecting the new borders of 
power to gas 
* The realisation of a large storage capacity, and storage solutions involving the use of 
alternative energy carriers (synthetic hydrogen/methane), is concentrated in the 
service of the network, is also indispensable in order to mitigate some problems and 
have appropriate flexibility resources 
* A further objective relates to the important development of the storage capacity, 
which will be gradually but increasingly addressed to “energy intensive” solutions, in 
order to limit the phenomenon of overgeneration and to support the achievement of 
the targets for the consumption of renewable energy 
* For the coming years, it is also necessary to pursue a significant development of 
electrochemical storage 
* it has been estimated that in the medium term (around 2023) new storage systems 
for almost 1.000 MW in production are in production, between hydro and 
electrochemical 
* It is of particular interest to be the synthesis of hydrogen from excess renewable 
electricity to be used for the purposes of storage or entry in gas networks 
* The potential for thermal energy storage technologies, especially high-efficiency 
cogeneration systems and district heating networks, will also be considered 
* In summary, the objectives for the energy security of the electricity system and its 
quantification are : new storage systems installed for at least 6 GW by 2030 
* Increasing the flexibility of the system is certainly one of the national targets for the 
internal energy market. It will be pursued both by making the existing thermoelectric 
power park more flexible and, above all, by extending market participation to new, 
flexible resources. These identify aggregation and demand response, the better 
involvement of distributed and renewable generation not programmable to services 
markets and the development of new storage systems 

171 

 
 
* Development of storage systems, including thermal, electrochemical and power to 
gas, and their interfaces with networks, to ensure high levels of penetration of non-
programmable renewables 
* Where self-consumed energy exceeds 40 % of output, a specific premium is 
provided, which can also drive the deployment of storage systems 
* Legislative Decree No 102/2014 introduced the possibility to create aggregates of 
generating installations, including together with storage systems 
* The sector on which Italy was relatively more active in electrical power in 2016, from 
an innovative perspective, is energy storage (one fifth of the total), but also 
photovoltaics and wind, which together attract 37 % of the innovations produced in 
Italy, mainly from Lombardy and Lazio. 
* Installation of storage systems is not allowed for those PV power plants that benefit 
from the first Conto Energia subsidies, have a capacity of under 20 kW and benefit 
from net billing (scambio sul posto). 
* The absence of clear timelines and procedures to follow for permitting and the lack of 
environmental regulation specific for storage technologies leads to permitting barriers, 
according to a stakheolder. 
* No further specific permitting provisions identified. 
* The Italian energy markets do not specificy the system actors which are able to 
participate, thus not blocking storage. However, the Italian wholesale energy markets 
do not have specific linked or loop block orders to allow tailored bids by storage. 
* Storage is allowed to participate in the Italian CRM (with a derating factor), whose 
auction took place at the end of 2019. The derating factor aggregates storage in the 
category 'others', giving a value of 50%, regardless of the energy-to-power ratio of the 
storage. According to the auction results published at the end of December 2019, 
storage was awarded 96 MW of new capacity, equal to 2.4% of the total awarded 
capacity. 
* Most behind-the-meter storage installed in Italy (and concentrated in the Lombardy 
region) is for increasing self-consumption of renewables. 
* There is no regulatory framework for vehicle-to-grid applications. 
* Italy is revising the regulatory framework and design of the MSD market (balancing + 
congestion management). In 2018 several pilots were launched to test the opening of 
this market to other resources than conventional and dispatchable power plants above 
10MW. In the UVAM pilot, which will continue in 2020, virtual units (of distributed 
generation, storage including V2G, demand and other resources) with (upward and/or 
downward) balancing capacity of 1 MW can now be aggregated and participate in 
congestion management, FCR and RR provision. A stakeholder has indicated it is 
focused on demand response rather than storage. 
* After the results of this pilot project, the partipation of virtual aggregated units to 
MSD will be fully allowed in the regulation. 
* Terna will verify in 2020 the possibility to allow the virtual units to participate in other 
services, especially FRR provision. 
* The UVAS project is to be launched in 2020 for the provision of rapid FCR (under 1 s) 
by non-conventional resources. The size of each UVAS must be over 5 MW. 
* The UPI project has been launched at the end of 2018 by the TSO Terna. UPI aims at 
the procurement of primary frequency regulation services from power plants above 10 
MW  with  storage systems. It was sized  at 30  MW,  and  this  capacity fully  allocated  by 
2020. 
* ARERA regulation 574/2014/R/eel updated the connection and access rules to include 
energy storage. Tariff discounts for withdrawal from pumped hydro are extended to all 
electricity storage technologies, as long as energy is not intended for final 
consumption. This means that hybrid configurations of storage system combining also 
consumption assets are not eligible for the discount. Hybrid generation + storage 
assets are classified as generation, and energy offtakes by these hybrid assets are 
differentiated between withdrawals intended for powering storage (treated as negative 
energy input) and withdrawal intended for powerering the auxiliary generation (treated 
as withdrawals). In either case, consumption by hybrid generation + storage assets for 
ultimately providing system services is exempt from grid charges. 
* ARERA issued consultation 345/2019/R/EEL which closed on September 2019 on the 
extension of the exemption on transmission and distribution grid charges to complex 
configurations such as the combination of consumption and storage. The ARERA 
orientation is that: all electricity drawn from the grid and intended to power the storage 
systems for subsequent re-injection in the network and / or the auxiliary generation 
services should be treated as negative electricity input for determining tariffs. This 
would apply also to cases such as aggregated assets or vehicle-to-grid. 
* According to art. 38-ter of the connection network code (TICA), when storage has the 
same economic conditions and procedures as for high efficiency combined-heat-and-
power plants, it still has to pay the connection charge. 
* The Italian tax authority confirms the installation of a storage system with residential 
PV does allow deducting the appropriate costs for tax purposes, irrespective of whether 
the storage system was installed together or after the PV system (Circular Letter No. 
7/E of 2018). In addition, in the 2019 the italian tax authority published the circular n. 

172 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

 
 
EUROPEAN COMMISSION 

13/E which forbids the detaxation for residential storage device if PV plant receives 
subsidies in the Conto Energia. 
* The 2020 Italian Budget Law 160/2019 includes tax credits for new high-tech assets, 
qualifying under the Industry 4.0 Plan. Credits amount to 40% for investments up to 
€2.5 million and 20% for investments from €2.5 to €10 million.  
* Self-consumed stored energy is exempt from taxes. No other specific mention of 
electricity storage identified in the legislation, thus other storage is treated as 
consumption for the electricity consumption tax and other levy purposes. 
* TSOs and DSOs may develop and operate battery storage facilities (Legislative 
Decree no. 93 of 01 June 2011). Regulation foresees that DSOs must submit a proposal 
providing a cost-benefit analysis to the regulator that justifies such investments if it is 
to be recovered through tariffs. 
* In 2012-2013 the storage pilot projects were regulated, and the TSO pilots were 
included in the NDP and approved by the government (Resolution 288/2012/R/eel / 
Ruling no. 08/2012 of NRA). 
* The NECPs indicates that, to satisfy the need for storage in the case of a lack of 
market interest, upon authorisation by the regulator and on the basis of guidelines 
from the Ministry of Economic Development, the TSO may implement and operate 
storage systems directly connected to the national transmission network in only two 
cases: 
- Storage integrated to the transmission network required for the safety of the 
electricity system. This storage cannot operate on wholesale markets in competition 
with operators; 
- Storage capable of providing ancillary services, where competitive procedures are 
employed by the market operator for procurement of these services. 
* Currently there is no DSO procurement of local flexibility services. 
* Regulatory decision 574/2014/R/eel: A storage system is a set of devices able to 
absorb and release electric energy, foreseen to work continuously in parallel to the grid 
or able to modify the energy exchange with the electricity grid. The storage system 
may or may not be integrated with a generating plant. Systems that enter into function 
only in emergency conditions like during a black out are not considered to be a storage 
system. 
* The absence of adequate long term price signals that differ from the Capacity Market 
is a main barrier to the development of storage facilities. A stakeholder indicates the 
services provided by the storage are still treated singularly and independently from 
each other, with no integration among them. As such, the regulatory framework is still 
lacking, or insufficiently attractive, to fully maximize value from storage technologies. 
* The net billing scheme 'scambio sul posto' is still active, and furthermore does not 
considers storage. It thus disincentives behind-the-meter storage, within and outside of 
the scheme. 
* In the Italian CRM the derating factor of the 'others' group is applied to storage, 
giving an extreme value of 50% and disadvantaging storage compared to other 
technologies. 
* While pilots are ongoing to allow the participation of (aggregated) storage in ancillary 
service markets, there is a need for a consistent and comprehensive opening of these 
markets for (aggregated) storage and loads. 
* Further information is needed on ancillary services are needed to develop a storage 
business plan based not only on the energy market. 
* The Italian tax authority clarified tax rules, confirming the installation of a storage 
system with residential PV does allow deducting the appropriate costs for tax purposes, 
if the residential PV plant does not receive subsidies in Conto Energia. 
* GSE (the authority managing the payment of incentives) confirmed and regulated the 
installation of a storage system in an existing PV power plant receiving subsidies, in 
order to remove uncertainties. 
* The UVAM pilot will increase the participation of storage in the procurement of 
various ancillary services. 
* The UVAS pilot will increase the participation of storage by developing a fast response 
frequency regulation service. 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

173 

 
 
 
 
 
Latvia 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 
9. Barriers 

10. Best 
practices 

Latvia - Policy description 
* The Energy Development Guidelines for 2016-2020 from 2016 indicate improving the 
safety of energy supply and sustainable energy are the key development targets in 
Latvian energy policy. However, the guidelines do not mention storage except when 
briefly discussing its capacity to support RES development. 
The draft NECP 2018 refers to electricity storage 
* The NECP indicates the Latvian Innovation Fund should cover a wide range of 
projects beginning in 2020, including innovative renewable energy and energy storage 
technology projects. 

* There are no specific requirements for permitting of storage facilities in national 
policies. Access permits are issued by the Ministry of Economics, while access to the 
grid is subject to technical regulations issued by TSOs or DSOs. Requirements in 
regulations are the same as for other infrastructure. 
* In 2013 the Nord Pool power exchange started operations in Latvia. Nord Pool day 
ahead and intraday markets are open to storage. The day ahead products include 
hourly and block orders, while the intraday market offers 15-minute, 30-minute, hourly 
and block products.  
* Storage for consumer energy management (e.g. peak shaving) and from electric 
vehicle integration is not developed in Latvia. 
* Planned heat storage within Riga CHP-2 plant will increase flexibility provision 
significantly. 
* The Latvian Regulatory Authority recently approved amendments to the National 
Network Code in line with EU Regulation 2017/2195, stating that energy storage 
companies may participate in the provision of a balancing service. 
* In January 2018 the Baltic common balancing market came in operation, covering 
mFRR. Storage is allowed to provide mFRR services. For mFRR the product duration is 
15 min, the minimum bid size is 1MW. The ENTSO-E ancillary systems survey of 2018 
however indicates only generators may participate in the Latvian mFRR. 
* Currently only FRR is used in the Baltic balancing market. The Russian Unified Power 
System (UPS) provides FCR and FRRa, while Baltic TSOs provide also RR. 
* Net metering for renewable energy installations with a small-scale connection (under 
3*16A amperage) was instituted in 2017 in the Electricity Market Law. 
* There are no specific rules for energy storage facilities to connect and access 
electricity grid. Storage facilities are considered as generators when supplying power to 
the grid and as consumers when consuming power from the grid. 
* In order to decrease monthly fixed grid connection costs for all system users, the 
Latvian NRA has proposed that the distribution-level generators should also have to 
pay the connection grid charge according to their connection capacity (in public 
consultation process in September 2019). 
* No specific mention of electricity storage identified in the legislation, assumption is 
that charging is treated as consumption for the electricity consumption tax and levy 
purposes. 
* Regulation does not address ownership and/or operation of storage by network 
operators. In accordance with Directive (EU) 2019/944 DSOs or TSOs are allowed to 
own storage plants only on specific conditions (Articles 36 and 54) 
* Energy storage is not defined in the national regulatory framework. 

* There is no regulatory framework for storage in Latvia. 
* Grid and taxation aspects (double charging of network tariffs, net metering for 
renewable energy producers with small connections) limit the business case for 
storage, front- and behind-the-meter. 
* The Baltic states implemented the Baltic common balancing market, with storage 
being able to provide the first product, mFRR. 

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EUROPEAN COMMISSION 

Lithuania 

Topic 

1. Public 
Support 

Lithuania - Policy description 

The Lithuanian Energy Strategy includes the following: 
* A strategic direction for 2020 the development of the fifth unit of the Kruonis Pumped 
Storage Power Plant following a cost-benefit analysis. 
* A strategic direction for 2050 the 'development of effective and non-polluting energy 
production, supply, storage/accumulation, and consumption technologies'. 
* An R&I priorities for 'the development of new energy production and storage 
technologies with low GHG and air pollutant emissions and resilience to climate 
change'. 

The final 2019 NECP version refers to electricity storage: 
* Lithuania plans to reach by 2030 45 %.RES target in final energy consumption. 
Therefore, investments in smart energy systems, including transmission, distribution 
and storage infrastructure, and in increasing the required balancing capacity are 
envisaged in order to successfully integrate larger volumes of renewable energy and a 
large number of electricity-generating customers 
* In addition, Lithuania’s 2021-2027 operational programme for investments from the 
European Union funds is directly linked to the implementation of the Commission’s 
recommendations, with a view to allocating EU funds investments to such tasks, such 
as : developing smart energy systems and grids, as well as local energy storage 
solutions 
* The planned capacity mechanism will be technologically neutral, as it will be open not 
only to electricity generation but also to existing and future electricity installations to 
be installed (built) by the participants in the capacity auction before the start of the 
capacity delivery period, but also to installations managed by storage and independent 
electricity demand aggregators. 
* Objectives set out in the National Energy Independence Strategy, with, among the 
priority axes for energy research and experimental development : Development and 
integration into the grid of new technologies for low greenhouse gas emissions and 
ambient air pollutants that are resilient to climate change changes in energy production 
and storage; and integration into the EU’s strategic value chains 
* Promote the production of electricity storage technologies by attracting investment in 
the production of these technologies in Lithuania 
* Financing the deployment and storage of RES energy generation solutions 
* The generating customer shall be given the opportunity to ‘store’ the electricity 
produced by him and not consumed by him for his own use in the electricity networks 
between 1 April of the current year and 31 March of the following year. The producer 
shall pay a network access charge for the amount of electricity that he has ‘stored’ and 
recovered from the electricity networks.159The amount of electricity supplied to the 
electricity grid in excess of the electricity consumed by the customer during the storage 
period shall not be carried forward to the next storage period 
* It is envisaged that the ‘prosumer’ scheme will continue until April 2040 by granting 
the right to “storage” electricity produced and not consumed by the economy in the 
electricity networks 
* In addition to the smart meter, it is also planned to introduce a smart metering system 
for meter management; reliable data collection, storage and analysis 
* Financing of energy security projects (with CEF): Field and infrastructure studies for 
the Kruonis pumped storage plant (Kruoni HAE) 
* Litgrid is currently carrying out a pilot battery project to check the availability of battery 
storage systems under realistic operating conditions of the Lithuanian electricity system. 
Battery  storage  systems  can  contribute  to  maintaining  the  required  level  of  inertia 
(synthetic  inertia  function)  and  to  ensuring  very  rapid  reserves  of  regulatory  powers, 
which  would  contribute  to  improving  system  adequacy  in preparation for  synchronous 
work with continental European networks 
* Promote the integration of electricity storage facilities and services into the electricity 
market 
*  Consumers  will  be  able  to  consume,  store  and  sell  self-generated  electricity  to  the 
market and participate in all electricity markets and contribute to increasing the flexibility 
of the electricity system through energy storage. 
* The Action Plan for the implementation of the National Energy Independence Strategy 
includes policy measures in the research, innovation and competitiveness sector up to 
2030: Develop and implement a common data storage and exchange platform 
* The funds allocated to Lithuania in the Modernisation Fund would be used for the 
modernisation of energy systems, the deployment of energy storage solutions in both 

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district heating and electricity transmission and distribution networks in order to 
integrate the planned ambitious RES levels 
* Planned policy measures for RES in the electricity sector up to 2030: AEI8. Financing 
of RES energy deployment and storage solutions, including prosumers, RES 
Communities (EU support) ; AEI19. Promote the use of RES for CHP heat generation by 
assessing the potential of solar technologies, heat pumps and heat storage in CHP 
systems ;  
* Planned market integration policies up to 2030: ERC26. Promote market integration 
of energy storage facilities and services ; ERC28. Kruoni pump-storage plants (KHAE) 
implementation of the construction project for Unit 5 

* The Ministry of energy actions on 'improvement of power generation infrastructure, 
energy distribution networks and energy storage' forecast as a cross-cutting adaptation 
policy for 2021-2030 with EU funds, but no budget is indicated. 
* No specific measures or requirements for permitting of storage facilities identified in 
national legislation. 
* In 2012-2013 the Nord Pool power exchange started operations in Lithuania. Nord 
Pool day ahead and intraday markets are open to storage. The day ahead products 
include hourly and block orders, while the intraday market offers 15-minute, 30-
minute, hourly and block products.  
* The 2017 Law on Necessary Measures against the Threats Posed by Unsafe Nuclear 
Power Plants in Third Countries stipulates that the Lithuanian electricity storage 
facilities (Kruonis Pumped Storage Hydroelectric Plant) cannot be used for storing 
electricity generated by unsafe nuclear power plants in third countries. 
* The Lithuanian CRM is technology-neutral and thus allows for the participation of 
storage and DSM. A consultation was closed in February 2019 and the first auction is 
forecasted to take place by March 2020. 
* The Kruonis pumped hydro plant is the only storage facility to have been identified 
with a significant role in the Lithuanian energy markets. 

* In January 2018 the Baltic common balancing market came in operation, covering 
mFRR. Storage is allowed to provide mFRR services. For mFRR the product duration is 
15 min , the minimum bid size is 1MW. The ENTSO-E ancillary systems survey of 2018 
however indicates only pumped hydro is eligible to provide FRRm to TSOs, while 
batteries are not yet eligible to provide AS. 
* Currently only FRR is used in the Baltic balancing market. The Russian Unified Power 
System (UPS) provides FCR and FRRa, while Baltic TSOs provide also RR. 
* Within the context of the Baltic synchronization project the Lithuanian TSO LITGRID 
launched a pilot project for a 1 MW battery in Vilnius (to be procured), to study battery 
systems under real operational conditions, identify applications and defined 
requirements for the different services. The battery will be tested for FCR, FRR and RR 
provision. 
* Baltic synchronization project 
   * The political roadmap on the synchronization of the Baltic States to the Continental 
Europe electricity network is from 2019. Studies performed by the Baltic and Polish 
TSOs decide on how to provide regulating power from HVDC links, where battery 
systems were identified as a viable alternative to frequency regulation by HVDC 
systems. Final investment decisions are not due in the next years while the technical 
capabilities of large battery systems are not proven, but preparatory steps are being 
taken. 
   * The Connection Agreement foresees additional studies with battery system 
suppliers regarding several technical and economic analysis on such a battery system. 
* There are no indications of exemptions from grid charges for storage in Lithuania. 
* No specific mention of electricity storage identified in the legislation, assumption is 
that charging is treated as consumption for the electricity consumption tax and levy 
purposes. 
* The 2000 Law on Electricity unbundling provisions do not refer to storage, requiring 
unbundling only of generation, transmission, distribution and supply. 

* Energy storage is not defined in the Law on Electricity or other legislation. 

* Except for pumped hydro in FRRm, there is no participation of storage for the 
provision of ancillary services. 
* The Baltic states implemented the Baltic common balancing market, with storage 
being able to provide the first product, mFRR. 
* LITGRID has started a 1 MW battery system pilot project as part of the forecasted 
increased penetration by 2025. 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 
9. Barriers 

10. Best 
practices 

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EUROPEAN COMMISSION 

Luxembourg 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 
9. Barriers 

10. Best 
practices 

Luxembourg - Policy description 

* There is currently no dedicated national strategies, nor policies exist with regard to 
the promotion of energy storage solutions and their operations. 
* There is currently no dedicated support mechanism for energy storage. 
* Energy consumption of storage devices is exempt from the electricity tax. 
* The law on the organization of the electricity market is currently being revised to 
include among others the principles of self-consumption and energy communities. 
These new modes of production and consumption render explicit the right of every user 
to own and operate energy storage devices within certain technical limits. 
* These provisions are part of the transposition of the Clean Energy Package on storage 
into national law. Additional revisions/adaptations may follow. 
* Luxembourg’s NECP lists decentralised storage and flexibility options as cornerstone 
for future developments. 
* There are currently no specific permitting rules applied to storage devices. The draft 
revision of the law on the organisation of the electricity market authorises all end users 
to own and operate energy storage devices within certain technical limits. 
* The “Vianden Pumped Storage Plant”, one of the largest in its kind in Europe, is 
located in the Grand-Duchy of Luxembourg with a capacity of 1,3 GW and approx. 
5.000 MWh. Owned and operated by the Société Electrique de l'Our S.A., it contributes 
significantly to the flexibility and reliability of the electricity system in the greater 
region. 
* There is currently no public information on the “behind-the-meter” small-scale 
storage capacities. 
* Heat storage capacities used for the operation e.g. district heating systems do not 
play an important role in Luxembourg and none of those contributes to the flexibility 
needs in the electricity sector. 
* Ancillary services for the Luxembourg grid area are procured by the German TSO 
Amprion on behalf of the Luxembourg TSO Creos due to the fact that they are in the 
same LFC area. Conditions are settled in a service contract. Mechanisms are currently 
being developed to fully enable assets in Luxembourg to participate in these 
procurement processes. 
* For the time being, the role of energy storage in consumer energy management is 
negligible. The new legal provisions on self-consumption and energy communities 
might lead to an accelerated development. 
* There are no specific provisions that apply to the grid connection and access rules of 
energy storage facilities. 
* Consumption of self-produced electricity from renewable energies involving storage 
devices is exempt from the variable grid tariff, however, a fixed capacity fee is still due 
* According to the legislative framework, 'the energy consumption used for storage 
purposes' and 'the energy consumption used to produce electricity or used to maintain 
the capacity to produce electricity' is exempt of the electricity consumption tax. 
* Self-consumption - with or without storage devices - is exempt from the renewable 
levies 
* Network operators are not prevented from providing services in the context of 
demand management, distributed generation and others, including the storage of 
energy 

* Energy storage is not defined in the national regulatory framework. 

* Full market access of assets to all ancillary service procurements, also see 4. 
* Economic barriers remain due to the lack of business cases 
* Application of real-time pricing schemes 
* Independent of whether it comes from generation or storage, injected electricity is 
not subject to grid tariffs in Luxembourg 

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Malta 

Topic 

1. Public 
Support 

Malta - Policy description 
* Storage is part of the energy R&I areas and thus may receive funding, as in the case 
of the FLASC project for offshore renewable energy storage. 
* In October 2019, the government announced a scheme in its budget for 2020, 
whereby a grant of 25% on the purchase of battery storage shall be introduced. This 
grant, capped at €1 000, is available to individuals who have already installed solar 
panels and who are no longer benefiting from the feed-in tariff scheme. Further support 
schemes at the moment do not cover the combination of renewable energy production 
with storage, in the same site or virtually. 
* There are ongoing studies by Enemalta regarding the deployment of cost-effective 
electricity storage units to support integration of small scale renewables in system. 

The final 2019 NECP version refers to electricity storage: 
* key policies and measures regarding Energy Security in the context of the long-term 
objective of decarbonisation of the energy system and increased deployment of RES, 
will address Energy storage solutions and demand management  
* The importance of utility battery storage systems for security of supply reasons was 
also raised during the public consultation process 
* Ensuring system stability will either require significant spinning capacity, utility scale 
battery storage or flexible balancing services over the electricity interconnector with 
Sicily. However, the latter is limited to 200MW (the capacity of the interconnector) and 
would in practice be lower if already meeting part of the load 
* Currently, Malta has no utility scale battery storage facilities, and keeping large 
spinning capacity is highly inefficient and may not be technically viable at all times 
* Increasing the flexibility of the national energy system, including through the roll-out 
of cost-effective, innovative solutions such as storage  
* The Government will continue to assess innovative, viable and cost-effective solutions 
tailored to the specificities of Malta’s energy system, such as the deployment of energy 
storage solutions, which would incorporate aspects related to increased RES generation  
* RES electricity in Malta is almost exclusively generated from photovoltaic systems with 
no storage capability and significant intermittency caused by highly variable and localized 
cloud cover. 
* Support for additional PV capacity shall also be aligned with the exigencies of a stable 
grid  and  shall  consider  options  which  facilitate  the  integration of  battery  storage.  This 
promises  to  provide  several  benefits,  including  mitigation  of  overvoltage  on  the  LV 
network, peak shaving, increased self-consumption and demand management. However, 
this depends significantly on the availability of storage solutions at an appropriate price 
point, such that any Government intervention can yield the desired results. 
*  Battery  storage.  As  of  2020,  a  pilot  scheme  supporting  the  integration  of  battery 
storage  with  PV  systems  will  be  launched.  Early  adopters  of  solar  PVs  whose  feed-in-
tariff has expired will be eligible to receive a 25% grant (capped at €1,000) against the 
purchase of a battery system for the storage of renewable energy and therefore increase 
the share of self-consumption. A preliminary study was conducted in 2019 to assess the 
feasibility of such a measure; the pilot project will feed into this continuing assessment. 
It  is  likely  that  a  large-scale  roll-out  of  battery  storage  systems  for  households,  PV-
integrated or stand-alone, would require a significantly higher level of support or lower 
cost of storage than at present. In this regards Malta shall be seeking EU funds (including 
Cohesion funds) to bridge the gap 
* The Government is closely monitoring the development of the energy storage market 
considered essential for further deployment of photovoltaic capacity and for 
optimization of the power system by providing for demand management and peak 
demand shaving 
* It’s important to note that the range of storage solutions which could be successfully 
implemented in Malta is also limited. For instance, the predominant large-scale energy 
storage solutions, such as pumped-storage hydropower are not available in the Maltese 
context 
* Enemalta is required to apply economic dispatch which would also include 
aggregation, demand response and storage subject to technical requirements 
* Utility scale battery storage is being studied not only for security of supply reasons, 
but also with respect to grid stability considerations, which is currently one of the 
barriers limiting Malta’s renewable energy potential post-2020. Investments in storage 
infrastructure will facilitate further deployment of renewable energy  

2. Permitting 

3. Energy 
Markets and 

* Enemalta will monitor the development of the energy storage market. 
* There are no specific permitting requirements for storage nor clarity on whether it 
would be considered as generation. This was one of the reasons for a project not to 
connect to the grid while testing. 
* There is no liquid wholesale market in Malta. 

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EUROPEAN COMMISSION 

Capacity 
Mechanisms 
4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 
9. Barriers 

10. Best 
practices 

* Balancing in Malta is conducted by Enemalta in coordination with the Italian TSO. 
Independent power producers connected to the distribution system do not have 
balancing responsibilities. 
* Since 2010 there is no net metering scheme in Malta, as it was substituted by a feed-
in tariff. 
* There are no specific provisions for storage tariff discounts in Malta, and thus double 
charging of network tariffs applies. 
* No specific mention of electricity storage identified in the legislation, and thus 
charging is treated as consumption for the electricity consumption tax and levy 
purposes. 
* There is no TSO in Malta. 
* Malta is exempt from the TSO and DSO unbundling requirements of the 2009 and the 
2019 Electricity Directives. However, the new storage unbundling requirement for DSOs 
of the new Electricity Directive applies to Malta. 
* Energy storage is not defined in the national regulatory framework. 

* There is currently no regulatory framework for electricity storage in Malta, which 
overall represents an important barrier and requires a case-by-case approach, resulting 
in significant uncertainty. 
The absence of a liquid wholesale market in Malta generally forecloses the participation 
of storage in energy markets. 
* Grid-connected energy storage in Malta is still incipient, with further experience 
necessary. 
* R&I policies already address energy storage projects/technologies. 
* The government has proposed a support scheme for domestic battery systems 
coupled with existing PV arrays. 

179 

 
 
 
 
 
Netherlands 

Topic 

1. Public 
Support 

Netherlands - Policy description 

* The National Climate Agreement contains agreements with various sectors 
(electricity, industry, built environment, traffic and transport, and agriculture) on 
contributions to the climate goals. A chapter in the Agreement is exclusively dedicated 
to systems integration and cross-sector elements of the energy system. 
* Electricity storage is eligible for the Energy and Climate Innovation Demonstration 
(DEI+) subsidy, which has a total budget of 33.6 M EUR for the electricity system 
flexibility window in 2019, and 29 M EUR in 2020. Only storage pilot projects (and not 
demonstration) limited to 15 million € of support are eligible, due to restrictions to the 
energy system flexibility project category arising from the EU State Aid Guidelines. 
* As part of the National Climate Agreement, the policy framework for energy 
innovations is changing towards mission-oriented innovation programmes. The integral 
knowledge and innovation agenda (IKIA) of 2019 specifies five missions that contribute 
to decarbonisation of the economy. The knowledge and innovation needs for attaining 
these targets have been formulated in 13 innovation programmes. Integration in the 
energy system and energy storage as a way to facilitate this is referred to in multiple 
programmes. These eventually serve as the basis for energy innovation policy 
instruments in the Netherlands. 
* The Dutch government supports lead industries through the Top Sectors mechanism, 
including Topsector Energy and Topsector High Tech Systems and Materials. In 2019 
the government has defined, together with stakeholders, 25 missions for the top 
sectors, including for electricity storage. Top Sector Energy missions explicitly mention 
storage as a key facilitator for addressing cross-cutting system integration challenges. 
* Storage is eligible for the renewable energy regulation subsidy scheme (HER-
regeling) which provides subsidies for projects in TRL 6-8. To be eligible, projects need 
to lower the costs of producing renewable electricity and/or combine production and 
storage in smart grids. These projects need to lead to additional renewable energy 
production which would not be possible without the innovation that is developed in the 
project. 
* The public R&I budget for energy storage in 2018 was 5.59M€. 
* Around 70 subsidised projects were active in early 2020 in the Netherlands on 
flexibility, and electricity, heat and gases storage R&I. These projects covered among 
others energy management for houses, buildings and the agriculture/horticulture 
sector. 
* The National Climate Agreement resulted in a process were local government (e.g. 
municipalities and provinces) need to create a Regional Energy Strategy (RES). In this 
strategy also attention needs to be given to energy infrastructure (and thus storage) 
aspects. Therefore, also DSOs are actively involved in these Strategies to study the 
grid impact of renewables and possible mitigation measures for congestion and 
developing flexibility resources. 
* The Dutch government has commissioned specific studies on energy storage 
(subsurface and above-ground), including evaluations of the potential for development, 
the emerging for need for storage from system perspective, and strategies for energy 
system integration. 

The final 2019 NECP version provides insights about the order of mangnitude of needed 
controllable capacity, an estimated 15-17 GW in 2030 and 17-27TWh a year. It 
furthermore refers to electricity storage as follows: 
* Typical issues that may arise at regional or local level include, for example, the 
spatial integration of renewable energy options, as well as the storage and 
infrastructure of heat and electricity 
* The Netherlands already has a lot of flexibility to deal with the loss of supply or 
demand in line with market conditions. The Netherlands does not have separate targets 
for increasing the flexibility in the system. Flexibility in the form of demand response, 
storage or controllability is interconnected in the electricity market and is traded 
through the different markets without the precise identifiable element of flexibility 
* The growth of the number of smart meters will also enable consumers, if they so 
wish, to react to real time prices, with or without aggregators. In addition, any barriers 
to storage will be removed. The transition to electric driving can contribute to this. 
* New opportunities such as the deployment of flexibility, energy storage, demand and 
orientation and congestion management will also look at how to maximise the available 
space on the grid with the lowest social costs 
* Flexibility is further unlocked by [further] introducing dynamic tariffs in the retail 
market. There is a great deal of flexibility in the system, such as large scale users, 
which are flexible and responsive to real time prices by switching up, up- or down, and 
parties with storage assets dealing with different markets. Where necessary, barriers to 
storage will be removed 
* In general, the Dutch authorities pursue electricity market frameworks that promote 
fair competition between market players and therefore do not discriminate against any 

180 

 
 
 
EUROPEAN COMMISSION 

party. These include those providing renewable energy, demand response and storage, 
including aggregation. No separate national targets have been set for this purpose 
* Energy tax and energy bill: There are a number of changes in energy taxation and in 
the Sustainable Energy Storage (ODE) with an impact on energy bills. The gas tax is 
increased. Additional funds raised in this way will be refunded by a higher tax reduction 
and a lower taxation of electricity 
* The Netherlands has great potential for producing renewable electricity. An important 
part of energy security for the Netherlands is the potential for large-scale and long-
term storage of renewable electricity. The development of power to gas is crucial to 
continue to supply a large part of its own energy needs and the storage of renewable 
electricity in the form of a gas entails flexibility for the electricity tourism system and a 
renewable energy carrier for the sustainability of transport and mobility, the industry 
and the built environment the Netherlands do not do so 
* Dynamic tariffs are also more and more entering the retail market. There is a great 
deal of flexibility in the system, such as large scale users, which are flexible and 
responsive to real time prices by ramping ups, up- or downstream storage, and parties 
with storage assets dealing with the different markets. In the area of Energy (TSE), 
systems integration and flexibility are becoming increasingly common and financial 
support for research (innovation).In addition, the TSO also runs several pilots with 
pooled/aggregated storage of small-scale storage devices such as home and electric 
cars 
* No specific permitting rules are defined, and storage characteristics are not suited for 
the current permitting regulations. This gives municipalities autonomy to determine 
their own requirements, which increases the permitting complexity. 
* For aquifer thermal energy storage (ATES) specifically, multiple legislation addresses 
the use of underground resources, environmental protection, permitting and 
monitoring, as well as accompanying manuals and other tools. 
* Businesses indicate the lack of standards (regarding storage safety such as 
prevention of fire and heat dissipation) is a reason to be reluctant to invest on a large 
scale in lines for products and services based on storage, and that it will be necessary 
especially for underground energy storage to obtain social acceptance. 
* The National Energy and Climate Plan indicates obstacles to storage participation in 
the electricity market (including storage used by small consumers) will be removed 
* The National Energy and Climate Plan indicates dynamic retail rates will be further 
expanded, beyond current practices. Several electricity suppliers already provide 
dynamic (hourly) retail prices. 
* In 2018 the EPEX energy exchange introduced loop block orders, where two block 
orders are executed or rejected together, representing for example the storage cycle. 
* There is limited availability to data of the (local) energy networks to improve the 
provision of localized services. 
* There are little locational and temporal incentives for energy storage by distributed 
energy producers or for end-users. 
* There is no Dutch capacity mechanism.  
* There are over 2500 aquifer thermal energy storage systems in the Netherlands, with 
a total capacity above 1 GW and reducing both total and peak energy demand. Strong 
growth is  forecasted to 2020. In August 2018 the total battery capacity of EVs was 
2532 MW. 
* In 2018 batteries could provide FCR/FRRa services, while load could provide FCR/FRR 
services. There is no pumped hydro in the Netherlands. 
* The Dutch system service procurement is market-oriented and accessible. Storage 
balance service providers in the FCR market are considered generation, but there is a 
differentiation made between energy-limited sources (e.g. batteries) and unconstrained 
sources (large gas or coal-fired production units). It is also possible to pool various 
storage assets under a single balancing service provider (BSP), facilitating the satisfy 
the FCR market requirements. 
* The draft National Energy and Climate Plan indicates several pilot projects offering on 
flexible markets resources from bundled/aggregate storage, and small-scale storage 
equipment (including home batteries and electric cars)   
* TenneT will conduct an upcoming aFRR pilot project focused on aggregators and 
decentralized energy assets. 
* Access tariffs in the Netherlands are mostly capacity-based, thus avoiding double 
charging of access tariffs for storage.  
* Storage systems providing ancillary services do not benefit from grid tariff 
exemptions. 
* There are no temporal signals for network tariffs. Experiments and discussions are 
ongoing for more dynamic network tariffs. 
* The net metering will be phased out, starting in 2023. It is expected that with this 
phase out it will make it increasingly attractive to develop storage. 
* TenneT identifies the need to further develop the market model and processes for 
congestion management in cooperation between TSO and DSOs. The GOPACS platform 
is launched were grid operators, both TSO and DSOs, can prevent congestion by 
redispatching generation/consumption to areas outside the possible congested area.   

181 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

 
6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 

10. Best 
practices 

* Currently, it is not  possible to share the connection costs between multiple 
companies (e.g. a wind farm and a storage facility). However, a policy change / legal 
possibility (AMvB) is being developed to create exemptions to connect solar PV and 
windturbines from various nearby projects to the network via one shared connection 
(cable pooling). 
* There is a tax ruling to avoid electricity consumption taxation for storage supplying 
energy directly to end consumers, but it does not cover the case of intermediary 
suppliers who supply energy which was previously stored. Storage systems providing 
ancillary services do not benefit from this taxation exemption. 
* The government has announced plans to end this double taxation of storage in 2021. 
A follow up from the National Climate Agreement is an analysis by the involved 
stakeholders about double taxation for storage, in certain cases. As a result it has been 
decided to incorporate this issue in the already outlined evaluation of the national 
energy taxation policy. The energy taxation policy will be extensively evaluated in 2020 
by the Dutch Ministry of Finance. It’s aimed to have changes in the energy taxation, 
when needed, for the specific situation of battery storage, take effect from 2021 on. 
* A tax advantage can be obtained by companies that invest in storage systems. The 
Energy Investment Allowance (EIA) fiscal scheme provides fiscal advantages  by 
allowing deduction of up to 45% of the investment costs from the taxable profit. 
* DSOs are forbidden from exercising market activities, and may only purchase storage 
services. 

* Energy storage is not defined in the national regulatory framework.  
* TenneT  and Vandebron are working on blockchain-based projects to sources 
flexibility services from EVs to the TSO. 
* There is no common definition of energy storage in the regulatory framework 
* The lack of guidelines on permitting of storage leaves the responsibility for 
municipalities to determine the requirements. This can lead to incoherent requirements 
in the Netherlands. A stakeholder indicates guidelines are necessary to orient 
municipalities in the permitting of storage. 
* There is a lack of data on (local) energy system hinders the development of storage 
business models for local and ancillary service markets. The mass roll-out of smart 
meters currently underway should mitigate this. 
* End-users and (small) producers have little information on how to access energy and 
ancillary service markets. 
* The lack of temporal signals in network tariffs reduces the incentives for load 
management by users. 
* The lack of tax exemptions for storage performing ancillary services or selling energy 
to a supplier creates undue taxation. 
* Taxation of gas and electricity are not conducted on the basis of the energy content, 
impacting the level playing field provided for both and for conversion. 
* There is advanced participation of storage and aggregators in balancing markets, 
recognized by studies. 
* TenneT is developing aFRR pilot projects focused on aggregators and decentralized 
energy assets. 
* Capacity-based access tariffs eliminate the possibility of double charging of access 
fees to storage. 
* Local governments (e.g. municipalities and provinces) need to create a Regional 
Energy Strategy (RES) as defined in the National Climate Agreement, with attention 
also to energy infrastructure (and thus storage) aspects. 
* A policy instrument facilitates experiments allowing a specified exemption under the 
Electricity Act, for example for experimentation with energy storage. Within 4 years the 
government evaluates the outcome and lessons learned, to see whether a legislative 
change is warranted. 
* During the last years a number of (de facto, international) standards have been 
developed with the input form Dutch parties, such as USEF (Universal Smart Energy 
Framework, USEF foundation) for flexibility on the market place, the OCPP protocol for 
flexibility from electric vehicles (Open Charge Alliance) and the protocol EFI to connect 
flexibility devices virtually to a market place (Foundation Flexiblepower Alliance 
Network, FAN). Other projects worked on a basis for a standard for smart distribution 
stations and the employment of direct current (DC).   

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Poland 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 
4. Ancillary 
Services 

5. Grid 
Aspects 

EUROPEAN COMMISSION 

Poland - Policy description 

* Storage is eligible for grants of the National Fund for Environmental Protection and 
Water Management ('NFOŚiGW') , which however covers only the R&I phase, and not 
market deployment. Depending on the project scale, grants could require State aid 
approval. 
* The public R&I budget for energy storage in 2018 was 2.05 M€ 

Thefinal 2019 NECP version refers to electricity storage: 
* it is important to develop technologies for energy storage, the roll-out of smart 
grids, the development of electromobility, the introduction of energy-efficient and 
highly efficient technologies 
* Technological progress will have a significant impact on the scale of RES use, both in 
terms of the current generation of energy and in radically new technologies, but also in 
energy storage technologies 
* The small elasticity of the Polish energy market (on the supply side and the supply 
side) is mainly due to the fact that there are practically no regulatory sources (except 
for pumped storage) which would be in a state 
* Investments in gas generation and transmission infrastructure are a key element in 
ensuring the flexibility of the system in view of the increasing role of RES.The 
participation of active audiences and aggregators, also through the deployment of 
smart grids, will be able to respond to situations of scarcity. In the long term, the 
development of demand side management (DSR), energy storage, as well as energy 
clusters, which should have the potential to be self-balanced can also be taken into 
account in the long term 
* The existing potential for the offshore wind sector (offshore sector) in the Baltic, in 
view of the need to ensure adequate storage capacity and the transmission of such 
energy generated after 2025, offers opportunities for the development and use of this 
technology beyond 
* In the context of R & D & I, it will be important to support the area of innovation in 
infrastructure (including technologies) for generation, storage and use of hydrogen, … 
* The development of storage technologies is a prerequisite for the development of 
RES and for the development of storage technologies 
* The capacity market is technologically neutral, thereby creating a level playing field 
for all electricity, electricity storage and DSR (Demand Side Response) technologies of, 
taking into account the degree to which individual technologies contribute to security of 
supply and provided that the requirements of the Power Market Act of 8 December 
2017 are met 
* Particular attention should be paid to the capacity market that allows DSR auctions 
and energy storage facilities. In the auctions held in 2018 and 2019, strong contracts 
were awarded to close to 3 200 MW of DSR units and to energy storage facilities 
* Measures will be taken to increase the flexibility of the energy system in relation to 
the generation of energy from renewable sources, e.g. smart grids, aggregation, DSR, 
storage, distributed generation, mechanisms control, re-dispatching and curtailment as 
well as real-time price signals, including the introduction of intraday coupling 
* Energy storage facilities, including cells and batteries for electric vehicles: the 
development of electromobility is in line with the EU’s strategic direction 
* Another way is production based on hydrogen (P2L), which can be CO2 neutral and 
can contribute to a significant reduction in greenhouse gas emissions while maintaining 
the liquid form. The maintenance of a liquid form is greatly facilitated by the transport 
and storage of energy 

* In 2018 the Operational Programme on Infrastructure and the Environment 2014–
2020 supported Tauron Dystrybucja for a demonstration project for a stationary energy 
storage system as a smart grid element. 
* No specific measures or requirements for permitting of storage facilities identified in 
national legislation. 
* The capacity market design in the Capacity Market Act of 2017 prioritizes low-
emission technologies, including storage, with the minimum required provision period 
being shortened to 4 hours. 

* Storage is not allowed to participate in any balancing market according to the 
ENTSO-E ancillary services survey. Load may provide RR energy. 
* Aggregation may not provide balancing services in Poland. 
* Electric vehicles may not feed-in electricity to the network in Poland. 
* There is a net metering scheme in Poland since 2016. 
* There is uncertainty regarding whether double charging of storage applies in Poland, 
which is thus assumed to apply. 

183 

 
 
 
6. Taxes & 
Levies 
7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

* There is no exemption to other surcharges such as for RES or cogeneration support. 
* There is no exemption for the electricity consumption tax in Poland. 
* Regulation does not address ownership and/or operation of storage by network 
operators.  
* Due to uncertainty existing projects are mostly for R&I and have the participation of 
network operators. 
* The 2015 Act on Renewable Energy Sources (the RES Act) defines an energy storage 
facility (Art. 2 point 17) as a dedicated facility or group of facilities where electric 
energy generated as a result of technological or chemical processes is stored in a 
different form. The RES Act also specifies that an electricity storage facility should be 
considered a part of a renewable energy source installation. This restricts storage to 
supporting intermittent RES. 
* The consolidated Energy Law of 1997 now defines energy storage: installation for 
storing energy, connected to networks having the ability to supply electricity to the 
network. 
* Definitions and references to 'energy storage' or 'electricity storage' differ from each 
other in the RES Act, Act on the Power Market, and Act on Electromobility. 
* In 2018, the Minister of Energy published a draft amendment of the Energy Law 
pertaining to the development of energy storage and smart metering. In this 
document, the Minister sets forth the framework for storage activities, define basic 
terms in this respect, provide clear rules for connecting the stores to the grid. The draft 
amendment in the beginning of 2019 was still in the process of public consultations, 
thus, the final form and rules are still to be determined (from TLR, 2019). 
* There is uncertainty and conflicts on the legal definitions of energy and electricity 
storage. 
* Storage may not provide ancillary services, aggregated or not. 
* Storage is subject to double charging of network tariffs as well as payment of the 
electricity consumption tax and other surcharges. 
* Lack of clarity regarding network operator ownership and operation of storage 
impacts non-regulated storage projects. 
* The capacity market design in the Capacity Market Act of 2017 prioritizes low-
emission technologies, including storage, with the minimum required provision period 
being shortened to 4 hours. 

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EUROPEAN COMMISSION 

Portugal 

Topic 

1. Public 
Support 

Portugal - Policy description 
* The government is considering conducting an auction for storage in 2020 with a total 
capacity of 50-100 MW. 
* The public R&I budget for electrical storage in 2015 was 0.02 M. 

The final 2019 NECP version refers to electricity storage. It forecasts an increase in 
storage capacity, first through pumped hydro and, closer to 2030, with a more relevant 
contribution of hydrogen and batteries. A large part of this capacity should be related 
with solar and wind renewable generation, and the remaining with stand-alone storage. 
The NECP also considers that, to increase the role of demand response in the electricity 
sector and incentives to behind-the-meter storage in buildings and industry will be very 
relevant, along with the increase of smart charging in EVs. 
* Smart grids, management support systems, producer and/or consumer aggregators, 
smart meters, storage systems, local energy generation, active consumers, flexibility of 
offer/demand, electric vehicle, among others, are the variables to be taken into 
account in constructing the grid model of the future 
* The development of new technologies and the improvement of existing low carbon 
technologies requires a significant effort in research and innovation that will be 
achieved through the adoption of an ambitious and comprehensive agenda covering all 
stages of the technological development until their commercialisation. This will greatly 
contribute to national support frameworks that will be oriented towards research and 
technological development in line with the country’s priorities, such as hydrogen, 
storage, smart grids, advanced biofuels, deep geothermal, concentration thermal, 
energy from the oceans, energy integration, energy conversion and storage, low 
carbon processes, circular economy, precision farming, among others 
* For the electricity sector, a strong impulse is given to the electrification of the 
consumption associated with the decarbonisation of production by enhancing the 
exploitation of the renewable energy potential with a particular focus on 
onshore/offshore wind and solar technologies, in parallel with the promotion of 
distributed generation, promotion of storage, strengthening and optimisation of the 
transmission and distribution networks and by promoting pilot projects 
* Pilot projects based on Concentrated Solar Thermal Technologies will be promoted as 
a technology enabling energy storage 
* National objectives with regard to increasing the flexibility of the national energy 
system, in particular by means of deploying domestic energy sources, demand 
response and energy storage 
* A significant part of the new storage capacity should be directly linked to the 
renewable electricity generating centres 
* By 2030, storage capacity is expected to increase, mainly via reversible pumping 
hydro, and at a later stage of the decade a contribution of batteries and hydrogen 
technologies. A significant part of this capacity should be linked to the production sites 
themselves via wind and solar technologies, with the remaining dedicated storage 
* In the electricity sector, industrial installations and storage incentives behind-the- 
meter in the building and industry sectors, so as to make changes in the daily load 
profile in the public service electricity grid less marked, as well as the generalisation of 
“smart” charging strategies on electric vehicles 
* new hydroelectric plants with storage and reversibility (pumping operation) that are 
expected to be placed in service until 2026 (reversibility, Daivões and Alto Tâmega) 
ensure an important contribution to increasing the flexibility of the system 
* Hydrogen has a huge potential as an energy carrier, which could serve as energy 
storage or fuel for the various sectors of the economy 
* Ensuring security of supply should be ensured by adopting appropriate measures 
addressing an imbalance between supply and demand, including those related to the 
overall technical management of the system, which encourage the diversification of 
supply sources and which contribute to the planning, construction and maintenance of 
the necessary infrastructure. The increase in interconnection capacity, storage systems 
(key in an essentially renewable energy system), the adoption of new network planning 
mechanisms, the dissemination of smart grids, etc 
* To promote storage systems, the following action measures are envisaged : 1/ 
Create the legal framework for the implementation of storage systems ; 2/ Promote a 
roadmap for storage in Portugal ; 3/ Promote the implementation of storage projects 
associated with renewable electricity generation centres ; 4/ Promote storage on 
islands. 
* The demand aggregator will aim to bring together different actors/entities, such as 
final consumers, small producers, storage, recharging points for electric vehicles, or 
any combination of them, and act as a single entity and participate in the electricity 
market and provide system services. 

185 

 
 
* The development of activities associated with renewable energy, storage, hydrogen, 
advanced biofuels and other 100 % renewable fuels will require the provision of 
specialised training needs covering various levels of training 
* The Innovation Fund is one of the largest funding programmes for low-carbon 
innovative technology demonstration projects and focuses on, among others, energy 
storage. 
* InnovFin Energy Demo Projects :  This financing arrangement consists of loans, loan 
guarantees or financing of property type, normally between EUR 7,5 and EUR 75 million 
for  innovative  energy  system  transformation  projects,  including  but  not  limited  to: 
renewable energy technologies, smart energy systems, energy storage, carbon capture 
and storage or carbon capture and use. This financing mechanism is complemented by 
the European Investment Bank 

* The challenge of the adequacy of network infrastructure enabling an effective energy 
transition arises in particular to the Low Voltage Network (LV) that will no longer be a 
passive network to integrate a whole set of new concepts, from network intelligence, 
management support systems, smart meters, storage, energy management, local 
production, energy communities, electric vehicles, among others, are variable to be 
taken into account in the construction of the future network 
* Legislation indicates the generation and storage license shall include the conditions 
for storage (not impacting storage for self-production). 
* Autonomous storage units require a license, but rules are yet to be set in 
complementary legislation (Decree-Law 76/2019). Until this occurs, there are no 
further specific permitting requirements for standalone storage. 
* A new system operations manual is in development but is not public, to gauge the 
participation of storage in energy markets. 

* Except for pumped hydro, storage may not participate in ancillary service markets, 
aggregated or not. The TSO proposal on terms and conditions for balancing service 
providers and balancing responsible parties states that it should be possible that loads, 
energy storage and generation be aggregated. 
* The regulator (ERSE) promoted in 2019 a pilot project for demand with an available 
capacity of 1MW to participate in the RR market. There are no explicit restrictions on a 
demand unit that can optimize its flexibility management of energy use through 
storage, but there were barriers on the possibility of aggregation, according to a 
stakeholder. 
* The revision of the RES self-production and energy communities framework in the 
Decree-Law 162/2019 requires storage units to have a meter it those are directly 
conected to the public grid as an electric facility apart from the consumption and 
generation units. EVs are considered storage only if they have bidireccional chargers. 
* Only conventional generators provide (mandatory and non-remunerated) voltage 
control in Portugal. 
* Black-start is not mandatory. A CCGT and a hydro plant provide the service in 
Portugal. 
* Decree-Law n.º 68-A/2015 indicates without practical impact: Network tariffs and 
regulation should not impede ancillary services for decentralized generation in 
electricity organized markets, including storage 
* Self-consumers and small producers (including with storage) must pay the 
connection costs to the grid. In what concerns self-consumed energy, they only pay for 
grid charges concerning the connection voltage level (and not for the costs of higher 
voltage networks). When there is reverse flows to higher voltage levels, the exemption 
is partial following a methodology set by the national regulator. 
* There are no indications of discounts on network tariffs for storage. 
* There is no exemption for storage from the electricity consumption tax set by the 
Law-Decree n.º 73/2010. 
* No other indications of tax & levy exemptions for storage in Portugal. 
* The Portuguese TSO REN is fully unbundled from other activities including storage. 

* Energy storage is not defined in the primary national regulatory framework, only in 
the renewables self-consumption and energy communities framework. 
* The regulatory framework for the electric mobility is defined in Decree-Law no. 
39/2010, as amended by Decree-Law no. 90/2014. 
* The requirements for permitting autonomous storage units are not yet defined, and 
there is no expected date on legislation. 
* For pumped hydro and batteries demonstrating the licensing compliance is a complex 
process. 
* The prohibition for renewable energy generators with storage from withdrawing 
energy impedes the use of the storage assets for multiple applications. 

186 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 
4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 

 
 
EUROPEAN COMMISSION 

* The new systems operation manual in development is confidential, impeding the 
evaluation of the proposed measures concerning energy storage. The uncertain 
evolution of the new BRP/BSP terms and conditions increases the lack of clarity.  
* Storage charging is subject to the electricity tax. 
* There is no definition of energy storage in the primary legislation. 
* There are no clear rules to allow for DSO procurement for flexibility services in the 
market (and under which rules), which may include storage. 
* Regulation on permitting requirements for autonomous storage forecasted in 
legislation. 
* Permitting of batteries in generation facilities are considered retrofitting and went 
well in the past. 

10. Best 
practices 

187 

 
 
 
 
 
Romania 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 

10. Best 
practices 

Romania - Policy description 

* The government ordinance no. 28/2014 defines specific measures for fostering 
pumped hydro plants with an installed capacity exceeding 15 MW. The ordinance 
encourages investments in new plants, which are considered public utility works. 
* The Romanian energy strategy 2007 –2020 aims to develop the 1000 MW Tarniţa-
Lăpuşteşti pumped hydro plant. However, the new Romanian Energy Strategy 2016-
2030 indicates that investments in a large pumped hydro plant before 2030 are 
unlikely, but a pre-feasibility study for small plants could be useful. 
* The Romanian Energy Strategy 2016-2030 has multiple 'avenues for development 
related to storage': turning Romania in a manufacturing centred (including household-
size batteries), promotion of electric and hybrid vehicles, and develop smart grids and 
buildings. 
The draft NECP 2018 refers to electricity storage 
* The government plans to integrate over 400 MW of battery storage capacity to flatten 
the load curve and provide balancing reserves. 
* The development of small storage capacities to foster the integration of RES is one of 
the main policies of the operational objective 'Ensure energy storage and backup 
systems capacities'. This comprises the development of pumped hydro, including the 
construction of the Tarnita-Lapustesti station. 
* Hybrid technologies for the storage of energy is a main research direction of the 
National Hydrogen and Fuel Cell Centre, in the form of the Lithium-Ion program. 
* The possibilities for storage and aggregated production of multiple 
consumers/producers should be considered. 
* There are no specific permitting rules for storage in Romania 
* For small scale, the active consumer permitting rules will be applied. 
* Permitting duration is long (2-5 years for greenfield storage projects) , but is not 
seen as a central barrier. 
* As of 2016 demand response was already allowed in the Romanian electricity 
wholesale market, but was not active. The legal framework is well-established, but due 
to a number of key barriers, is has not taken off the ground due to the lack of 
secondary legislation, the lack of smart meters and the electricity system is supply-
driven. 
* There is no framework for the participation of storage in the provision of ancillary 
services in Romania. Only generators are allowed to participate in any of the balancing 
markets. 
* Law 121/2014 on energy efficiency lists energy storage services as one of the criteria 
for assessing energy efficiency for network operators. 
* There are no specific electricity grid connection and access rules for energy storage 
facilities, so double charging is applied for storage. Some of the distribution-connected 
pumped hydroelectric storages facilities are fully exempted from transmission-related 
injection charges in Romania. 
* Net metering for renewable energy installations of up to 100 kW was introduced in 
2018 through an amendment to Law 220/2008. 
* A feed-in support scheme for renewables is in place where the price is set to the last 
year's average from the day-ahead market. The price that the consumer is buying 
energy from the grid is almost double due to fees (distribution fee, transmission fee, 
extraction fee). 
* No specific mention of electricity storage identified in the legislation, assumption is 
that charging is treated as consumption for the electricity consumption tax and levy 
purposes. 
* Storage plants in Romania can be owned and operated by DSOs or TSOs. 

* There is no specific legal or regulatory framework for storage in Romania. The 
Romanian Energy Regulatory Authority (“ANRE”) indicated it could include energy 
storage in a future legislative package. 
* There is no regulatory framework for storage in Romania. 
* The high hydropower installed capacity in Romania (6.4 GW) including pumped hydro 
(200 MW) may act as a disincentive to further development of energy storage and 
related policies 
* In practice demand response is not active in the Romanian electricity and balancing 
markets. 
* The NECP provides a target to integrate over 400 MW of battery storage capacity 
* EDPR has inaugurated in 2018 a 1MW battery system in its Cobadin wind farm 
* Research laboratories specialising in the development of energy storage technologies 
are forecasted. 

188 

 
 
 
 
Slovakia 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

EUROPEAN COMMISSION 

Slovakia - Policy description 
* Currently, there are only few projects in the area of storage. Slovakia is using mostly 
hydro pump storage or underground gas storage facilities for large scale energy 
storage. Commercial battery storage is very limited due to high investment costs into 
the overall system and long payback. 
* There is no direct support for electricity storage 
* Indirect support are: the program smart city; incentives to create new EV charging 
stations; the electromobility development strategy; incentives focused in energy 
efficiency measures and RES; preparing integration in Horizon 2020, and Important 
Projects of Common European Interest (IPCEIs) 
* Slovak company Nafta a.s. announced a domestic R&I project called “Large-scale 
energy storage”. In cooperation with Institute of Earth Sciences of the Slovak Academy 
of Sciences (SAV), Institute of Inorganic Chemistry, Institute of Geotechnics and 
Slovak Technical University, the project partners will investigate the interaction of 
hydrogen with underground structures and its utilization for energy storage 

The final 2019 NECP version refers to electricity storage 
* the deployment of intelligent energy systems and electricity storage systems is 
particularly important. 
* in line with the overarching European legislation, to create conditions for the 
provision of support services allowing the aggregation of demand facilities, energy 
storage facilities and power generation facilities for the purpose of offering balancing 
services 
* The development of energy storage will ensure the integration of variable RES into 
the grid 
* The integration of the local storage of energy in storage appliances, energy storage 
devices and electric vehicles or in the gas distribution network with their storage 
capacities is therefore an important element of the smart grid. 
* the maintenance and support of the existing capacity and operation of pumped 
storage power plants and, where appropriate, to assess the potential increase in 
storage capacity by building a new pumped-storage hydroelectric power plant 
* State R&I programme (SRDP) Energy Security includes storage 
* Conditions for the provision of support services from among others storage, including 
balancing services should be created 
* Indicates support to shortening of the currently used trading intervals on daily, 
intraday and balancing markets. 
* Energy storage units go through the standard permitting process (environmental, 
construction, connections, location, others), and there are no specific rules for energy 
storage. 
* Large scale energy storage (pumped hydro) has to fulfill standard technical 
specification of TSO/ DSO for connection. There are currently no specific permitting 
rules for other types of energy storage (batteries), therefore existing framework should 
be adapted.  
* Due to competitiveness the typical utilization of storage is limited to back-up power 
supply, provision of ancillary services (pumped hydro) or peak shaving. 
* Small installations are used in households combined with PV generation. In small 
business for 'peak shaving', to a limited extent. 
* There are some applications of CHP systems storing heat to provide electricity system 
products to the markets but mainly services to the TSO. 
* CZT allows for the provision of support services in electricity systems and the storage 
of energy in the form of heat. 
* Under the Slovak rules, pumped hydro will be eligible to provide specific products 
(Tertiary 3 min+/-) and also standard products of mFRR+/- services 
* Batteries are eligible to provide ancillary service - primary control (FCR). 
* No specific requirements to storage compared to other connection points, technical 
and commercial conditions needs to be fulfilled as in any other case 
* There is no specific regulation with regard to storage at the moment. The DSO in 
Slovakia (VSD) treats storage the same way as generation and consumption 
* Energy storage is considered as "buyer of electricity", paying for full reserved 
capacity like any other buyer (determined on the basis of the maximum consumption) 
and is considered as "generator of electricity", subject to G-charge at the level of 30 % 
of the reserved capacity (determined on the basis of installed capacity) when 
connected to DSO. The final payment is the higher from both. Hydro pumped storage 
does not pay G-charge and reserved capacity (as a supplier of Ancillary services). All 
electricity generators connected to TSO network pay to the TSO a payment for access 
calculated based on reserved capacity, special coefficient of capacity involvement and 
the value of the tariff for reserved capacity. 

189 

 
 
* Connection fee to the Distribution System are payed twice, as "buyer of electricity" 
and as "generator of electricity" (there are some exemptions, for PHS as example). 
* charging for storage is treated as consumption for the electricity consumption tax and 
levy purposes (that also constrains the potential of usage of energy storage).  
* DSO and TSO are not allowed to offer other services than those related to their core 
business (distribution and transmission) 

* There is no definition of energy storage in the regulation. An holistic approach for 
energy storage would support and ease its development  
Main existing barriers: 

 

 

 

National  legislation  (policy)  does  not  contain  definition  of  energy  storage  or 
energy storage for elektricity (only for natural gas). 
The investments costs of storage are very high and it may not pay back its 
usage in area of peak shaving or deviation/ imbalance management. 
Regulatory: Energy storage (except hydro pumps) is burdened by capacity and 
injection fee that overcharges its usage. 

* National R&I programme includes storage in the energy security category 

6. Taxes & 
Levies 
7. 
Involvement 
of TSO/DSO 
8. Other & 
General 
9. Barriers 

10. Best 
practices 

190 

 
 
 
 
 
 
EUROPEAN COMMISSION 

Slovenia 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 
4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 
8. Other & 
General 

9. Barriers 

10. Best 
practices 

Slovenia - Policy description 
* The Energy Act refers to the facilitation of inclusion of advanced technologies for the 
provision of ancillary services.  
* The Eco-fund subsidizes companies and private owners to purchase vehicles battery 
electric vehicles. 
* No subsidies are envisaged by the current legal framework, but are mentioned within 
the Action Plan for Energy Efficiency within the period of 2014 – 2020 as enhancing the 
efficiency of distribution systems for which subsidies are envisaged in the future until 
2020. 
The draft NECP 2018 refers to electricity storage 
* Technological development and commercial breakthrough of storage technologies is 
listed as a key challenge for Slovenia. 
* Slovenia’s Smart Specialisation Strategy (S4) includes a pillar on mobility including 
related energy storage systems. 
* Depending on the technology (for example pumped storage) storage of electricity 
might be considered as production, so construction of such projects of more than 1 MW 
connected to public grid requires a permission issued by the Minister for Infrastructure. 
* Behind-the-meter storage is already allowed. Besides larger projects, there have 
been some smaller projects including the vanadium-flow batteries installed at a 
restaurant in the Slovenian Alps. 

* In 2018 pumped hydro could provide FRRa services, while loads could provide FRRm 
services. 
* The Slovenian regulator has launched in July 2019 a public consultation regarding the 
establishment of a flexibility market in Slovenia, that deals with the role of storage as 
well. It explores the possible roles of storage in providing flexibility services and seeks 
input from stakeholders regarding dynamic tariffs and possible flexibility products. It 
identifies several barriers on market design, measurement, validation, support systems 
and technical solutions. 
* There is also a reference in the Energy Act regarding facilitating the inclusion of 
advanced technologies for the provision of ancillary services. 
* Storage facilities are exempt from the network charges under certain conditions as 
defined by the 'Act determining the methodology for setting the network charge, the 
criteria for establishing eligible costs for electricity networks, and the methodology for 
charging for the network charge' adopted every 3 years by the regulator. 
* In Slovenia, specific incentives for smart grid investments exist: If the network 
operator realizes investments in smart grids that meet the requirements set out in the 
methodology, a one-off incentive is acknowledged amounting to 3% of the current 
value of the asset in the year in which the asset was put into service. Yet, these 
incentives were considered to be too low and will be increased in the next regulatory 
period. Nevertheless, a PCI smart grid project, SINCRO.GRID, is already being carried 
out in Slovenia and Croatia (from EC, 2019). 
* The TSO National Development Plan should define the provision of storage facilities 
among other aspects (from EC, 2019) 
* To access the network, storage facilities must contract with the TSO (ELES) or the 
DSO SODO and/or the sub-contracted distribution companies 
* Slovenia applies net metering for small consumers 
* No specific mention of electricity storage identified in the legislation, assumption is 
that charging is treated as consumption for the electricity consumption tax and levy 
purposes. 
* The role of the Slovenian TSO excludes storage systems. 

* There is no definition of storage in the national regulatory framework, although it is 
addressed in secondary legislation. Especially the network charge methodology is set 
by the 'Act determining the methodology for setting the network charge, the criteria for 
establishing eligible costs for electricity networks, and the methodology for charging for 
the network charge' adopted every 3 years by the regulator. 
* According to some stakeholders, the scope of the TSO’s role is a barrier, as it does 
not involve new technologies, such as storage (from EC, 2019). 
* Storage has access only to FRR balancing markets 
* Electricity consumption tax is applied to storage 
* Given the lack of special status of energy storage and the lack of subsidies, there are 
pending regulatory burdens and potential disadvantages for investors interested in this 
particular field 
* Slovenia and Croatia have established the SINCRO.GRID project which plans to install 
two 5 MW battery systems. In 2014, the transmission system operators (HOPS and 
ELES) and distribution system operators (HEP ODS and SODO) of Croatia and Slovenia 

191 

 
began to search for joint solutions and decided for an international cooperation in 
setting up smart grids. The SINCRO.GRID - Phase 1 smart grid project offers an 
innovative integration of mature technologies that will be beneficial to the electricity 
systems of Slovenia and Croatia as well as to the countries in the region. The project 
includes the deployment of compensation devices, an advanced dynamic thermal rating 
system, a battery electricity storage system, as well as a virtual cross-border control 
centre. In 2015 the EC included the project on the PCI list. The contract 'Action n° 
10.3-0022-SIHR-W-M-16 Implementation of the SINCRO.GRID PCI – Phase 1 ' on co-
financing of the project by the EC was signed in 2017. 
* The Slovenian electricity TSO has created a department for strategic innovation. The 
TSO is active regarding smart grids, being the leader of the first smart grid PCI. The 
TSO has a 'budget under coordination' of 130 million € for innovation, within which the 
main focus is on R&I, demonstration projects and pilot projects which range from core-
business practices to international cross-border cooperation and cross-border market 
projects. They are conducting a micro grid project for the city of Ljubljana and are 
involved in a consortium led by the French RTE working on OSMOSE, a project on 
storage at a cross-border level and including multiuse of storage (from EC, 2019). 
* Aside from major projects, there have been some smaller projects including the 
vanadium-flow batteries installed at a restaurant in the Slovenian Alps. 
* The STORY project in the network of the DSO Elektro Gorenjska foresees the 
installation of a energy storage system, at two different locations 
* NGEN has started operating in 2019 the first Tesla PowerPack in Europe, providing 
balancing solutions to balancing responsible parties in Slovenia. 

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Spain 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

EUROPEAN COMMISSION 

Spain - Policy description 
* In the period 2014-2016 the Spanish National Program on Research, Innovation and 
Competitiveness has invested over 24M€ in basic research projects in the Societal 
Challenge 3: Sustainable Energy. Energy storage projects amount 2.6 M€, 
approximately 11% of the total. 
* In the last support auction for renewable generation in the Balearic Islands, 
generation facilities with batteries received extra points versus facilities without 
batteries. Nevertheless, the awarded projects did not get any additional remuneration. 
* The Ministry of Science, Innovation and Universities launched in 2019 the Cervera 
program financing innovation in SMEs and technology centres. Cervera includes battery 
components and systems as well as hybrid generation and storage technologies among 
the eligible ones. 
* The Ministry of Science, Innovation and Universities is developing Innovation Missions 
with a consultation in mid-2019. The missions,on which the Spanish storage association 
has contributed to, include 1) safe, efficient and clean energy for the 21st century and 
2) sustainable and intelligent mobility for the 21st century,  
* The public R&I budget for energy storage in 2017 was 0.92 M€ 

The draft NECP 2018 refers to electricity storage 
* Specific auctions may be developed in the short-term for renewable generation 
combined with storage. Government plans seem to focus on concentrated solar power 
plants with thermal storage. Other technologies providing similar benefits, as wind or 
photovoltaic power plants with batteries, should also be allowed to participate in these 
auctions on equal terms. 
* Plan to add 6 GW of storage (3.5 GW of pumping and 2.5 GW of batteries), with a 
balanced presence of the different renewable technologies. Additionally, 5 million 
electric vehicles are expected in Spain by 2030, of which 3.5 million will be cars while 
the remaining 1.5 million will be motorbikes, trucks and buses. 
* Permitted behind-the-meter storage is explicitly allowed to consume electricity. 
* A case of permitting of batteries for a wind farm required the farm not to take energy 
from the grid for storage and to store only the generated electricity. 
* No other specific measures or requirements for permitting of storage facilities 
identified in national legislation. 
* A stakeholder indicates the permitting process is lengthy with different 
administrations involved. 
* Spain’s regulatory framework does not address energy storage systems, with the 
exception of pumped hydro, which is considered a conventional generation system, and 
thermal storage associated with thermal solar power plants. 
* There is no regulation for the electricity storage participation in the market in the 
resolution 15049/2019, which updated the rules for the day-ahead and intra-day 
markets, but mentions only producers, suppliers and consumers. Active customers are 
permitted when fulfilling the self-production decree requirements. 
* There is no capacity remuneration mechanism in Spain, central actors are studying 
the matter. Stakeholders indicate it may be necessary given electrification, the 
decommissioning of coal, nuclear and potentially CCGT capacity, and the need to 
provide long-term revenue certainty for the development of e.g. hydropower. 
* The draft National Energy and Climate Plan indicates regulation should be adapted to 
develop aggregated generation, response to demand and storage 
* The wholesale market price cap was set at 180 €/MWh with the Law 54/1997, until 
the implementation of the clean energy package. 
* There is no specific regulation adapted to allow vehicle-to-grid applications. 
* in 2018 pumped hydro could provide FRRm services 
* Currently storage is not allowed to participate in ancillary service markets, either 
individually or aggregated (except pumped hydro in FRRm). The Spanish NRA is 
consulting on a regulation for the participation of aggregated resources in balancing 
markets, running until September 2019. The Spanish Ecological Transition Ministry is 
also consulting on self-production rules which touch on storage for stabilizing energy 
consumption. 
* There is no definition of aggregator and independent aggregator agents in the 
Spanish regulatory framework. 
* IDAE and the market operator OMIE are exploring local electricity market models, 
with possible pilots starting in the future. 
* The limits between national and local energy markets are not defined, nor their 
interaction. 
* Black start and voltage control services are regulated, without remuneration. 
* DSOs are not allowed to procure ancillary services. 
* There is no EV to grid experience in Spain. 

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5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

* There is double charging of network access tariffs for storage in Spain, except 
pumped hydro. Pumped hydro pays for the energy injected and the energy lost in the 
storage cycle, resulting in 0.2€/MWh for charging and 0.5€/MWh for injection. The new 
CNMC (the national regulator) tariff proposal eliminates access charges for all 
generators, and thus for pumped hydro. 
* Net metering is simplified for active consumers with less than 100 kW in law-decree 
15/2018. 
* Self-consumed energy from renewables, co-generation or waste is exempt from 
network tariffs and other tariffs in law-decree 15/2018. 
* Grid tariffs are capacity-based and have a time component, but it does not 
corresponded to actual grid usage. The new CNMC proposal improves the time-of-use 
periods. 
* There is no specific mention of electricity storage in the taxation legislation, thus 
storage discharge is subject to the electricity production tax (Impuesto sobre el valor 
de la producción de la energía eléctrica, IVPEE). Self-consumption installations under 
100 kW are exempt. 
* There is no clarity on  the application of consumption taxes on self-produced and 
stored energy.  
* There are no unbundling requirements for TSOs/DSOs owning storage since 
regulation does not address the topic (except for pumped hydro in islands). 
* System operators are the owner of pumping capacity in the Canary islands to secure 
the supply of energy, to ensure the system’s safety or to integrate non-manageable 
renewable energy sources (act 17/2013). 
* Storage is not defined in the Spanish regulatory framework. However, the 2019 
proposal on the Climate Change and Energy Transition law includes the definition of 
the: 
  - Holder of storage installations, which acquires energy to generate it in a posterior 
moment according to the regulatory terms. This with no prejudice to producers, 
consumers or holders of transmission and distribution networks owning these types of 
installations without losing their condition, according to the regulatory terms; 
  - Demand aggregator, which combines multiple loads of consumers, producers of 
storage installations for its sale or purchase in the organized or system service 
markets. 
* Storage is not allowed to participate in energy and ancillary service markets, with 
some exceptions for pumped hydro and thermal storage associated with thermal solar 
power plants. 
* The lack of a definition for (independent) aggregators increases the uncertainty for 
storage and impedes its participation in energy and ancillary service markets. 
* The lack of markets for the provision of black start and voltage control services and 
the impossibility for TSOs to procure ancillary services reduces the revenue streams 
available for storage. 
* Full double charging is a problem. Even for pumped hydro the exemption is 
inadequate and it still pays partial tariffs for the charging cycle, and full tariffs for 
production. 
* Net metering hampers the development of behind-the-meter storage. 
* CNMC has proposed a new methodology for allocation of connection costs which 
introduces barriers to hybrid projects combining generation and storage. 
* A stakeholder indicated DSOs should develop a tool to publish congestion 
information. 
* Double taxation for storage exists in Spain. 
* The 2019 proposal on the Climate Change and Energy Transition law indicates the 
system operator will be able to establish the pumping and generating strategy for new 
hydropower concessions (including pumped hydro) in order to maximize the integration 
of renewables. This could impact the business case of pumped hydro. 
* The electricity cost is disadvantaged vis-a-vis the gas cost as network access tariffs 
incorporate charges for subsidization of renewables, the recovery of past tariff deficits 
and subsidies for the electricity supply in islands. 
* A stakeholder indicates the planning regulation needs to assure system operators 
adequately weight expansion investments against procuring flexibility from markets. 
* Prototypes and pilot projects face the same permitting requirements as large-scale 
projects while having a more limited project duration. Demonstration equipment has 
trouble to meet conventional permitting requirements due to the lack of standards for a 
developing technology. Pilot and demonstration projects deserve specific and 
streamlined permitting processes which would accelerate and reduce the costs of the 
development cycle. 
* Indicative development of storage to 2030 in the NECP, separated between pumped 
hydro and batteries. 
* In the last support auction for renewable generation in the Balearic Islands, 
generation facilities with batteries received extra points versus facilities without 
batteries.  

194 

 
 
EUROPEAN COMMISSION 

* Potential inclusion of renewables combined with storage in the next support auctions, 
intended for thermal solar but open to all technologies due to technology-neutral 
approach. 
* 2019 proposal on the Climate Change and Energy Transition law includes the 
definition of holders of storage installations. 
* Various initiatives in Spain supporting the deployment of energy storage pilots have 
been gathered through the Smart Grids Technological Platform FUTURED and the 
Cross-platform Storage Workgroup, GIA, now part of Spanish Technological Platform 
for Energy Storage, BatteryPlat. BatteryPlat aims to continue this task and be the 
national hub for energy storage pilot and demo projects involving any energy storage 
technology, not only batteries. 

195 

 
 
 
 
 
Sweden 

Topic 

1. Public 
Support 

2. Permitting 

3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

Sweden - Policy description 

* In order to help increase the ability of individual customers to store their self-
generated electricity, a contribution to the storage of self-generated electricity has 
been in place since November 2016. It allows individuals to receive financial support for 
the installation of storage systems160.The grant is limited in time until 2020, if SEK 60 
million per year. Grants may not exceed 60 % of the cost of the storage system, with a 
maximum of SEK 50 000 

* Hydro storage plants provide storage capacities by storing water in reservoirs (total 
capacity +/-120TWh in SE and Norway). These plants cover, up to now,  the Nordic 
grid balancing need over all time scales. The need for batteries,  pumped storage hydro 
or other storage technologies to balance the grid is therefore very limited for the time 
being (but increased interst could come in a near future). Today Hydro generates 40-
45 % of the nation’s electrical demand, and takes care of the dominating part of the 
variation of demand in all time scales (year, week, day, minutes).  

The final 2019 NECP version refers to electricity storage 
* In the Government Budget Bill for 2020 (prop.2019/20: 1(21) The Government notes 
that a future electricity system with a higher proportion of variable wind and solar 
production increases the need for flexibility in programmable generation, demand 
response in user sectors, energy storage and system services to support and stabilise 
the electricity system 
* In the direction of the Energy Policy Bill161, the Government considers that the 
network owner’s role may need to be given a broader content to fully exploit the 
benefits of smart grids, energy storage and demand response to the electricity system 

* Existing subsidy provides financial support to individuals for the installation of storage 
systems. Förordning (2016:899) om bidrag till lagring av egenproducerad elenergi. 
* in Sweden, permits for water utilisation (incl hydro storage plants) are granted 
without a time limit under the condition that hydropower operators respect the 
environmental conditions stated in the original permit (compliance with the 
environmental quality standards and the rules on special protection areas) 
* Environmental obligations in original permit are more and more constraining for new 
hydropower installations.  
* In Sweden, national legislation requires that hydropower generation facilities have 
concessions in order to operate. Most water concessions were granted in the mid-1900s 
and have no time limit. National legislation does not appear to provide for competitive 
procedure (for new concessions and concession renewals) 
* Owners of energy storage facilities are allowed to offer flexibility in energy and 
balancing markets. However, DSOs (and the TSO) are restricted to use storage only for 
grid operational purposes and not commericial trading.  
* The CoordiNET (2019) creates a platform for TSOs and DSOs where they can 
collaborate and utilize common resources to create a safe and efficient electricity 
system, by providnig solutions to : balancing, overload management, controlled drift 
and voltage regulation. Through a dedicated platform, CoordiNET aims to increase the 
share of renewable energy in the electricity grid and also open up more possibilities of 
income for users. CoordiNET prepares the system for the network code implementation, 
allowing storage and demand side management. CoordiNET could be scaled up at EU 
level (SE-NO ambition). 
* Heat and electricity systems are integrated in several ways, e.g. in co-generation of 
electricity and heat, or when DH is produced with electric boilers or heat pumps. Heat 
can also be stored more easily than electricity, and thermal storages are used to 
improve the system balancing of variable power generation. By utilising co-generation, 
heat pumps and thermal storages, a DH supplier can respond to price signals on the 
electricity market. In times of high electricity prices, DH production can be adjusted to 
maximise the power generation and thermal storage used to cover heat demand, and 
in times of excess power, DH suppliers can utilise more heat pumps.There is a number 
of heat storage projects ongoing based on storage on the DH systems. 
* The Swedish TSO, Svenska Kraftnät, states that the requirements on ancillary 
services will generally increase and will much more clearly reflect and be adapted to 
the system’s needs. In 2019, Svenska Kraftnät started to establish a market for FFR 
(Fast Frequency Reserve), where electricity storage could be an important part.  
* An owner of a grid connected electricity storage is obliged to pay a grid tariffs and 
tax for electricity supplies to the storage from the grid. Storage owners are also 
formally obliged to pay a feed-in-tariff for electricity feed into the grid from the 
storage, however storage units with a capacity less than 1500 kW are excepted.  

160   Ordinance (2016: 899) on subsidies for the storage of self-generated electricity. 
161  prop.2017/18: 228 The direction of energy policy. 

196 

 
 
 
 
 
                                           
EUROPEAN COMMISSION 

* The storage owner is entitled to a compensation from the DSO for the grid value of 
supplies electricity from the storage.  
* During 2019, there was a huge media attention in Sweden regarding lack of grid and 
electricity production capacity in major cities such as Stockholm and Malmö. Due to this 
situation, the Swedish Energy regulator, Energimarknadsinspektionen was given a task 
to investigate means to address the capacity limitations. Flexibility and storage and 
markets solutions connected to those is one aspect to be investigated. The 
investigation will be presented in late 2020.  
* There is tax deduction for the excess electricity injected into electricity network from 
renewable energy (residential solar PV, wind etc.), equal to SEK 0.60/kWh 
* Recovery of energy tax on electricity after storage of batteries : as of 1 January 
2019, Chapter 11, Section 13 of the Energy Tax Act (1994: 1776) provides for the 
possibility to apply for a refund of energy tax on electricity consumed from a network 
subject to a concession, stored and then fed back to the same electricity network 
subject to a concession. This is to avoid unintended double taxation 

Swedish electricity grid companies may use energy storage for operational purposes, 
but not for commercial services. The TSO Svenska Kraftnät is currently developing the 
market for flexibility services such as Frequency Restoration Reserves (FRR) and 
Replacement Reserves (RR).  

The Swedish Energy regulator conducts an annual investigation on the swedish 
flexibility market. The 2019 investigtion showed that there are not technical or legal 
barriers for flexibility measures, such as electricity storage. A general problem though 
is the lack of access to metering data of sufficient resolution for creating more real-
time markets for flexibility and the time for the market actors to access such data. The 
main obstacle for electriciy storage in Sweden is the lack of economic incentives due to 
the lack of price volatility on the Nordic electricity market.  

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

8. Other & 
General 
9. Barriers 

10. Best 
practices 

197 

 
 
 
 
 
 
 
United Kingdom 

Topic 

1. Public 
Support 

2. Permitting 
3. Energy 
Markets and 
Capacity 
Mechanisms 

4. Ancillary 
Services 

5. Grid 
Aspects 

6. Taxes & 
Levies 

7. 
Involvement 
of TSO/DSO 

United Kingdom - Policy description 

* The National Grid 2017 annual report forecasts on the future design of energy 
markets and indicates an increasing need for flexibility to which storage could 
contribute to, from 4 GW in 2016 to 6 GW in 2020 and 6-9 GW in 2030, plus up to 30 
GW to accommodate renewables by 2050. 
* To integrate and incentivise energy storage, BEIS, Ofgem and National Grid are 
launching a series of framework reforms, including: 
 * Changes to the electricity generation licence to add the definition of ‘electricity 
storage’ and ‘electricity storage facility’ in SLC1 (Definitions) in order to provide 
regulatory clarity on the treatment of electricity storage within the regulatory 
framework (consultation closed, awaiting decision). The modified licence will provide 
regulatory certainty to storage facilities, both existing and developing, encourage 
deployment of this new technology into the system and will ensure that a level playing 
field exists, so that storage can compete fairly with other sources of flexibility. 
 * New standard licence condition (SLC E1) to require licensees operating or owning 
storage to make available information to their suppliers to support the correct 
calculation of levies and charges (consultation closed, awaiting decision) 
* In 2019 the government launched the 'Storage at Scale' competition to fund the 
demonstration of innovative large-scale energy storage. 

* Storage is included in the National Energy and Climate Plan (2019), with the most 
pressing challenges discussed and indicative solutions proposed to issues such as 
double charges.  
* 2017 Upgrading our Energy System study sets out 29 actions to remove barriers 
including to storage. Implementation is targeted to 2022. The 2018 progress update 
shows 15 of the 29 actions are implemented, and sets priorities, including 9 new 
actions. 
* The Energy Innovation Needs Assessment (EINA)will assess themes such as power 
generation including bioenergy, carbon capture and storage, hydrogen, demand and 
supply of heating and transport 
* Smart systems innovation funding: Up to £9 million to reduce the cost of energy 
storage technologies (including electricity storage, thermal storage, and power-to-gas 
technologies), up to £600 000 on feasibility studies for a potential first of a kind large-
scale future energy storage demonstrator. 

* Pumped hydro storage is active in wholesale markets. 
* The UK has a capacity market suitable for storage 
* In 2018 the EPEX energy exchange introduced loop block orders, where two block 
orders are executed or rejected together, representing for example the storage cycle. 
* One issue is the limited duration of balancing service contracts and whether duration 
constraints exist for non-balancing services procured by network system operators. 
* Pumped hydro is eligible to provide FCR/FRRm/RR services, while batteries are 
eligible to provide FCR and FRRm services. 
* To meet increasing balancing needs, National Grid plans to standardise and improve 
the procurement and open them to market from April 2018. The services are: 1. 
Balancing: merger of services (mainly enhanced and fast frequency responses) into 
standardised auctions from April 2018, and rationalizing slow reserves; 3. Voltage 
Regulation: Opening of the market of new services ; 4. Black start: Opening of the 
market of new services 
* In the UK, the Piclo Flex platform – currently being trialled by several UK DNOs – 
provides a marketplace for DNOs to tender for and receive bids to resolve anticipated 
network congestion needs. 
* Variable charges are applied on the total injections (injection-based tariffs or 
charges) or withdrawals (with balancing services use of system). Scottish storage 
(under 100MW) connected to the 132 kV transmission network receive a tariff 
reduction. Some of the distribution-connected storages facilities are fully exempted 
from transmission-related injection charges in the UK. 
* The profitability of pumped hydro storage is impacted by high transmission tariffs 
* Storage could face double charging of final consumption levies. A clarification of the 
regulatory framework for electricity storage is currently being processed: Statutory 
consultation on proposed modifications to the electricity generation licence. 
* The regulatory framework does not explicitly state that transmission-connected 
pumped hydro is considered as a producer, while in practice it is apparently the case, 
thus exempting taxes and surcharges for the plant 
* The current regulation does not address ownership and/or operation of storage by 
network operators. 

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* Ofgem decided to introduce a new condition in the electricity distribution licence to 
ensure that distribution network operators cannot operate storage (consultation closed, 
awaiting decision). 
* In its RIIO-2 Sector Specific Methodology Decision (May 2019), Ofgem requires the 
Electricity System Operator to develop an Early Competition Plan. Early competition is 
‘competition run prior to the project design process to reveal the best idea to meet a 
system need, and could reveal non-network (and flexibility) solutions’. It aims to 
generate a wider range of potential solutions for the system needs identified in the 
network planning process, including non-network flexibility options (such as storage). 
* Some Distribution Network Operators are at the forefront of the creation of flexibility 
markets where storage can provide a solution. 
* National Grid was separated in 2019 into the Electricity System Operator (ESO) and 
the Transmission Operator (TO). The ESO is responsible for the system planning and 
operation, as well as coordination with distribution system operators, and is ramping up 
efforts to increase competition with solutions proposed by the TO. 
* The 2017 National Grid report proposed to amend the Electricity Act of 1989 to 
include a specific definition for energy storage as a distinct subsect of energy 
generating assets 
* The main barriers identified and under regulation changes are: planning process; 
network connections; network charging; final consumption levies; regulatory clarity; 
* There is generally a need for markets that reward the value of storage, such as 
renewable curtailment avoidance and support to network stability (i.e. voltage and 
frequency control). 
* The 2017 Upgrading our Energy System study sets out 29 actions to remove barriers 
including to storage. 
* The Energy Innovation Needs Assessment (EINA) will assess various themes 
including storage. 
* To meet increasing balancing needs, National Grid plans to standardise and improve 
the procurement and open them to market from April 2018. The services are: 1. 
Balancing: merger of services (mainly enhanced and fast frequency responses) into 
standardised auctions from April 2018, and rationalizing slow reserves; 3. Voltage 
Regulation: Opening of the market of new services ; 4. Black start: Opening of the 
market of new services 
* In 2019 the government launched the 'Storage at Scale' competition to fund the 
demonstration of innovative large-scale energy storage. 
* Ofgem’s RIIO-2 Sector Specific Methodology Decision (May 2019) Early Competition 
Plan requirements will improve the weighing of non-network flexibility solutions versus 
network investments. 
* The CRM design is positive for storage development in UK as a very limited de-rating 
factor impacts storage participating to CRM 

8. Other & 
General 

9. Barriers 

10. Best 
practices 

199 

 
 
GETTING IN TOUCH WITH THE EU 

In person 

All over the European Union there are hundreds of Europe Direct information centres. 
You can find the address of the centre nearest you at: https://europa.eu/european-
union/contact_en 

On the phone or by email 

Europe Direct is a service that answers your questions about the European Union. You 

can contact this service: 

– by freephone: 00 800 6 7 8 9 10 11 (certain operators may charge for these calls), 

– at the following standard number: +32 22999696 or  

– by email via: https://europa.eu/european-union/contact_en 

 
 
 
 
 
 
 
 
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doi:10.2833/077257