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The European Union (EU) member states have put in place 272 financial instruments for energy storage projects, totaling up to EUR 113 billion, according to a study on investment schemes for energy storage in the EU.
The study on financial instruments and models for energy storage was carried out as part of the Investors Dialogue on Energy – an initiative launched by the European Commission and its Directorate-General for Energy in 2022. The aim was to assess and upgrade financing schemes and propose new ones to mobilize financing in the context of the European Green Deal.
According to the study, wider deployment of energy storage solutions can help lower electricity prices during peak hours, minimize price fluctuations, and enable consumers to utilize their own energy. However, storage project “financeability” is affected by their technology readiness level (TRL), the levelized cost of storage, and the range of services they can provide, the study reads.
Loans and grants are the most popular instruments across the EU
The energy storage sector faces obstacles such as the lack of revenue mechanisms and limited access to capital. Financial instruments, however, can address some of the barriers to investment by making projects more appealing for investors.
A mapping of financial instruments at member state level resulted in data on 272 instruments available for financing energy storage in the 27 EU member states.
“Among these 272, loans and grants are the most popular instruments across the EU. All instruments together provide an estimated cumulative financing for up to EUR 113 billion,” according to the study.
The amount allocated to grants, EUR 57 billion, is more than twice the size of what is allocated to loans – EUR 25 billion.
Only three schemes are specifically designed for energy storage, most schemes target at least one more energy segment, and 176 schemes target all segments of the energy value chain.
Three key characteristics for a financial support scheme to be effective
Most of the mapped instruments only support mature and market-ready projects, favoring SMEs and larger companies, but smaller companies and households should not be at a disadvantage, the study finds.
The authors of the study identified three key characteristics for a financial support scheme to be effective in the energy storage sector: the seamless provision of different types of financing, long-term stability and visibility, and the provision of technical assistance services together with financing.
The expansion of the offering of financial schemes emerged as particularly important for countries with lower market maturity, and the use of equity and guarantee schemes should be leveraged more to mobilize private financing, particularly in countries with high storage capacity targets, according to the study.
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