In early May, Norwegian battery cell producer Morrow Batteries filed for bankruptcy. A year earlier, it was Sweden’s Northvolt. Some 17 European battery production projects have been cancelled or delayed.
Slower than expected EV sales and competition from low-cost Chinese and Korean suppliers has dimmed Europe’s hopes of building a homegrown industry to supply batteries for electric vehicles.
But the economics are different in another corner of the battery market – for stationary storage systems for renewable energy from wind and solar. In Europe, billions of dollars of fresh investment are flowing to European battery makers for systems that can store excess energy and release it when intermittent sources are not producing.
Wind and solar produced more power than fossil fuels for the first time last year; renewables now generate close to half of all EU power. The shift to wind, solar and other clean energy accelerated first with Russia’s invasion of Ukraine in 2023 and more recently with the spike in oil and gas prices caused by the closure of the Strait of Hormuz because of the war with Iran.
The new generating capacity is creating energy imbalances and price volatility, including negative pricing when renewables are over-producing. The continent is racing to deploy utility-scale battery energy storage systems, or BESS. By 2024, BESS sales were growing twice as fast as EV sales.
Europeans have “woken up to the idea that we are not energy independent,” says Wiebe Visser of Dutch impact investing platform CarbonEquity. “It’s not only energy independence, it’s also just pure economics.”
“If you have cheap generation, like you have in the Nordics with hydro or with wind, or in Spain with solar, if you put a battery next to it, it’s a great economic case,” Visser told ImpactAlpha.
Tech sovereignty
Europe has many of the right ingredients for investors. FieldFisher, a London-based law firm, forecasts that battery storage capacity in Europe will increase sixfold to more than 100 gigawatts by 2030 on increased demand for clean energy.
On a “beautiful, sunny and windy” day recently in Bucharest, wind and solar generation “working at full speed,” recalls Gregory Poilasne of San Diego-based Nuvve which has more than a dozen battery energy storage projects in Austria, Romania, and Bulgaria. As part of its pivot to Europe, Nuvve said it has developed a pipeline of one-gigawatt in battery energy storage projects, backed by OMNIA Global, the family office of Swiss entrepreneur Daniel Hansen.
Electricity prices fell below zero from 11AM to 2PM. “With the balancing of the grid, plus the arbitrage…you have a value of $5,000 per megawatt per year,” Poilasne told ImpactAlpha. Under those conditions, BESS projects have a “very short” payback period and “can generate a lot of value for shareholders.”
