Why Europe must set ambitious targets for long duration energy storage

As Europe moves to energy systems reliant on renewables, long duration energy storage investments are key, writes Alex Campbell, Director of Policy and Partnerships at the Long Duration Energy Storage Council.

After a summer of climate catastrophes, Europe is taking historic strides to reaffirm its leadership among nations charting the course of the global energy transition. On 12 September 2023, the European Parliament voted to significantly raise the EU’s renewable energy ambition, setting a new legally binding 2030 target of having 42.5% of energy consumption delivered by renewables.

This is nearly double the share of renewable energy today. This urgent action was a response to the millions of lives and livelihoods threatened by a long, hot summer of rampant wildfires, flash floods and crop failures, which revealed the full force and fury of climate change. However, increasing solar and wind deployments alone will not be enough.

To ensure that resilient communities have constant access to renewably sourced power, energy storage — and specifically long duration energy storage (LDES) — must be deployed at scale. Decarbonising Europe’s energy systems requires both a migration to renewable energy infrastructure and the flexible transformation of energy markets to distribute that power effectively.

For decades, fossil fuels provided the bedrock of the EU’s power systems. Now, these systems must build a new foundation, since investing in baseload fossil fuels is antithetical to net zero goals. Renewables can be that new power resource.

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Indeed, the Global Renewables Alliance — which includes members like the LDES Council — alongside the European Commission and the COP28 Presidency called for renewables to triple their capacity by 2030. But those 11TW of power require a concurrent commitment in energy storage to reach global objectives. Indeed, LDES is the cornerstone of the energy transition.

It provides the flexibility that’s needed to offset the variable nature of renewable power. Renewable energy sources like wind and solar are intermittent in nature. Strong winds may blow for weeks followed by fallow periods, and likewise extended periods of cloud cover can drastically reduce solar output. LDES works to harmonise that energy output. With the ability to store power for ten hours to ten months, it addresses concerns about reliability, resiliency, and resource adequacy.

LDES technologies come in many types and can store energy in thermal, mechanical, electrochemical and chemical forms. As well as power LDES technologies can provide reliable low-carbon heat, further supporting the energy transition.

The economic case for LDES is clear. Analysis by the LDES Council shows that the most cost-efficient pathway to a net zero global energy system could require 8TW of LDES by 2040. Such a system could save up to $540 billion annually in energy system costs, a huge dividend but one that requires urgent action to unlock at the European and global scale.

LDES technologies such as pumped storage hydropower have been deployed at scale in Europe for decades, but they were mainly built under very different market arrangements. To complement, and actually fully implement, the EU’s renewable energy goals, additional policies need to be drafted that support innovation and development of LDES. These innovations are pivotal as the EU moves from energy systems supported by renewables to ones that are reliant on renewables.

Investment incentives

Regulations need to create new market mechanisms that maximise the full value of that flexibility. Policy makers should provide clear signals to investors through rulemaking that provides transparent, long term pricing visibility and new regimes for trading and permitting that will unlock the full functionality of LDES technologies.

The new legally binding target of 42.5% demonstrates the necessary level of ambition and leadership which have traditionally been cornerstones of the EU. The time is now to invest in the enabling technologies necessary to make this target a reality.

However, to unlock the power of LDES, the EU electricity market needs to reform:

• Markets should incentivise flexibility and grid reinforcements to match climate dependent generation.
• Policymakers should encourage the adoption of more 24/7 Clean Power Purchase Agreements, enabling corporate leaders to match their ambitions for net zero operations with reality.
• Governments need to grant ancillary service providers access and availability to participate in markets so LDES can turn renewable energy into profits.

Europe has set ambitious targets for renewables. Now, the EU must do the same for energy storage, particularly LDES, to ensure delivery of these renewables reliably and affordably.

European stocktake

LDES projects will not only smooth energy generation and create a more reliable and resilient grid, but they will also save money and help create a more politically stable European Union. Deploying LDES at scale also secures the optimal use of renewable resources and reduces waste.

Currently, when electricity generation exceeds demand or grid capacity, renewable resources are shut down in a process called renewable curtailment. This is a real challenge in Europe. In April last year, Spain curtailed its solar power production following a drop in electricity demand across the country.

This caused a drastic decline in the wholesale electricity price from €168.50 per MWh to a new record low of €3.70/MWh. Similarly, the UK curtailed 1.35TWh of wind energy last winter, enough to power over a million homes. And there is an urgent, renewed focus on energy security. Russia’s invasion of Ukraine fundamentally shifted Europe’s view on the security of supply and the ability to meet demand.

Renewables are now recognised as essential in bolstering countries’ resilience to the aftershocks of geopolitical conflicts. But LDES is needed to ensure that Europe doesn’t rely on fossil fuels at these times of crisis. Some countries across Europe are now investing heavily into LDES and energy storage, realising its critical importance to the energy transition. And member states are beginning to set energy storage targets across the continent, in an early acknowledgement of the central role LDES will play in realising the energy transition.

But the 6GW of LDES projects Greece has planned to develop by 2030; or the 3GW the Italian and Irish governments wish to develop over the same period; or Spain’s €280 million commitment for energy storage, including standalone, thermal, and pumped hydro technologies aren’t enough.

Given the immense economic opportunity in Europe, the ability to provide a new generation of green jobs, and facilitate a just and equitable transition for citizens across Europe, there is no time to waste. Europe’s governments can do more to assure its citizens that the continent’s renewable ambitions will be met and its decarbonisation targets achieved.

Cross-collaboration between market players to drive innovation and hasten the development of long duration energy storage must increase as fast as possible. The EU and European governments need to quickly reshape markets and create the policy landscape to enable the greater deployment of renewables and storage. And these young industries require better finance mechanisms to bring the necessary levels of investment that will supercharge projects and see more public-private partnerships.

With clear targets for energy storage and LDES, the renewable energy future Europe is aiming for can become a reality. The challenge is clear. The road to a net zero economy in Europe runs through renewables and LDES, if the continent’s governments have the will to walk it.

Alex Campbell will be speaking about the importance of long duration energy storage at Enlit Europe on 29 November at the Hydrogen & Storage hub.