A rethink on the structure of European energy markets needed

CEOs and business leaders of 10 European organisations (Fluence Energy GmBH, Gore Street Capital, Gresham House, MW Storage, Zenobé, AEPIBAL, BVES, Energy Storage Ireland, Fraunhofer Institute for Solar Energy Systems and Karslruhe Institute of Technology) come together to sign an open letter, calling on European policymakers and public opinion to rethink the structure of European energy markets in response to the REPowerEU Plan.

The letter underlines the need for specific policy frameworks and targets, which would accelerate the adoption of flexibility and energy storage technologies in order to secure affordable, reliable, and sustainable energy systems for European consumers. The letter further highlights that these technologies are necessary to reduce the European energy dependence on imported gas, to meet growing electricity demand, and to lower energy prices while allowing for the green transition in a timely manner. 

The letter:

An open letter to European policy makers and the media regarding the REPowerEU Plan
The current geopolitical situation across the continent, combined with high dependency on imported natural gas, growing electricity demand, and consequently, higher bills for households and businesses, creates an urgent need to rethink the
structure of European energy systems.

The REPowerEU Plan1 , published in May by the European Commission, aims to increase the security of energy supply by building and connecting more renewable generation to the grid. However, for this plan to be successful, it must be accompanied by adequate targets and policy frameworks for the deployment of energy storage and other flexibility technologies. They are necessary to enable the safe and efficient integration of renewables into the electric grid, and now is the time to recognise them as the pillars of the European energy transition.
The signatories to this letter, organisations with decades-long experience in creating and supporting global and European energy markets, welcome the REPowerEU Plan, its ambitious renewable targets, and the recognition of the role of energy storage in delivering sustainable and reliable energy supply.

At the same time, we believe that if the accelerated near-term deployment of renewable energy sources is to be successful, Europe needs a rapid rollout of proven and scalable technologies to increase grid flexibility and enable the safe and efficient integration of renewable generation. To this end, battery-based energy storage is a quickly deployed, cost-effective, and low-emissions solution with the potential to become a backbone of modern, resilient, and decarbonised energy systems. Other technologies, such as demand side response, the improved utilisation of existing storage potential of pumped hydroelectric
and other energy storage technologies, as well as the interconnectivity between national electricity markets, are all critical to enabling the European energy transition.

Thanks to its unique characteristics – speed of response, flexibility, and reliability – battery-based energy storage and other fast-acting technologies are perfectly positioned to reduce the overall electricity cost for businesses and residential energy users in multiple ways. Battery-based energy storage can enhance network stability and ease congestion on transmission
lines, reducing renewable curtailment and the significant costs associated with it. It can provide capacity and ancillary services that balance supply and demand, often more efficient and cheaper than other technologies. It can also limit price volatility and thereby overall electricity cost in the wholesale energy markets through energy arbitrage.

In several markets around the world, energy storage technologies have proven their ability to replace thermal power plants as a more economical and low-carbon way of providing secure energy supply during periods of peak demand and low renewable generation. But despite having access to this ready-to-deploy and cost-effective technology, we continue to
rely on high-emission natural gas-based generation, while the Europe-wide targets that would strategically scale up energy storage projects are yet to be developed and embedded in law. In 2021, capacity market auctions across Europe awarded approximately 2.4 GW of contracts to energy storage, but various studies predict that to increase the security and reliability
of energy systems on the continent, we will need up to 200 GW of energy storage by 2030.

Additional changes to the energy market structure and design are also required to enable the goals of REPowerEU.

1The REPowerEU Plan by European Commission was first communicated in March and published on May 18th. It includes increasing the target of energy generated from renewable sources to 45% by 2030, up from 40% compared to last year’s targets. This would bring Europe’s renewable energy generation to 1,236 GW by 2030, including the installation of 320 GW of solar by 2025.

Manuel Perez Dubuc, CEO Fluence Energy GmbH
Alex O’Cinneide, CEO Gore Street Capital
Ben Guest, Managing Director Gresham House - New Energy Division
Wilfred Karl, CEO MW Storage
James Basden, Co-Founder and Director Zenobē
Luis Marquina de Soto, President Asociación Empresarial de Pilas y Baterías y Almacenamiento – Spanish Energy Storage Association
Urban Windelen, Executive Director Bundesverband Energiespeicher Systeme e.V. - The Energy Storage System Association – Germany
Bobby Smith, Head of Energy Storage Ireland Energy Storage Ireland
Dr. Matthias Vetter, Head of Department Electrical Energy Storage
Fraunhofer Institute for Solar Energy Systems
Prof. Dr. Stefano Passerini Karlsruhe Institute of Technology

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