The Future of European Electricity Markets: Batteries, Hybridisation and Profitability

European electricity markets are facing an unprecedented energy revolution, driven by the rise of renewable energies. Batteries and hybridisation of technologies are emerging as key players in this transformation process, not only optimising the integration of clean energy but also mitigating price volatility and increasing the profitability of investments. Falling battery prices and the advance of hybridisation promise a more stable and profitable future for the renewable sector.

The European electricity market is undergoing an unprecedented transformation process, driven by the rise of renewable energies. In this context, batteries and hybridisation of technologies play a crucial role, not only for their ability to improve renewable integration but also for their impact on price cannibalisation and the increase in the return on investment.

Batteries: A more accessible and profitable technology

In the last year, the price of batteries has fallen by around 100%, making them much more accessible for energy storage projects. In addition, with the massive introduction of photovoltaic generation, the spread between the electricity market price between solar and night time has increased, allowing batteries to capture higher price margins through arbitrage. This means that the profitability of batteries has progressively increased, as they can buy energy during the hours of low solar demand and sell it later in the evening when the price is higher.

This progress not only helps to manage the intermittency of renewable technologies but also helps to mitigate the problem of price cannibalisation during peak solar energy production hours, stabilising the market and optimising revenues for installations.

Hybridisation: Resource maximisation and market stability

Hybridisation of technologies, combining different generation sources (wind energy, solar energy, batteries) and taking advantage of the complementarity of resources, not only increases operational efficiency but also extends generation capacity throughout the day. This helps smooth fluctuations in market prices, reducing volatility and increasing the profitability of energy projects.

By combining renewable generation and storage technologies, hybrid installations not only enable higher production but also capture more value during peak hours, improving returns on investment.

Falling battery prices and growing arbitrage opportunity in the electricity market indicate a promising future for investment in renewable energy.

AleaSoft Energy Forecasting’s analysis on energy storage and hybridisation

The AleaStorage division of AleaSoft Energy Forecasting provides services to optimise and manage energy storage systems and to calculate their revenues in the main European markets. Forecasts and reports are produced for stand?alone projects, hybrid systems of wind energy and batteries, hybrid systems of solar photovoltaic energy and batteries and hybrid systems of wind energy, solar photovoltaic energy and batteries.