An econometric analysis of the driving forces behind growth in grid-scale battery storage capacity in the EU

As countries seek to enact a renewable energy transition, development of adequate storage capacity is essential in order to balance supply and demand due to the intermittent nature of prominent renewable energy sources. Battery storage is a key technology in achieving this goal, with fast responses, high efficiency, and flexibility of application, making it particularly suited to providing short-term energy storage. Battery storage capacity has seen substantial growth in recent years, but few studies yet exist analysing the driving forces behind this growth. This work aims to determine which policies and market conditions promote growth in battery storage capacity, and which of these policies are the most important in this regard. A Fixed Effects regression model is used on panel data from eight EU countries spanning 2007–2020, across a selection of thirteen explanatory variables, in order to assess this. Access of battery storage to FCR/FRR markets, low household electricity prices, low energy dependency, and a high share of intermittent energy sources were found to be significant determinants of growth in electrochemical storage capacity. Based on the change to Adjusted R-Squared upon removal of each significant variable, low energy dependency and a high share of intermittent energy sources were found to cause the greatest change, and thus were found to be the most important factors in explaining growth in battery storage capacity in the EU.