Unlocking the opportunity for C&I batteries in Europe

Commercial and Industrial (C&I) solar has rapidly gained traction across Europe as businesses and the public sector look to manage costs, meet decarbonisation targets and regulatory compliance, as well as leverage policy incentive schemes while available. Yet, despite growing awareness of the benefits of energy storage, the C&I battery market remains small. The problem isn’t technical potential — it’s turning that potential into bankable, repeatable projects at scale.

Lessons from Australia

Where 800 MW – 1 GW of C&I solar is installed annually, and storage is closing the gap

Australia’s C&I battery market offers a clear playbook. 2023 was a breakout year, with 252 MW / 403 MWh of new battery capacity added at commercial and industrial sites — a major leap compared with previous years. The momentum continued through 2024 and is expected to further rise. A recent Australian C&I solar industry census run by Orkestra and market research agency Sunwiz indicated that 58% of solar installers had seen a “substantial increase” in battery enquiries over the last 12 months.

Australia’s C&I solar and battery market

What unlocked growth? Several factors came together. Falling battery costs, state grants and federal incentives helped with upfront costs. In parallel, businesses increasingly viewed batteries as a way to manage costs and hedge against rising and increasingly volatile energy prices.

The real breakthrough, however, was more methodical. The value proposition clicked with end-customers when developers and installers were able to accurately model the returns and deliver batteries with a diverse value stack (including solar self-consumption, time-of-use optimisation, load shaping to reduce network charges, and market participation in wholesale and frequency markets).

Today in Australia, about half of all C&I solar proposals now include a battery option (this can go up to 75% of proposals in some States).

Europe’s missed potential

Contrast this with Europe, where in 2024, roughly 20 GW of C&I solar capacity was installed across the continent, compared with less than 1 GW / 2 GWh of C&I battery.

Europe’s C&I solar and battery market

Why the gap?

• Investor caution: Solar has a lower upfront CAPEX on a per kW and kWh basis. Decision-makers (CFOs, COOs, energy managers) are also comfortable with its passive, intuitive value proposition: generate on site, offset grid consumption, and save X euros per MWh.
  
  Batteries are inherently more complex, returns depend on active control of a battery, being on tariff structures that incentivise flexibility that are potentially more risky, and potentially require electricity market participation where the returns are far from certain. That uncertainty makes investors cautious. It’s not that batteries don’t make sense technically, the challenge is confidence in the economics and operations required for the returns to materialise.
• Complexity of stacked revenues: The value stack differs materially by country and even by site: retail and network tariffs (including time-of-use vs. demand components), dynamic pricing options, local market access rules, and DNO / TSO flexibility program availability. This complexity is a knowledge barrier for C&I battery developers.
• Execution gaps: Even when feasibility numbers look strong, projects can stall over EMS (energy management system) capability, integration responsibilities, or aggregator terms. If control systems and/or aggregators can’t actually implement the optimal tariff or market strategy, the modelled value won’t be realised.

Cracking the code: Making C&I batteries bankable

Research from LCP Delta shows growing policy momentum around flexibility in Europe. Several markets are reforming network tariffs, introducing dynamic pricing, and reforming market accessibility for behind-the-meter assets to access flexibility value streams. We’re seeing steps to enable independent aggregators to compete on a level playing field with traditional suppliers and balancing responsible parties. And the rollout of sub-metering and better metering standards is helping smaller sites prove and verify their flexibility.

As these evolve, C&I storage will look much more attractive because businesses can monetise that flexibility instead of letting it go to waste.

Batteries can earn money or savings from several sources, including (non-exhaustive):

Implicit flexibility (bill savings and avoided costs)

1. Self-consumption optimisation: storing excess solar for later use.
2. Time-of-use shifting: charge in cheap periods, discharge in expensive periods.
3. Peak-shaving: avoiding demand charges during high-use periods.
4. Network cost optimisation: avoid high-priced network tariff periods and/or enable a swap to more cost-effective tariff options.

Explicit flexibility (revenue generation)

1. Grid services: participating in frequency response or local flexibility markets.
2. Wholesale trading: day-ahead & intra-day markets.

In essence, investors in C&I storage should consider batteries as “flexibility-in-a-box”.

What stakeholders need to get right and be ready for

Stakeholders include C&I end-customers, solar installers and energy solution providers, battery manufacturers (OEMs) and EMS / Optimiser providers, aggregators, policymakers, and financiers.

1. Policy and tariff reform: While good progress has been made, many programs that incentivise flexibility are extraordinarily complex and favour energy industry majors. But there is opportunity in electricity tariff reform that both reflect the high cost-to-supply times in the grid and provide clear price signals to consumers to flex their loads to reduce their costs. Octopus Energy is a good example of a leading innovator in this space. The simplicity of tariff optimisation opportunities levels the playing field.
2. Financial framing: Many buyers look at CAPEX first and ask for a 3-year payback by reflex. For 15- to 25-year assets, IRR/NPV and cash-flow profiles may be the more appropriate lens. Hence, project developers and solar installers need to move away from sending solar and battery proposals that state only a cost and maybe a payback (“here’s the total price, sign here”) to genuine value-based proposals with a quantified stack expressed as IRR/NPV and scenario ranges. Put CAPEX last.
3. Tariff literacy: Too many battery proposals ignore demand charges, network fees, or dynamic components. When tariff optimisation is a core part of the value stack, and the feasibility hasn’t considered the impact on tariffs, don’t expect the battery project to miraculously stack up.
4. Market access & commercial terms: If explicit market participation is part of the stack, agree who optimises this revenue, how revenue and risk is shared, what metering and availability commitments are required, and determine any impact on implicit flexibility priorities (ie. determine if market participation comes at a cost of tariff savings).
5. Sizing challenges: Avoid using “rules of thumb” for C&I battery sizing. Capacity and duration should be optimised simultaneously against site load, usage patterns, on-site generation, actual retail and network tariffs, and any market services targeted. Shortcuts lead to under-sizing that leaves value on the table or over-sizing that erodes IRR.
6. EMS capability: Just because a battery “comes with an Energy Management System” (EMS), the active controller for the battery that unlocks the value, doesn’t mean it’s bankable. Bankability depends on delivering the modelled savings. Hence, the project scope needs to include an EMS capable of delivering the savings. In many cases this requires an EMS that uses or creates load and generation forecasts, optimises effectively, and is capable of ingesting and optimising a load for a specific tariff. The most advanced batteries are now getting shipped with EMS that can do these things, but it’s worth checking.
7. Understand the opportunity cost of delay: Deferring storage decisions can lock sites into PV-only designs that are sub-optimal and potentially result in undersized solar systems or, in the worst case, no viable opportunity to add a battery. Furthermore, adding storage later can mean extra engineering work, additional connection requests, constrained inverter capacity, or missed opportunities to capture higher value from the combined system. So early integration usually pays off in the long run.
8. Simplify financing, where CAPEX is a barrier: With standardised business models that overcome high upfront costs. For example, storage-as-a-service or integrated solar-plus-storage PPAs. Storage can be used to massively increase a solar system that would otherwise be limited due to the financiers’ requirements (eg. assisting to meet specific solar self-consumption requirements for the solar system).
9. Post-installation accountability: Without performance tracking that reconciles savings to invoices, confidence erodes and portfolios stall.
10. Portfolio-level learning: Standardise templates for feasibility, EMS specifications, and performance reports. Iterate quickly on early sites to accelerate roll-out.

From potential to progress

Europe can replicate Australia’s success. But only by treating batteries as core infrastructure, rather than a PV add-on. The winning formula is to design flexibility and solar from day one matched directly to the load and tariff, with stacked value that is modelled and delivered as promised.

The market signals are positive and Europe keeps installing record volumes of C&I solar.

It is time to convert that momentum into bankable C&I storage and close the battery gap.