European Market Monitor on Energy Storage

• Front-of-the-meter (FoM) storage (also called utility-scale storage): refers to battery systems connected directly to the transmission or distribution grid. These assets are owned by developers or utilities and earn revenues from wholesale electricity markets, capacity markets and ancillary services. In Europe, Great Britain (7.2GW installed) and Italy (1.9GW) are the largest FoM markets, with total installed FoM capacity reaching 18.5GW / 34.4GWh by end of 2025.
• Behind-the-meter (BtM) storage: refers to battery systems installed at a customer's premises; residential home batteries paired with solar PV, or commercial and industrial (C&I) systems at business sites. BtM storage primarily reduces electricity bills through self-consumption, peak demand management and participation in flexibility markets. Europe had 30.2GW / 46.2GWh of BtM storage by end of 2025, led by Germany (13.6GW) and Italy (5.4GW). EMMES 10 provides separate country-level forecasts for each segment to 2030.

A tolling agreement is a commercial structure in which an energy trader or offtaker takes operational control of a battery asset, paying the owner a fixed "toll" fee in return. The trader retains all revenues from operating the battery in energy and ancillary service markets, bearing both the upside and downside risk. This gives developers predictable debt-serviceable revenue without needing a capacity market contract.

It is a mechanism through which a grid operator or regulator procures a guaranteed volume of electricity capacity for a future delivery year, awarding multi-year contracts to generators and storage assets. For battery storage developers, a capacity market contract provides predictable revenue that significantly improves project bankability and reduces the equity required to reach financial close.

EMMES 10 identifies capacity markets as key to FoM (Front-of-the-Meter) storage deployment.

• Great Britain and Italy (the two largest FoM markets) both have well-established capacity markets.
• Belgium's capacity market has helped it consistently perform as a top-market each year.
• Poland has attracted contracts for over 7GW of storage connecting by 2030, though de-rating factors fell sharply from 95% (2027 delivery year) to just 13.4% (2030) across successive auctions.
• Spain and Germany were identified as the next expected capacity market launches.

They are grid balancing services procured by transmission system operators (TSOs) to maintain system frequency and stability. Batteries excel in these markets due to their millisecond response capability. The main European service categories are:

• FCR (Frequency Containment Reserve): automatic response within 30 seconds. Available across most European countries, though mandatory and unremunerated in some (eg. Spain for large generators).
• aFRR (Automatic Frequency Restoration Reserve): restores frequency automatically; procured pan-European via the PICASSO platform.
• mFRR (Manual Frequency Restoration Reserve): manually activated balancing energy, typically activated within 12.5 minutes.
• Fast-acting / sub-second services: Great Britain's Dynamic Containment (DC, 0.5 sec), Dynamic Regulation (DR) and Dynamic Moderation (DM) command significant premiums and are a key GB revenue driver. Ireland operates a bespoke 9-service framework from FRR (2 sec) through RM3 (480 min).