Early signs of the impact of batteries

Batteries started to compete with gas power in 2025

In many EU countries, gas-heavy hours pushed up prices in 2025, while sunny and windy hours pulled them down. This creates a profitable opportunity for batteries to store clean power for use in fossil-reliant times of the day. Early evidence of this was visible in 2025, with a record battery pipeline hinting at a major acceleration.

Wholesale electricity prices increased in 21 EU countries in 2025 compared to 2024, with annual rises ranging from 22% in Austria to 3% in Greece. The main cause of these price increases was sharp spikes during morning and evening hours. These are periods that align with the highest gas use, when more power from costly gas generators is needed to meet demand. 

Burning fossil gas is typically the most expensive way to generate electricity. In 2025 the average cost of electricity from gas ranged between €101/MWh and €112/MWh across the EU. During peak gas-use hours in 2025, prices were on average 11% higher across the EU than in 2024. By contrast, in the hours when clean power (especially solar) was abundant, typically between 7am and 4pm, wholesale electricity prices rose by only 3%. In Germany, for instance, electricity prices jumped by 19% during high gas-use periods but grew only by 8% when solar generation was plentiful. 

Hours with abundant wind and solar, which align with lower power prices, are common across the EU and are happening more often. In 2025, 19 EU countries experienced at least one hour when wind and solar combined accounted for over 70% of the country’s hourly power generation, a significant increase from only two countries in 2020. Wind and solar together supplied more than half of electricity generation during at least one third of all hours in Denmark, Estonia, Germany, Greece, Lithuania, Luxembourg, the Netherlands, Portugal and Spain.

The widely interconnected European power system is already alleviating price spikes and stress on the grid by moving electricity to where it is needed the most. Higher connectivity and new cross-border electricity transmission lines, both in major demand centers and in more isolated regions such as the Nordics and Eastern Europe, could further mitigate both the frequency and the severity of the high price events.

Using batteries to store renewable energy for later use at times of high demand is another solution to lowering price spikes, and one that could be rapidly scaled up thanks to the favourable economics of battery projects. An average 20% annual decline in battery costs over the last decade, combined with large and widening intraday price spreads, made investing in battery storage more financially attractive than ever in 2025.

The improved business case has already boosted battery deployment: in 2025 EU large batteries exceeded 10 GW. This is more than double what it was just two years ago, at 4 GW in 2023.

While nearly half of EU grid-scale batteries are still concentrated in just two countries (Italy and Germany), 2025 saw clear signs of acceleration across the bloc. Battery projects started construction or were announced in most EU countries. In 2025, the grid-scale battery pipeline reached record levels in countries like Greece, Spain and Poland where operating grid-scale battery capacity remains especially low compared to installed wind and solar.

Germany and Poland lead the EU battery storage pipeline, followed by Italy. If all projects in the pipeline go ahead, capacity would exceed 40 GW, a ten times growth from 2023 levels, and would be less geographically concentrated. A big jump in the value of Chinese batteries imports to the EU in the first 11 months of 2025 is a sign of the strength of the pipeline.

Italy is one of the battery leaders in the EU, hosting 1.9 GW large batteries (about 20% of total EU operating capacity). Strong growth came in 2025: capacity increased by 0.7 GW from January to October (+40% compared to 2024). A robust pipeline of projects hints at rapid growth to come, with 10 GW of new battery projects in construction, permitted or announced as of December 2025. 

In 2025, Italy’s batteries contributed to meeting demand during peak gas-use hours, a trend that could rapidly accelerate as that pipeline is built. In September 2025, large-scale battery systems discharged an average of 1.1 GW during the early evening hours (7–8 pm). This accounted for only 3% of demand in those hours, compared to fossil power’s 52% share. However, with the delivery of the development pipeline, battery capacity could quickly grow by nearly six times, meet higher shares of demand during peak gas-use hours and reduce the country’s high reliance on expensive gas.

California offers a case study of what could play out in Italy. California’s grid-scale battery capacity in 2021 matched Italy’s current level (2 GW), but then soared to 13 GW within four years. Italy would follow this trajectory if ongoing projects are delivered. In 2025, California’s batteries routinely supply almost a fifth of electricity demand during evening peaks, increasingly limiting the need for gas. In fact, in just four years, California’s share of fossil in the evening demand peak dropped from 44% in September 2021 to 34% in September 2025, while battery’s contribution surged from 3% to 22% over the same period. This suggests that EU countries deploying batteries to store abundant clean power could similarly reduce their reliance on costly gas.

Deploying more battery capacity could displace more gas power generation and lower wholesale electricity prices at times when electricity is in high demand. Solar or wind power stored in a battery and shifted to the evening could cost around €64/MWh in Italy (see Methodology). This is a competitive price compared to the cost of producing electricity with a typical gas power plant which averaged €111/MWh in Italy in 2025 and typically set the electricity price in EU power markets. By outcompeting expensive gas-fired power plants and increasing competition among suppliers to meet demand, batteries can reduce the market power of existing price-setting generators and lower wholesale electricity prices.

As solar installations take off across Europe, increasing battery use can ensure that as many solar kilowatts as possible get put to use. 

Curtailment, where grid operators intentionally limit the output of a generator, is generally due to physical constraints in the grid or limitations in operating the grid. Where curtailment takes place, there is an opportunity to capture that power for later use through battery storage. Batteries that charge using low-priced abundant clean power — which would otherwise be wasted — stand to profit, as periods of high renewable curtailment typically align with the lowest prices, sometimes even turning negative. In 2025, seven EU countries recorded negative prices in 5% or more of all hours.

Germany, the largest EU producer of solar power, is one country where batteries could help capture a significant amount of wasted solar and wind production. Germany curtailed about 3.1% of their total solar generation in 2025, up from 1.9% in 2024, while monthly wind curtailment remained at an average of 4.8% into 2025. Overall, Germany curtailed an estimated 9.6 TWh of wind and solar generation in 2025, nearly 4% of the total generation of these fuels.

If Germany’s battery announced projects (equivalent to 10.5 GW/26.3 GWh) had absorbed this otherwise wasted generation, it could have avoided one third of the curtailment in 2025, avoiding about €0.8 billion in redispatch costs (€613 million) and gas purchase (€219 million). This could have alleviated consumer bills, since redispatch costs are passed to consumers via grid fees included in the electricity bill. Making use of that electricity through batteries would have also reduced gas generation by 3.7% (3 TWh) over the full year. These benefits would have outstripped the necessary cost of investment in batteries. To deliver those annual savings of €0.8 billion, the additional investment in batteries is estimated at €145 million per year over the technology’s lifetime. The cost-benefit ratio for investing in batteries improves further given that they would be used for additional grid stabilization services, and would be used over a period of many years.

The potential benefit of capturing curtailed power is substantial in those countries where a rapid solar expansion was not yet matched by a similar deployment of batteries, such as Greece, Poland or Spain. The lack of a clear regulatory framework is one of the factors that has slowed down battery storage development, but this started to change in 2025. For instance, Spain approved new rules to fast-track battery deployment, as part of a package to future-proof the Spain power grid and address key vulnerabilities identified after the Iberian blackout.