European energy storage startups have attracted €2.14 billion in equity funding, underscoring how capital is increasingly targeting technologies capable of stabilizing power systems with high renewable penetration.
According to a study by Avnet Silica, mechanical energy storage leads the funding landscape with €696.7 million, more than double the €331.8 million raised by battery energy storage systems. The data points to a strategic recalibration by investors toward long duration storage as grid volatility, negative pricing events, and curtailment intensify across Europe’s power markets.
The analysis, based on European hardware focused energy storage startups listed on Crunchbase as of September 22, 2025, excluded software, trading platforms, residential systems, grants, and debt financing. The scope was deliberately narrow, concentrating on commercial, industrial, and grid scale technologies where capital intensity and system impact are highest. This filtering matters, as it reveals where investors believe physical infrastructure bottlenecks will constrain energy transition timelines.
Mechanical storage dominates not because of volume deployment today, but because of its perceived ability to solve multi hour and multi day balancing challenges. Of the €696.7 million raised, nearly 80 percent flowed into two companies. UK based Highview Power secured €339 million for its liquid air energy storage systems, while Switzerland’s Energy Vault raised €200.5 million for gravity based storage towers.
Both approaches target discharge durations well beyond conventional lithium ion systems. Liquid air energy storage typically operates in the 8 to 12 hour range, while gravity systems are designed for flexible discharge profiles tied to grid needs rather than battery degradation curves. Investors appear to be pricing in a future where frequency regulation alone is insufficient to justify storage revenues, and capacity value becomes decisive.
Mechanical systems also benefit from decoupling power and energy capacity, allowing scaling without proportional increases in cost. That characteristic aligns with markets such as Germany, the UK, and Italy, where renewable penetration is already testing system adequacy during prolonged low wind or solar periods.
BESS remains central, but capital discipline is visible
Despite being eclipsed in total funding, battery energy storage systems remain a structural pillar of Europe’s energy storage ecosystem. Avnet Silica estimates €331.8 million has been raised by BESS focused startups, with lithium based technologies accounting for €236 million of that total.
Grid scale batteries continue to dominate near term deployment because of their modularity, fast response times, and well established supply chains. However, capital allocation suggests a more selective approach. Instead of funding scale for scale’s sake, investors are backing differentiated chemistries that address safety, material constraints, or use case gaps.
Sweden’s Enerpoly raised €1.8 million to develop zinc ion batteries positioned as a non flammable alternative to lithium ion systems, while Switzerland’s Unbound Potential secured €6.7 million for membraneless redox flow batteries aimed at long duration applications. These amounts are modest compared to mechanical storage funding, but they signal targeted bets on niche performance advantages rather than mass deployment.
As Harvey Wilson, Senior Manager of Industrial Vertical Markets EMEA at Avnet Silica, noted, battery storage demand is increasingly driven by applications outside traditional grid services, including EV charging in weak grid locations, temporary power for construction and events, and mobile energy solutions. These use cases favor flexibility and safety over pure energy density.
Beyond lithium ion systems, next generation storage technologies accounted for €113.2 million in funding. Redox flow batteries attracted €76.1 million, with iron based chemistries receiving €66.7 million of that total. Germany’s VoltStorage raised €38.75 million, while Cyprus based Redox One secured €28 million.
Flow batteries offer cycle durability and decoupled scaling of energy and power, making them suitable for applications requiring daily deep cycling over decades. Their funding levels remain below mechanical storage, reflecting slower commercialization timelines and higher balance of plant complexity, but the steady capital inflow indicates sustained confidence in their grid relevance.
Hybrid storage solutions received €17 million, led by Spain’s Hybrid Energy Storage Solutions with €14.9 million for its lithium ion and ultracapacitor architecture. Finland’s Geyser Batteries raised €2.1 million for an aqueous hybrid system targeting improved safety and fast response. These technologies aim to bridge the gap between high power and long duration needs, particularly for industrial users with fluctuating load profiles.
Investment patterns reflect grid realities, not hype cycles
The funding distribution highlights a shift from short duration optimization toward system resilience. As renewable generation rises, Europe’s grids face growing mismatches between supply and demand across hours and days, not seconds. Mechanical storage and long duration systems are positioned to monetize this gap through capacity markets, congestion management, and seasonal balancing, rather than ancillary services alone.
At the same time, BESS investment has not collapsed, but it has become more pragmatic. Capital is flowing to chemistries and architectures that address specific operational constraints rather than to incremental improvements on established lithium ion designs.
The Avnet Silica study also underscores how hardware focused innovation remains central to Europe’s decarbonization strategy. Software and trading platforms may optimize existing assets, but physical storage capacity ultimately determines how much renewable energy can be integrated without destabilizing the system.
With €2.14 billion already committed, Europe’s energy storage startup ecosystem reflects an investment thesis anchored in grid physics rather than policy signaling. The next phase will test whether these capital intensive technologies can move from demonstration and early commercial projects into scalable deployment before grid congestion and curtailment costs outpace infrastructure buildout.
