Europe’s battery storage sector is entering a period of rapid scale-up, with annual deployments set to climb from 11 GW in 2024 to 16 GW in 2025, a 45% year-over-year increase, according to new forecasts from Wood Mackenzie.
The acceleration comes as markets across the continent confront widening volatility in power systems increasingly dominated by renewables.
Wood Mackenzie projects European BESS installations will sustain a 9% compound annual growth rate through 2034, reaching 35 GW by the end of the decade. Yet the distribution of this growth is far from even. Germany continues to cement its position as Europe’s largest and most aggressive storage market, supported by structural shifts in generation, high renewable penetration, and a capacity shortfall emerging across its power system.
Germany is expected to deploy more than 3.5 GW of storage in 2025, a figure Wood Mackenzie sees rising to 7 GW by 2034. The country’s demand profile is also more diversified than elsewhere in Europe, with 18 GW of expected utility-scale demand and 8 GW from commercial and industrial users over the next ten years. This reflects Germany’s reliance on energy-shifting and grid-balancing capabilities as it retires legacy assets. Nuclear generation has already been phased out, and approximately 29 GW of coal capacity is scheduled to exit the system by 2030. At the same time, new gas-fired projects have struggled to reach financial close, leaving storage as one of the few scalable options for flexibility.
However, the pace of Germany’s storage expansion is increasingly constrained by grid access. Connection requests have surged at a speed that far outstrips available capacity or permitting bandwidth. Early this year, applications for large battery projects totaled around 300 GW; that figure has now exceeded 500 GW, according to Wood Mackenzie. Data from the German Association of Energy and Water Industries (BDEW) reinforces this trend, showing more than 720 GW of pending applications for BESS systems larger than 1 MW, with an additional 78 GW already approved. These volumes highlight an underlying mismatch between investor interest and grid readiness.
Growing developer competition is also reshaping revenue expectations. While fundamentals remain strong, particularly in ancillary services, cannibalization is becoming a defining feature of the German market, narrowing the spreads that storage projects depend on. As more batteries enter the system, price volatility decreases, eroding the very revenue streams that BESS assets rely on for economic viability.
The broader European context presents similar contradictions. While governments view storage as essential for achieving renewable targets, the buildout often outpaces regulatory reform. Wood Mackenzie’s forecast reflects the continent’s urgent need for energy-shifting capacity, but also the structural challenges facing grid operators as storage moves from a niche asset class to a cornerstone of system stability.
With Europe’s largest power system entering a capacity crunch and a capacity market under consideration, storage is increasingly treated as critical infrastructure. But without faster grid modernization and clearer pathways to connection, the sector risks facing delays despite unprecedented demand signals.
