Year in Review: European developer/IPPs Aquila, Kyon and Baywa r.e.

We will be publishing a separate article with the trio’s predictions for what major energy storage technology trends Energy-Storage.news readers should be looking out for, later this week.

Kyon is primarily active in Germany where it has brought nearly 700MW of battery energy storage system (BESS) projects to ready-to-build stage, including 195MW sold to investor Obton last year. Kyon’s managing director Florian Antwerpen shares his views for this article.

Aquila was one of the first movers in the Belgian BESS market and launched its first operational project in Germany in December, a solar-plus-storage system in Lower Saxony with a 6.9MWh BESS, while actively targeting Italy and Poland and Australia. We hear from its director for energy storage Kilian Leykam.

For BayWa r.e., recent projects it has progressed include a three-hour 171MWh BESS project in the UK,, and a solar-plus-storage-plus-hydrogen project in France. Head of storage Julian Gerstner rounds of the trio of contributors.

Kilian Leykam, director energy storage, Aquila Clean Energy EMEA

What did 2023 mean for the energy storage industry, both from your own company’s perspective and in bigger picture terms? 

As we anticipated at the beginning of this year, 2023 has been a pivotal year for BESS in Continental Europe. We saw big steps forwards in all markets in which we are active with major project announcements in Germany, Italy and BESS auctions in Greece and Spain.

For us, at Aquila Clean Energy, 2023 has also marked a key year regarding BESS. During the same we expanded our BESS development project pipeline across EMEA to around4 GW and we commissioned two BESS projects in Belgium and Germany.  

How are energy storage projects and different market opportunities evolving, as technologies and stakeholder understanding mature? 

We see that stakeholders across Europe are recognising more and more the essential role that BESS plays to integrate renewables into the power grid. Policy makers, regulators and grid operators are key to setting the right framework for BESS capacity growth. In this sense, for example, grid connections, permits and grid fees are still slowing the deployment of BESS in many countries.

However, we see that in most countries stakeholders are now actively pursuing strategies to reduce hurdles and to activate the BESS build-out. This is enabling us at Aquila Clean Energy to continue to grow our investment, development and construction activities in this space. We also welcome the approach of countries like Greece and Spain to set up dedicated incentive systems for battery projects.  

The last couple of years saw significant supply chain challenges for the industry, particularly around lithium battery and battery materials. Have those constraints eased and what sort of supply chain dynamics are you seeing in the industry going forward? 

In 2023, we saw lithium prices dropping over 80% from the highs in 2022. Over the past year lithium supply expanded rapidly across the globe and combined with a significant build-out of battery cell production capacity, the bottlenecks in the overall battery supply chain were significantly reduced. We see a continued ramp-up in the production of battery cells and we expect this trend to continue in 2024.   

What should the industry’s main priorities be in 2024? 

The year 2024 will be the year of execution in particular in markets like Germany and the Nordics. Many larger scale projects that have been developed over the past years will now enter construction phase which will require all stakeholders to work together to make these projects a success.  

Florian Antwerpen, managing director, Kyon Energy

What did 2023 mean for the energy storage industry, both from your own company’s perspective and in bigger picture terms?

In 2023, Kyon Energy experienced impressive growth in the industry. With numerous new battery energy storage system (BESS) project announcements we significantly increased our existing project capacity of 120MW. Kyon managed to bring another 689MW of BESS projects to “ready to build” status this year, while almost tripling our total project pipeline to more than 7GW. A great step towards more flexibility, efficiency and resilience in the German energy system. 

Overall, 2023 was a pivotal year for the storage industry and Europe as a whole. Following the market shocks in the wake of the war in Ukraine, the power market has calmed down considerably this year. However, it has become increasingly clear over the course of the year that there will be much more movement in the market in the long term due to the elimination of surplus fossil capacities, the massive ramp-up of renewables and rising electricity consumption.

This has made the business model for large-scale storage facilities considerably more robust, which is also reflected in a massive ramp-up in investment. In Germany, the political framework conditions for storage systems have also been improved in some areas. It was therefore a good year for the industry, but there is still a long way to go. 

How are energy storage projects and different market opportunities evolving, as technologies and stakeholder understanding mature? 

Energy storage projects and market opportunities are undergoing a significant evolution as technologies advance and stakeholders deepen their understanding of the sector. With ongoing technological advancements, energy storage solutions are becoming more efficient, cost-effective, and scalable. Project sizes are getting bigger – in Germany we are moving from 10-20MW projects to 100MW and more. The variety of available approaches opens up the possibility but also the challenge of finding the most economical solution. 

Investors, policymakers, and energy companies are increasingly recognizing the value of energy storage in enhancing grid reliability, integrating renewable energy sources, and providing grid services such as frequency regulation and demand response. Therefore regulatory frameworks are slowly improving in some areas to accommodate the unique characteristics of energy storage, facilitating its integration into existing energy markets. A lot more changes need to be made. 

The last couple of years saw significant supply chain challenges for the industry, particularly around lithium battery and battery materials. Have those constraints eased and what sort of supply chain dynamics are you seeing in the industry going forward? 

The challenges we face in the supply chain continue to be diverse. The biggest bottleneck encountered in battery storage projects is still the long delivery times for high-voltage components, especially HV-transformers. This bottleneck is affecting projects throughout the industry and has increased further due to the strong expansion momentum. 

At the same time, there are encouraging signs that the market for battery components, including modules, containers, inverters and switchgear, is easing. Delivery times for these crucial elements have normalized again to less than 12 months, depending on the size of the project. This easing of the market promises greater flexibility in the planning and implementation of our projects. 

There is also a positive trend in raw material prices. There is a gradual improvement, especially for cells that require less critical materials such as cobalt and nickel. Lithium iron phosphate (LFP) batteries in particular are in favor of the falling lithium carbonite prices. 

As of the variety of technologies used, the demand for lithium-ion batteries remains high and dominant on the market, as no alternative technologies have yet been established to replace them in a large scale. 

Despite these challenges, the supplier market for Battery Energy Storage Systems (BESS) is experiencing significant and broad-based growth. New manufacturers and suppliers are constantly entering the market. This expansion reflects the increasing demand and the important role that battery storage solutions are playing in the energy transition.

What should the industry’s main priorities be in 2024? 

The year 2024 marks yet another very important year for the energy storage industry, especially in continental Europe. It is the year of scaling, where the entire industry is on the verge of maturity. Next to green-field development of new projects, the focus is now on actual implementation and delivery. This development reflects the maturity of the industry, which is moving from theoretical concepts to practical solutions.

One of the biggest challenges for the energy storage market will be to create a real level playing field for storage compared to conventional energy producers. Once this starting point has been established, energy storage systems will have to assert themselves on the market. The interaction between market and grid plays a decisive role here. Energy storage systems must not only be economically viable, but also technically and procedurally capable of being seamlessly integrated into the existing and future energy infrastructure. This requires close cooperation and continuous exchange between the various players in the energy system in order to remove existing hurdles as quickly as possible and develop efficient solutions. 

Specifically, one of Kyon’s major priorities next year will be to work with politicians, the national regulatory authority and other stakeholders to find viable solutions for jointly optimizing the use of storage systems on the market and locally in the grid. This will not only benefit storage projects, but also the entire economy and electricity consumers in particular. 

2024 will also be extremely exciting from a technical perspective. While new storage technologies are entering the market, we are experiencing a sharp drop in costs for established lithium-ion systems. The challenge will be to find the most economical system setup in this increasingly diverse market. 

Julian Gerstner, head of storage, BayWa r.e.

What did 2023 mean for the energy storage industry, both from your own company’s perspective
and in bigger picture terms?

2023 was a strong year for our energy storage efforts. Amongst others, we secured planning approval for our first standalone battery energy storage system (BESS) in the UK, which is also one of our biggest standalone systems in Europe. The Meadow Farm Project will be built in Stockton-on-Tees and its capacity of up to 171MWh will help stabilise the local electricity system. This is a huge milestone that takes our UK storage operations to the next level, as we look to contribute significantly to the acceleration of the energy transition in this country and beyond.

Speaking more broadly, 2023 saw a growth in positive sentiment around storage solutions as their development around the world increased – and is expected to continue growing in 2024 and beyond. This rapid acceleration – one that started mainly in the UK, Australia and the US in around 2017 – can be explained by the ability of storage systems to bring flexibility and stability to a volatile energy marketplace and congested grids.

But 2023 also saw the continuation of a bottleneck for storage systems to connect to the grid, with many stuck sittings in queues – particularly in the UK, where grid congestion must be addressed if storage is to reach its full potential.

How are energy storage projects and different market opportunities evolving, as technologies and stakeholder understanding mature?

As countries continue to move away from fossil fuels and to renewable energy sources, we will need a modern, clean, cheap and flexible power plant and grid infrastructure. So energy storage projects will become increasingly attractive as a valuable asset for the operation of electrical systems because of the stability and flexibility they offer. People are now understanding how storage systems benefit the grid and the wholesale energy market, as they constantly de-stress the grid and improve the quality of supply.

For instance, storage systems can fill with renewable energy when demand is low, and then discharge when demand is high, bringing some much-needed flexibility to the market and helping to integrate more RES into the system. This ultimately means end consumers benefit from lower prices, which is why an affordable and successful energy transition depends on the build-out of BESS.

As countries transition to green energy, this will open up new market opportunities for battery storage from the country but also the application perspective.

The last couple of years saw significant supply chain challenges for the industry, particularly around lithium batteries and battery materials. Have those constraints eased and what sort of supply chain dynamics are you seeing in the industry going forward?

When it comes to the type of battery system in grid applications, lithium-based technology is the clear favourite and I’m confident that the production of lithium batteries will meet the high demand, despite still being a comparable new technology.

This is because lithium batteries are the ones used in electric vehicles, which gives them a huge economy of scale benefit, while research and development into this technology is very strong and equipped with a lot of money. I expect lithium technology will have the majority share of future battery systems, as they will be much more advanced than any other storage technology and supply will increase in the next five to ten years.

These days, Li-ion batteries are the technology of choice even for a storage duration of four to eight hours. A few years ago, it was thought that other technologies such as redox flow would be preferred here. However, as Li-ion batteries are now safe to operate, proven technology and the costs are low, I believe they will also become established in this area.

What should the industry’s main priorities be in 2024?

To take full advantage of the opportunity storage systems present, there are several challenges we must look to address in the coming year. Firstly, we urgently need a paradigm shift in the political and regulatory community on every level to acknowledge the importance of storage. A key component to this is increasing the number of studies that emphasise the cost benefits and flexibility advantages of storage systems, especially to political decision-makers.

We also need political regulation to grant storage systems priority access to the grid and creation of market environments that offer many different applications such as wholesale trading, frequency and non-frequency ancillary services and capacity markets so that it becomes a more economically attractive venture to storage developers. The regulations in the European Renewable Energy Directive (RED III), as well as the planned approval of the new Energy Market Design, are steps in the right direction. 

There must also be a concerted effort to get communities on board with storage systems. Community acceptance is a pivotal part of the success of any renewable energy solution. Although concerns must be taken seriously, these can be mitigated by planning, executing and operating projects to the highest social, technical and environmental standards.

Storage is a stable, sustainable all-rounder and, simply put, the successful energy transition depends on it. This is why there must be tangible progress made in 2024, from regulators to communities to storage operators, so that together we can take advantage of the benefits storage has to offer.

Energy-Storage.news’ publisher Solar Media will host the 9th annual Energy Storage Summit EU in London, 20-21 February 2024. This year it is moving to a larger venue, bringing together Europe’s leading investors, policymakers, developers, utilities, energy buyers and service providers all in one place. Visit the official site for more info.