Energy storage in 2023. Summary and trends for 2024

With an expert eye

Jacek Stężowski , eco -energy engineer and editor-in-chief of e-magazyny.pl

Energy storage has emerged as a pivotal aspect of the energy transition in recent years, captivating the attention of scientists, engineers, and businesses worldwide. In 2023, significant shifts occurred within this sector, encompassing advancements in technology, market dynamics, and legislative frameworks. The transition from experimental ventures to tangible implementations marks a transformative milestone, illuminating the promising trajectory of energy storage in the future.

This article provides an overview of the current state of energy storage in 2023, examining the key challenges and trends that have shaped the sector. Additionally, we’ll explore future projections that are poised to impact the evolution of energy storage in 2024.

Insights from industry experts are featured in the article, including Barbara Adamska, the president of the Polish Energy Storage Association; Łukasz Łyżwa, CEO of SRS Group; Krzysztof Wybrański, director of new technology development at ZPUE SA; and Adam Prokopowicz, Poland Sales Manager at Kehua.

The most important events and trends in 2023

The energy storage sector in Poland confronts numerous challenges, with positive legislative changes serving as just the initial step in market development. Barbara Adamska emphasizes:

“2023 marked a significant year for energy storage in Poland, yet it left us somewhat dissatisfied. While there were notable advancements on the legislative front, the actual market turnover and the number of contracted energy storage facilities failed to meet expectations. The industry still feels as though it’s waiting at the starting line, while other markets and countries have already forged ahead.”

Barbara Adamska, president of the Polish Energy Storage Association

Amendments to laws

The amendments to the Energy Law and the Renewable Energy Act in 2023 introduced several regulations concerning energy storage, establishing a framework for defining business models. However, according to the president of PSME, Barbara Adamska, the effectiveness of business models and their profitability, as well as the pace of market development, are influenced not only by statutory regulations but also by executive acts and regulations such as the Capacity Market Regulations or Balancing Conditions.

An important decision within the RES Act was the inclusion of energy storage in the definition of a hybrid RES installation. To qualify as hybrid, an RES installation must meet specific criteria, including the presence of an energy storage facility, which must collect electricity exclusively from devices within the installation. This change is vital for stabilizing the distribution network, reducing the need for extensive expansion while enhancing the efficiency of hybrid RES installations. Furthermore, allowing energy flow between the grid and the storage facility supports network stability, contributing to a more sustainable and efficient energy system.

Additionally, the amendment to the RES Act expanded the statutory definition of an energy cluster to include energy storage. This expansion emphasizes the importance of energy storage facilities in technical models focused on high self-consumption levels. The regulations stipulate that the capacity installed in energy storage facilities must comprise at least 2 percent of the cluster’s generation sources, with a planned increase to 5 percent in the coming years.

Moreover, the Energy Law amendment integrated the definition of energy storage as a fully integrated element of the operator’s network (FINC). Adamska highlights the benefits of these provisions, emphasizing that DSO warehouses can only be utilized to ensure network operation security and cannot compete with warehouses built by other market participants. This framework enables operators to seek consent from the President of the Energy Regulatory Office for constructing energy storage facilities and provides clarity for including DSO energy storage facilities in the regulatory value of assets. Already, the Energy Regulatory Office has issued initial consents for the construction of operator warehouses.

Capacity market

In the December capacity market auction for energy supplies in 2028, out of the 7 GW of capacity obligations, a substantial 1.7 GW is designated for energy storage. However, it will take several years before these installations begin to stabilize the energy system. The benefits to the power system from these storage facilities may not materialize until at least the 2030s.

Barbara Adamska highlights that the allocation of 30 storage projects in the auction, totaling approximately 1.7 GW, represents a significant increase compared to the previous year. However, she notes that the outcome could have been even better for energy storage if not for the derogation allowing the use of coal in the capacity market until 2028.

Battery recycling

Łukasz Łyżwa underscores the significance of the adoption of the new regulation by the European Parliament and the Council on batteries and waste batteries as the most crucial event. This regulation positions batteries as a strategic raw material, highlighting the imperative for a circular economy like never before. This shift marks a revolutionary change for both the recycling market and the entire battery supply chain. Łyżwa emphasizes the necessity for cooperation across all links in the chain to meet the regulation’s requirements. Recycling now emerges as a pivotal tool in the overall process, alongside mining, production, and sale. As the industry steps out of the shadows, there’s a pressing need to elevate processes and standards to the level of other market players. A formidable challenge lies ahead.

Łukasz Łyżwa, CEO of SRS Group

The discussion revolves around Regulation 2023/1542, adopted by the Council and the European Parliament on 12 July 2023. This regulation brings about significant changes in the realm of batteries and waste batteries, modifying Directive 2008/98/EC and Regulation (EU) 2019/1020 while repealing Directive 2006/66/EC. Unlike previous EU regulations that primarily focused on the end-of-life phase of batteries, the new regulations prioritize the effective management of used batteries.

Key aspects of Regulation 2023/1542 include:

1. Carbon Footprint Calculation: Mandating the calculation of the carbon footprint of batteries and the sharing of this information through a digital battery passport.
2. Collection Targets: Setting targets for collecting used portable batteries.
3. Lithium Recovery and Recycled Content Targets: Introducing targets for lithium recovery and minimum levels of recycled content in industrial and vehicle batteries.
4. Operator Due Diligence and Substances Restrictions: Defining requirements for operator due diligence and placing restrictions on hazardous substances in batteries.
5. Information Requirements and Labelling: Introducing information requirements, battery labelling, a digital battery passport, and the use of a QR code.

These changes aim to enhance the management of used batteries, promote recycling, and foster energy efficiency in the battery sector.

Technology development

Krzysztof Wybrański reflects on the dynamic developments within the energy storage sector in 2023, noting a notable surge in interest in storage facilities across both the prosumer and industrial markets. This heightened interest is attributed to supportive systems and the continuous rise in energy prices. As ZPUE, they witnessed numerous launches of storage facilities throughout the year. Additionally, there were significant strides in implementing and testing energy storage facilities within distribution networks, exemplified by projects like those in Ochotnica. Moreover, there’s been a marked acceleration in cell technology development, with ongoing discoveries of new battery chemistries such as sodium-ion batteries. Wybrański also observes a rekindled closeness between the energy storage market and electromobility, alongside a growing interest in Vehicle-to-Grid (V2G) technology.

Krzysztof Wybrański, director of development of new technologies at ZPUE SA

The array of topics that emerged on our website last year underscores the fervent efforts of engineers worldwide in advancing energy storage technologies. Here are a few noteworthy examples:

• Is sodium-ion storage poised to become a new leader in the sector?
• Are Polish revolutionary innovations reshaping energy storage production?
• The Czechs have unveiled a technology for storing energy in sand.
• Siemens plans to construct an energy storage facility with a synchronous compensator in Ireland.
• The creation of the first flow battery with a built-in ultracapacitor marks an innovative breakthrough.
• A groundbreaking long-term energy storage system is slated for construction in the USA.
• Could calcium-metal batteries offer a viable alternative to lithium-ion batteries?
• Exploring the potential of cement and soot in energy storage solutions.
• Antimony-based liquid metal batteries: Are they the future of energy storage?

In 2023, alongside advancements in energy storage technologies, significant progress has been made in auxiliary systems that ensure the safety and efficiency of storage facilities. Kehua Tech, a leading manufacturer and integrator of energy storage systems, highlights the commissioning of several large-scale liquid-cooled container energy storage facilities as a key event. The popularization of this technology for cooling and temperature control of individual battery cells marks a milestone in the development of medium and large energy storage facilities. Intelligent cooling systems enhance the safety and efficiency of these systems, positioning Kehua as a leader in designing and implementing storage farms with capacities of up to 400MWh. Additionally, battery “Liquid Cooling Systems” are gaining popularity in the industry, especially for energy storage systems from the commercial and industrial (C&I) sector, starting from 100kWh, designed in an All In One philosophy (PCS + battery system in one cabinet in a unified form), which became available in the market towards the end of 2023.

Moreover, regulatory changes in infrastructure in 2023 also significantly impact the energy storage market. The introduction of the definition of a direct line is highlighted as an important regulation for the development of energy storage facilities. In models assuming island operation or direct connection of the generating source with the recipient, the use of energy storage is technically and economically justified. Additionally, new regulations on aggregation and aggregators allow even energy storage facilities with low power and capacity to participate in the energy market through aggregation, offering benefits to their owners. Another important regulation is the possibility of sharing energy infrastructure between wind and photovoltaic technologies, known as cable pooling, which further contributes to market development.

Development of the global prosumer market

According to the latest data from Bloomberg New Energy Finance (BNEF), the global home energy storage market is experiencing rapid growth, with a capacity exceeding 15 GW and over 34 GWh by the end of 2023. Germany, Italy, Japan, the USA, and Australia lead in investment in home batteries, collectively representing 88% of this capacity.

In Germany, the success of the home energy storage market is primarily attributed to a subsidy program for battery purchases introduced in 2013. High energy purchasing rates for households and diminishing benefits of excess energy fed into the grid have also contributed to the increasing popularity of batteries. As a result, nearly 80% of German prosumers now own their own batteries.

Italy, the second-largest market for home energy storage, has witnessed a significant uptick in investment in such systems. Approximately 70% of Italian prosumers now own batteries, thanks to national tax breaks and local incentives such as a 50% subsidy offered by the Lombardy government.

In the USA, particularly in California, where around 12% of American prosumers utilize home energy storage, the market is also flourishing. The withdrawal of financial support for excess energy fed into the grid and the introduction of subsidies for home energy storage ranging from $150 to $1,000 per kWh are key factors driving investments in these solutions in California.

Expert forecasts for 2024

As the energy storage market in Poland continues to grow, experts believe that each coming year will be a big one. We asked them about their predictions for 2024. What challenges will the sector face? What trends will be popular? And where can opportunities for growth be found?

2024 in energy storage from the perspective of industry

“I’m hopeful that 2024 will surpass the excitement of 2023. I anticipate more implementations and new projects using hybrid storage solutions. The advancement of energy management systems, especially those connected with renewable energy sources, will be crucial. It’s essential to pay attention to the supply chain of key components, including battery cells, and examine their carbon footprint. I expect the European market in this area to grow dynamically. I’m convinced that more industrial customers will show interest in our energy storage and management systems to operate their businesses in a zero-emission and cost-effective manner.” – Krzysztof Wybrański.

“My hope for 2024 is for peace and an end to the war in Ukraine, a wish shared by many. The negative effects of this conflict are felt by all, including our ABM Recycling plant in Zhytomyr. Looking ahead to the new year, MB Recycling is increasing processing capacity and adapting collection systems to new waste streams, like the growing volume of lithium-ion batteries. Our GECON Trading Company is also responding to the demand for reusing lithium-ion batteries. For SRS Group, proving the circular economy is not just theory but practical business will be a challenge. 2024 promises to be a busy year, marked by rising recycling and collection levels, moving us closer to a zero-emission economy.” – Łukasz Łyżwa.

“In 2024, standardization and certification of components could make it a breakthrough year for Kehua. Drawing from global experience, we anticipate larger projects (>100MWh) utilizing container energy storage systems with ‘Liquid Cooling System‘ technology. Our 215kWh All-In-One EStore battery systems will offer flexibility for businesses of all sizes. The challenge lies in applying global expertise to Polish and European markets. Regulatory fluidity and lack of standards on the network side require local experience, which Kehua has developed in Poland. Geopolitical shocks, like the conflict in Ukraine or the Red Sea basin, remain threats to the supply chain, as seen in 2023.” – Adam Prokopowicz.

The year 2024 in energy storage through the eyes of PSME

“In 2024, we see a significant opportunity to bolster Poland’s energy storage industry. Our focus will be on leveraging the potential of the European battery regulation, regulations enabling extraordinary public aid for the energy storage sector, and addressing cybersecurity issues in energy infrastructure. We’ll advocate for support programs for entities investing in energy storage, particularly in the commercial and industrial (C&I) segment,” emphasizes Barbara Adamska.

Adamska also stresses PSME’s ongoing efforts to secure extraordinary public aid for Poland’s energy storage industry. With the European Union allowing member states to provide state aid for “green” industries amidst the energy crisis following Russia’s aggression against Ukraine, PSME aims to ensure that Poland’s regulations governing such assistance are robust.

“Our goal is to include all investment costs, both tangible and intangible, in eligible costs for aid. Entrepreneurs also need tax breaks and subsidized interest rates on loans or loan guarantees. We advocate for support for component manufacturers and investments in building energy storage facilities. The investment subsidies combined with a contract for difference, as seen in Hungary, are a proven method to support energy infrastructure investments and should be considered in Poland’s support rules,” adds Adamska.

Regarding cybersecurity, Adamska highlights the transformational changes occurring in Poland’s National Power System, particularly the digitization of the energy sector. The lack of cybersecurity regulations and specifications poses a serious threat to the system’s stability and security. PSME aims to adopt non-regulatory mechanisms, such as government recommendations, to address urgent cybersecurity concerns during the transitional period.

In 2024, PSME will continue its efforts to introduce co-financing programs for energy storage facility purchases, including support for entrepreneurs. Such investment impulses are crucial for building an internal market and fostering the growth of Poland’s energy storage industry.

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