Energy Storage – The Key to Transformation

Introduction

The energy transition is one of the greatest challenges of today’s economy. Around the world, we are witnessing rapid development of renewable energy sources (RES), which are becoming the foundation of energy mixes. Photovoltaics and wind power are currently the cheapest energy generation technologies and also the most dynamically growing. According to the International Energy Agency, by 2030, over 60% of new electricity capacity will come from RES.

However, this development direction brings a serious challenge: non-controllability. Wind and solar energy depend on weather and time of day – we don’t always produce it when it’s most needed. As a result, energy systems increasingly require solutions to balance these fluctuations.

A key role in this process is played by energy storage systems (BESS – Battery Energy Storage Systems). They allow surplus energy to be stored during periods of high production and released during times of deficit. Storage systems can respond in fractions of a second, stabilizing the grid and ensuring continuity of supply. Thanks to them, the full potential of RES can be utilized, and fossil fuel production gradually reduced.

Global Context of Energy Storage Development

The global BESS market is experiencing rapid growth. In 2010, the total battery storage capacity was only a few hundred megawatts. By 2023, it had surpassed 100 GW, and forecasts for 2030 predict 600–800 GW of installed capacity. This growth is comparable to the solar boom of a decade ago.

The United States is one of the leaders – California, Texas, and New York are implementing multi-gigawatt projects. The largest current facility in California (Moss Landing) has over 1.6 GWh of capacity and plays a key role in grid stabilization. U.S. storage systems also participate in ancillary service markets, generating stable revenues for operators.

Europe is developing at an impressive pace – the UK has already exceeded 4 GW of BESS capacity, Germany plans to reach 10 GW by 2030, and Spain and Italy are launching new auctions to support investments. A particularly interesting market is the Netherlands, where storage systems are integrated with large PV and wind farms to manage local grid constraints.

Asia presents two distinct models: Japan, which implemented storage systems a decade ago to support the grid (mainly due to high population density and the need for supply stability), and China, which is investing in massive projects – hundreds of megawatts in a single location – as part of a plan to increase flexibility in a system still heavily reliant on coal-fired power plants.

In this global context, Poland is just beginning its dynamic development of the energy storage market. Although the starting point is later than in Western Europe, the scale of planned investments is significant. The largest project in Żarnowiec will offer 260 MW of power and 980 MWh of capacity, with additional gigawatts planned within the capacity market and hybrid RES projects.

The Role of BESS in the Energy Mix – Functions and Applications

Energy storage systems are no longer just “batteries for electricity.” They are versatile systems that perform many critical roles in modern power systems. Their functionalities include both technical and business tasks, each translating into specific economic and operational benefits.

1. Balancing Renewable Sources – The most obvious role is compensating for the variability of RES production. Surplus electricity from photovoltaics during midday can be stored and used in the evening when demand rises and generation drops. For wind, storage stabilizes farm output during gusts or lulls.
2. Providing Ancillary Services – Battery storage can react almost instantly, making it ideal for frequency and voltage regulation. Unlike conventional power plants, they require no startup time or fuel combustion, delivering or absorbing power in seconds.
3. Power Reserve – BESS serve as fast reserves – in case of sudden demand spikes or generation unit failures, storage can immediately step in. Traditional plants need minutes or hours; storage reacts in seconds.
4. Peak Shaving – Storage reduces peak demand by discharging energy during critical hours, lowering the need for expensive peak units.
5. Improving Power Quality – BESS eliminate voltage fluctuations, flicker, and harmonics, crucial for industrial consumers. This improves supply quality and reduces machine failure risk.
6. Backup Function (Black Start and Emergency Supply) – Storage can act as a backup source during grid failures. In critical situations like blackouts, BESS enables black start – restarting parts of the grid without conventional power plants.
7. Integration with Microgrids and E-Mobility – BESS naturally fit into local microgrids and e-mobility projects. They support fast EV chargers by storing energy at night and discharging during peak hours. They also contribute to V2G (vehicle-to-grid) systems, potentially becoming a widespread flexibility source.

Summary of BESS Roles

Applications of energy storage can be grouped into three main areas:

• Grid stabilization and RES integration – key to the energy transition.
• Cost management and consumer optimization – reducing energy costs, improving supply quality.
• Energy security – reserve, backup, and fast system recovery.

These elements make energy storage a strategic component of the energy system, not just an add-on.

Implementation Examples – USA, Europe, Asia, Poland

Energy storage development is a global phenomenon, shaped by local technical, regulatory, and economic conditions.

USA – Gigawatt-hour Scale – The Moss Landing Energy Storage Facility in California exceeds 1.6 GWh and plays a strategic role in system balancing. U.S. storage operates in:

• System support – fast reserve, frequency regulation, grid stabilization.
• Market services – price arbitrage: buying energy during low supply and selling when prices rise.

Companies like Fluence, Tesla, Stem Inc., and NextEra Energy integrate BESS with PV and wind farms and offer industrial services. Mobile solutions also emerge – containerized storage deployed where needed.

Europe – Regulatory Market and RES Integration –

• UK – One of the most advanced markets. Regulatory services (e.g., Dynamic Containment) make BESS profitable. Over 4 GW installed, more under construction.
• Germany – Integrates storage with wind farms in the north and PV in the south to reduce transmission costs and stabilize the grid. Plans for over 10 GW by 2030.
• Netherlands – Rapidly growing market. Storage built near PV farms to manage local grid constraints. Projects of 100–250 MW are becoming standard.
• Spain and Italy – Recently launched support programs, now building large projects via regulatory and reserve auctions.

Asia – Japan’s Experience and China’s Scale –

• Japan – Early adopter. Systems built between 2010–2015 support grid stability in densely populated areas. Also used for V2G and island microgrids.
• China – Builds massive BESS systems, 200–300 MW with over 800 MWh capacity. Used for integrating large PV and wind farms and stabilizing a coal-heavy grid.

Poland – Dynamic Start –

• Żarnowiec – Largest project in Poland and one of Europe’s biggest: 260 MW, 980 MWh. Strategic for the National Power System (KSE).
• Capacity Market – Recent auction contracted 2.5 GW of new BESS capacity, enabling multiple large investments.
• Hybrid Projects – RES developers increasingly combine PV/wind farms with storage to improve competitiveness and project economics.
• Industry – Energy-intensive consumers (steelworks, chemical plants, data centers) explore BESS to reduce energy costs and ensure reliability.

Business Models – ESaaS, Arbitrage, Ancillary Services

BESS technology opens new business opportunities. Storage is no longer just a capital expense – it’s a revenue-generating asset.

1. Price Arbitrage – Energy Trading Over Time – Buy energy during low supply (e.g., night, RES surplus), sell when prices are high. Especially attractive in volatile markets like California and Texas. Europe sees growing arbitrage potential with spot market volatility.
2. Ancillary Services – Regulatory Market – BESS naturally participate in services like FCR, aFRR, mFRR. They can:

• Deliver power during frequency drops.
• Absorb energy during surplus.
• Stabilize voltage and provide spinning reserve.

UK, Germany, and the Netherlands show BESS can be a regulatory services backbone. Poland is opening this market too.

1. Cost Reduction for Industrial Consumers – BESS optimize:

• Ordered power costs.
• Peak demand charges.
• Power quality and machine failure risk.

Industries like chemicals, metallurgy, and data centers treat BESS as reliability-enhancing investments.

1. Energy Storage as a Service (ESaaS) – Clients don’t buy storage but use it as a service. Operator installs, finances, and maintains the system; the client pays for power or energy availability.

Benefits:

• No high CAPEX – shift to OPEX.
• Full technical and service support.
• Fast access to arbitrage and service revenues.
• Flexibility – scalable to client needs.

Examples:

• USA – Mobile storage programs deployed on demand.
• Germany and UK – Developers offer rental storage integrated with RES and regulatory contracts.

1. Hybrid Storage with RES – Storage becomes part of PV/wind farms, serving multiple roles:

• Increase self-consumption.
• Boost auction competitiveness.
• Enable flexible PPA energy sales.
• Reduce curtailment risk.

1. New Models – Aggregation and Virtual Power Plants (VPP) – VPPs digitally connect hundreds of small storage units and RES installations to act as one large system resource. Advanced EMS enables participation in capacity and service markets.

Summary of Business Models

Energy storage offers many monetization paths – from simple arbitrage to advanced service models like ESaaS and VPP. Revenue diversity will be key to market growth in Poland and globally.

Regulations and Financing – Poland and EU

Energy storage development depends heavily on regulatory frameworks and support mechanisms.

1. European Framework – The EU recognizes storage as key to the energy transition. Regulations (“Clean Energy for All Europeans,” “Fit for 55”) define storage as a separate system resource, enabling equal market participation.

EU funding programs include:

• Modernisation Fund – Supports zero-emission technologies in Central and Eastern Europe.
• Innovation Fund – Backs innovative projects, including BESS integration with RES and hydrogen.
• REPowerEU – Accelerates RES and grid infrastructure, listing storage as a key flexibility tool.

1. Poland – Regulations and Capacity Market – Allowing BESS in capacity market auctions was a major boost. Over 2.5 GW contracted, triggering large-scale project development.

Legal changes define storage as a separate technical object, enabling:

• No double distribution fees.
• Dedicated tariffs.
• Integration with RES via virtual prosumer and hybrid projects.

1. Financing and Public Support in Poland –

• NFOŚiGW – National Fund for Environmental Protection and Water Management offers green transformation programs including BESS.
• KPO (National Recovery Plan) – Funds flexibility infrastructure, including BESS.
• “My Electricity” Program – Focused on PV, home storage, and heat pumps; may expand to V2G charging stations.

1. Regulatory Outlook – Key future steps:

• Launching ancillary services market in Poland.
• Enabling microgrids and VPPs.
• Introducing grants and tax incentives.

Development Prospects – Challenges and Opportunities

Energy storage is essential to power system transformation. Despite huge potential, full realization faces technological, economic, and regulatory challenges.

1. Technological Challenges –

• Supply Chain – Global demand for lithium-ion cells (mainly LFP) is rising. Competition with e-mobility pressures prices and availability.
• Recycling and Circular Economy – More projects mean greater need for critical raw material recovery (lithium, cobalt, nickel). EU regulations on recycling and carbon footprint will impact competitiveness.
• New Technologies – Alternatives like sodium-ion, vanadium redox flow, and hybrid systems are emerging, promising safer and cheaper long-term storage.

1. Economic Challenges –

• High CAPEX – Large-scale BESS projects require significant investment. Despite falling cell prices (20–25% in 2023–2024), capital cost remains a barrier.
• Regulatory Uncertainty – Changing energy and service market rules hinder long-term planning.
• Project Bankability – Financial institutions demand guarantees and long-term contracts, requiring refined business models.

1. System and Regulatory Challenges –

• Grid Integration – More storage requires advanced digital tools (EMS, SCADA) and flexible grid regulations.
• Access to Ancillary Services Market – Full market opening needed for BESS to compete equally with conventional plants.
• Standardization and Safety – Rapid growth demands unified installation, fire safety, and certification standards.

1. Opportunities – Global and National –

• Europe – Plans over 200 GW of storage by 2030, making it a pillar of energy security.
• USA – IRA program offers major tax incentives, accelerating gigawatt-scale projects.
• China – Mass battery production and 1+ GWh projects strengthen global supply chain position.

For Poland, this means:

• Building a domestic battery and system industry.
• Attracting foreign investors – industrial hubs for cell, module, and system integration.
• Boosting competitiveness of Polish firms via BESS adoption.

1. Development Directions in Poland –

• RES Integration – Hybrid PV/wind + storage will become standard.
• ESaaS Growth – Service-based storage will gain popularity in industry.
• Digitization and VPPs – Virtual power plants will connect distributed resources.
• Business Prosumer Growth – Companies will invest in mid-scale storage to cut energy bills and improve operational security.

Final Summary

Energy storage is becoming one of the key pillars of the energy transition. Once seen as a supplementary technology, it now plays a central role in balancing power systems, integrating renewables, and ensuring grid stability.

Global examples from the USA, China, and Western Europe show that BESS is not just a climate policy tool, but also a means of strengthening energy security and economic competitiveness. Poland, with its growing RES sector and capacity market participation, has the chance to join the leaders of this transformation.

Challenges like investment costs, regulatory stability, and raw material access are real, but new business models (ESaaS, arbitrage, VPP) and financing mechanisms (NFOŚiGW, KPO, EU programs) help overcome them.

Looking ahead, energy storage can be called the “backbone of modern energy” – enabling dynamic energy flow management and laying the foundation for e-mobility, virtual power plants, and new digital services.

For Poland, this is a unique opportunity to use the transition as a catalyst for building a domestic technology industry based on innovation and exportable expertise.