Grid connection delays are the single biggest barrier to deploying battery energy storage systems (BESS) in Europe, according to delegates at Tamarindo’s inaugural Investing in Battery Energy Storage conference in London.
An overwhelming 98% of attendees identified grid connection delays as the main execution bottleneck constraining deployable capital, highlighting mounting pressure on electricity networks as investment in storage accelerates. By contrast, just 2% pointed to supply chain constraints.
At project level, the issue is equally pronounced. More than three-quarters (78%) of respondents said grid connection queues are the regulatory factor most responsible for delaying BESS projects across European markets. Other barriers were seen as far less significant, including market access restrictions (11%), revenue stacking limitations (6%) and permitting timelines (4%).
The wait for grid access
Delegates reported that projects are frequently being held up for years while awaiting grid access, creating a growing disconnection between investor appetite and the pace of deployment.
Despite these constraints, the sector continues to attract strong interest from investors. More than half (52%) of respondents identified energy arbitrage as the primary revenue stream currently underpinning BESS investment in Europe. Corporate power purchase agreements (PPAs) were cited by 23% of delegates, while frequency response (13%) and capacity markets (12%) were viewed as less dominant drivers.
The findings come as Europe’s battery storage market scales rapidly, requiring significantly greater levels of capital to support the energy transition. However, without faster and more predictable grid connection processes, industry participants warned that project pipelines risk becoming increasingly congested, limiting the sector’s ability to deliver at pace.
Stephen Jennings, chief sustainability officer, EMEA at MUFG said: “Storage is no longer a niche financing theme; it’s now an active and fast-growing market with huge potential and scale. Given the magnitude of expected capex needs in Europe in the coming years, the key question becomes how we can ensure these projects remain bankable and continue to attract the liquidity required to fund them.”
Adam Barber, chief executive officer at Tamarindo, said: “Right now, the energy storage market – and particularly the BESS market – has real momentum. In the space of just a few years, the industry has undergone an incredible transformation. It was great to be able to gather industry leaders to share their reflections and thoughts as to where the market is headed.
“While investor appetite is certainly there, we are also seeing a series of structural barriers holding the sector back, most notably securing a grid connection, which has become the single biggest bottleneck to project deployment, with queues stretching from months to years as projects compete for capacity.
“The discussions highlighted how the sector is actively grappling with these challenges and exploring practical solutions to keep investment flowing and projects moving forward.”
Illustration: Gorodenkoff © Shutterstock, Inc.
