Power Dispatch: Storage Wars - Batteries, Dams and Why We Need Both

European power markets are racing to lock in flexible storage as intermittent renewables reshape the grid. Italy’s recent MAXI auction handed out 10 GWh of battery capacity at a premium, showcasing how aggressive procurement can quickly boost short‑duration storage. Capacity markets in the UK, Italy and other nations have become the primary revenue stream that makes battery projects bankable, allowing developers to stack income from ancillary services and capacity payments. This momentum is mirrored in Bulgaria, where competitive restore programmes have already delivered over two gigawatt‑hours of battery installations, underscoring the continent’s appetite for fast‑track, grid‑scale batteries.

Yet the surge is uneven, hampered by regulatory friction across several jurisdictions. Spain’s pending capacity market and opaque auction timetable leave investors wary, while Greece’s licensing bottlenecks have forced multiple extensions for battery roll‑outs. Denmark and Spain still grapple with double‑taxation on grid use—charging both when storing and when discharging—eating into project margins. In Italy, the concentration of awards to a single operator sparked calls for caps to broaden participation, and the exclusion of pumped‑hydro from upcoming auctions highlights a lingering bias toward batteries despite their short‑duration nature. Romania’s swift policy tweak that eliminated double taxation instantly unlocked a gigawatt‑hour of projects, illustrating how modest regulatory tweaks can unleash significant capacity.

The broader lesson is clear: a resilient, low‑carbon grid needs both batteries for rapid, sub‑hour response and pumped‑hydro for multi‑hour, seasonal balancing. Policymakers must craft blended incentives—capacity markets, clear permitting pathways, and equitable grid tariffs—to nurture both technologies. As the EU tightens renewable targets, integrating long‑duration storage will become as critical as short‑term battery flexibility, ensuring grid stability while delivering the flexibility required for a fully decarbonised energy system.