Both forms of flexibility will grow rapidly from 2025 - 2030: grid-scale batteries seeing 41 GW of new capacity, and demand side flexibility to see a five-fold increase from 20GW in 2024 to 100GW[2] across seven major European markets. While Germany is the most attractive market for grid-scale batteries, taking over from GB, the analysis reveals that the GB market is setting the pace for market accessibility for demand side flexibility, a critical requirement to unlock the potential for demand side flexibility. For both grid-scale batteries and demand side flexibility, Spain is the least attractive.
In the landmark report, ‘The Road Ahead: Markets, value chains, and pacesetters shaping Europe’s Energy Transition’, LCP Delta provides a holistic view of the energy transition, exploring the complex interactions between consumers, power markets, grid-scale assets, and networks in the push towards green energy. The six value chains that LCP Delta has identified as driving Europe’s energy transition are customer electrification, smart energy retail, demand-side flexibility, grid-scale BESS, grid-scale renewables, and green hydrogen. Three key transition challenges analysed include engaging with customers; distribution network congestion and power market volatility across seven European markets: Great Britain, Spain, France, Germany, Italy, Belgium, Netherlands.
Overall, by 2030 we can expect to see:
• Continued rapid grid decarbonisation: 267GW of grid-scale wind and solar renewables expected to be added across Europe (59GW in GB). In total, renewables capacity could generate 60% of annual demand in four markets by 2030, although mismatch in generation and demand means the actual figure will be lower.
• Renewable penetration will see a surge in excess generation, with GB and Germany expected to see excess renewable and nuclear generation in 56% and 46% of hours by 2030 respectively, compared to just 6% and 17% in 2024.
• 261 GW of electrification assets will be added to households: 42 million assets across electric heating, EV charge points, solar and battery will be added to European homes – but two in three households across Europe will still not have any electrification assets (7.5 million new assets in GB, two in three households in UK will also not have any).
• Rapid scaling of grid-scale batteries: Market expects to see a compound annual growth rate (CAGR) of 30%, as an additional 41GW of new capacity is installed across Europe.
• Green shoots for green hydrogen: Europe’s electrolysis pipeline grows to 63GW, but only 9% is in advance stages, as industrial players lead demand (UK's electrolysis pipeline will grow to 8.7GW, with only 5% in advanced stages).
‘The Road Ahead’ sets out the biggest challenges facing the transition and the opportunities they present for companies. The report reveals that Europe’s energy transition will be defined by value chain integration and value chain interaction, overcoming longstanding silos that used to segmentate the old energy system.
In a system increasing dominated by renewable generation and electrification, flexibility holds the key to a successful and cost-effective energy transition.
LCP Delta’s analysis identifies a new breed of customer-focussed energy solution providers that are rapidly emerging. Companies are integrating the smart energy retail, electrification and demand-side flexibility value chains to address this new reality. Businesses identified at the forefront of this include Octopus Energy, Enpal, 1Komma5, and Ovo Energy. To build trust in new low carbon technologies and make the transition affordable to customers, the shift towards sustainability must be turned into clear and simple propositions with straightforward customer journeys, according to the report.
Jon Slowe, Partner at LCP Delta commented: “We are currently witnessing the disruption of traditional energy value chains, as the old energy retail system gives way to a new interconnected value chain, filled with opportunity for companies able to evolve and even pivot their businesses. A lot of the recent focus of the transition has rightly been on the supply side and developing the infrastructure we need. This ongoing transformation is crucial. But the next step will see flexibility and customer engagement play a much more central role. The opportunities for companies that can bring flexibility to market, and can simply customer’s electrification journeys, is enormous. Our report suggests that in this brave new world, only holistic approaches that overcome traditional siloed thinking will find success.”
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