Legal framework for incentivizing energy storage to foster renewable development in the EU

Abstract

The transition to a low-carbon energy system in the European Union (EU) requires large-scale deployment of renewable energy sources and flexible solutions to ensure grid stability, affordability, and energy security. Energy storage systems (ESS) are essential to address the intermittency of renewables and to enable a resilient and competitive electricity market. This thesis investigates how a robust legal and regulatory framework can incentivize the deployment and integration of ESS to accelerate renewable energy development across the EU.The study combines a review of existing EU and national legislation with an assessment of economic and technological factors influencing storage adoption. It analyzes business models for energy storage, including merchant, contracted services, and hybrid renewable-plus-storage concepts, and evaluates the impact of electricity market design, price caps, and ancillary services. The research also includes case studies demonstrating best practices for battery-integrated renewable projects and explores the role of both short- and long-duration storage technologies in enhancing system flexibility.Findings highlight significant regulatory and financial barriers to ESS deployment, such as fragmented national frameworks, limited access to revenue stacking, and insufficient fiscal incentives. The thesis proposes policy measures including the establishment of a unified EU Energy Storage Directive, amendments to the Renewable Energy Directive (RED III), and the introduction of fiscal reforms to ensure market integration and investor confidence.Ultimately, the research concludes that harmonized legal frameworks, market-based incentives, and targeted public–private partnerships are key to unlocking the full potential of energy storage in achieving the EU’s decarbonization and energy security goals.