European startups that are focused on the development of energy storage hardware have raised over €2.14 billion in equity funding, which is a major indication of the rapidly growing investor interest in the technologies that form the basis of the continent’s clean-energy transition. The majority of the funding (almost 46.7%) has been obtained within the last three years, and 84.4% in the last five years, which is a clear trend of acceleration, according to the recent analysis by Avnet Silica.
As Europe is decarbonizing and is attempting to integrate more wind and solar power, energy storage systems (batteries as well as mechanical, thermal, and hydrogen-based solutions) are indispensable tools for grid stability, renewable integration, and energy security.
Investment has been diversified across storage technologies
This money is spread out over an extensive range of storage technologies and different ways of using them:
The mechanical storage has been able to attract the maximum amount of money approximately €696.7 million more than twice the amount that has gone to battery-based storage however, there are fewer companies in this segment.
Battery Energy Storage Systems (BESS) got close to €331.8 million of which €236 million were devoted to lithium-based technologies (mainly lithium-ion) while €15 million to lithium-sulfur batteries.
Thermal energy storage (TES) startups were funded with €105.9 million that was evenly divided between sensible-heat storage (e.g. rock, salt, or ceramic-based storage) and latent-heat storage using phase-change materials.
Besides that, the new storage types have also attracted investors’ money: the combined total for hydrogen and power-to-X storage companies was close to €128.1 million (hydrogen storage: €73.7 million; power-to-X: €54.4 million) whereas supercapacitor-focused startup got approximately €18.4 million.
For the installation of the charging stations for electric vehicles, the devices with integrated energy storage were financed with €435.5 million and the problem of off-grid or high-power buffered charging infrastructure was solved.
Portable storage solutions for events, construction sites, and temporary setups attracted €127.1 million.
Battery chemistry of the next generation as well as cell/module/pack production is the focus of the startups who raised €259.4 million and thus showed that investors have increasing confidence in vertical integration and the capacity of European manufacturing.
The circular-economy niche, in fact, is on the verge of getting traction: battery-recycling startups such as Circu Li-ion (Luxembourg) and tozero (Germany) have raised €4.5 million and €14.5 million respectively, and there are at least 14 BESS startups that collaborate with second-life batteries.
Why investors are doubling down beyond just batteries
The primary reason for this dramatic increase in a major European energy storage market is the procurement of flexible, dispatchable storage to be used as a complement of the intermittent renewable sources like solar and wind. By 2023, the continent had installed 17.2 GWh of new battery storage capacity in the year, which represents a 94% increase from the previous year and a total of about 36 GWh.
Besides that, the whole energy-storage market in Europe is expected to have a rapid expansion over the next years. One recent forecast anticipates that the market will have a compounded annual growth rate (CAGR) of more than 26.8% from 2025 to 2029.
Still, energy storage is not a “one solution fits all” matter. For momentary grid balancing as well as demand peaks, lithium-ion batteries are the leading and most mature technology.
While short-term grid balancing and handling demand peaks, lithium-ion batteries remain the dominant and most mature technology, according to Mordor Intelligence.
Where there is a need for longer-term storage, the mechanical (e.g. gravity, liquid-air, flywheel), thermal (heat accumulation or phase-change materials), hydrogen / power-to-X, or hybrid storage systems can offer various advantages when it comes to cost, scalability, and use cases.
Harvey Wilson, Senior Manager Industrial Vertical Markets EMEA at Avnet Silica, said in an interview:
“It is thrilling to see startups presenting solutions to the multitude of energy storage issues… Besides battery storage, long-duration storage options are also being developed and introduced to the market.”
How this affects Europe’s energy transition
This wave of funding is a sign of a turning point: energy storage is rapidly becoming the necessary infrastructure not only for integration of renewables but also for grid resilience, energy security, EV-charging infrastructure, industrial heat, peak-load management, etc.
By putting money into the supply chains, next-gen battery chemistries, and recycling, the energy ecosystem is becoming mature, a sustainable one that is less dependent on external suppliers (especially Asian battery manufacturers) and more resilient to supply shocks.
With the market growth forecast and the wide range of storage technologies that are funded, Europe looks like it is taking a “technology-agnostic” stance: that is, supporting batteries where they are most efficient, mechanical or thermal storage where duration and scale are of importance, and hydrogen or hybrid solutions where flexibility and future-proofing are the key factors.
Once storage capacity is increased, deployment is expanded, and financial support is provided the following five years may be the period that determines how resilient, decarbonized, and energy-independent Europe will be.