Let's look at the "Investment Case" for Large-Scale Energy Storage: From Niche to System-Critical Infrastructure

February 2026

The global energy market has reached a tipping point. In 2025, annual installations of battery storage exceeded 100 GW for the first time, marking the end of the era of batteries as a niche product only. For investors, this means that large-scale energy storage is now emerging as one of the most promising asset classes in the green transition.

Market Situation: Volatility as a Business Opportunity

The transition to weather-dependent power generation (solar and wind) has fundamentally changed price formation in the electricity market. We see an increasing correlation between high production and periods of negative electricity prices, which creates ideal conditions for arbitrage.

In Europe, the Battery Energy Storage Systems (BESS) market is expected to grow at a compound annual growth rate (CAGR) of 16.5% until 2035. This growth is driven by the need to stabilize the grid as fossil backup power is phased out.

Revenue streams and profitability

Modern storage projects no longer rely on a single source of revenue. Successful operators use revenue stacking to maximize ROI:

• Frequency regulation (Support services): Selling balancing services to grid owners (such as Svenska kraftnät) is still a primary driving force. The estimated return on investment for battery projects that focus on support services is around 15-20% per year.
• Price arbitrage: Charging at low prices and injecting into the grid during price spikes is becoming increasingly profitable as price volatility increases.
• Reduced network charges: For industries, storage can cut peak shaving, which directly lowers fixed grid costs. Technological maturity and falling CAPEX

The investment cost of batteries continues to fall drastically. In 2025, average prices for BESS systems decreased by a further 8%, and prices have fallen overall to one third of 2020 levels. At the same time, hydrogen is emerging as the long-term alternative for seasonal storage, although the investment cost per kWh is still significantly higher than for batteries in short-term storage.

Risks and regulatory challenges

Despite the strong growth, there are a few bottlenecks to watch:

• Grid connection: Queues to connect new projects to the grid exceed 100 GW in major markets in Europe.
• Raw material supply: Demand for lithium is expected to increase by 13.5% in 2026, which could create temporary price increases in the supply chain.

Portfolio summary

Large-scale energy storage is no longer a speculative technology of the future – it is the airbag that the entire European electricity system requires to function. With attractive ROI levels, sometimes with payback periods of less than two years in favourable market conditions, storage is a central part of the energy portfolio of the future.