Interview: grid modernization & storage — from pilots to scale

Europe’s electricity system is undergoing the most significant transformation since the advent of alternating current. Massive electrification for transport, heating, and industry is set to increase electricity consumption by around 60% by 2030, while wind and solar capacity is projected to grow from about 400 GW to at least 1 000 GW over the same period. The continent operates one of the largest networks on Earth: more than 11 million km of transmission and distribution lines that connect some 266 million households and companies. However, around 40% of Europe’s distribution grids are over 40 years old, and long permitting queues leave thousands of renewable projects waiting years for a connection. These pressures mean that grid modernization and flexible storage are no longer pilot exercises; they are essential for maintaining reliability, enabling decarbonization, and unlocking new value streams for utilities and innovators.

Why It Matters

Aging infrastructure meets exponential demand. Europe’s electricity networks were designed for centralised fossil generation and one‑way flows. Today they must handle millions of rooftop solar panels, electric vehicles, heat pumps, and local energy communities. Many cables and substations date back to the 1970s; regulators estimate that up to €425 billion must be invested in distribution grids by 2030, and roughly €584 billion will be needed for the electricity grid this decade. Without modernization, the backlog of renewable projects will grow, energy bills could rise, and decarbonisation targets may slip out of reach.

Flexibility reduces cost. While the European Commission estimates that between €1.99 trillion and €2.29 trillion of investment is required to make the grid fit for net‑zero by 2050, not all of that money needs to be spent on copper and steel. Demand‑side response, storage, and advanced grid technologies can defer expensive infrastructure build‑outs. These solutions provide fast‑acting capacity, absorb surplus renewable energy, and stabilise voltage and frequency, thereby reducing congestion and avoiding costly curtailment. A flexible grid also improves resilience to extreme weather, which is increasingly important as climate change drives more frequent storms and heatwaves.

Storage is scaling, but not fast enough. Battery energy storage systems (BESS) have seen record installations in Europe for eleven consecutive years. In 2024 alone, 21.9 GWh of new BESS capacity was installed, bringing the total battery fleet to about 61.1 GWh. Yet growth slowed to 15% that year and, under business‑as‑usual projections, battery capacity will only reach around 120 GWh by 2029. Analysts suggest that Europe may need 780 GWh of battery capacity by 2030 to fully support a renewable‑dominated energy system. Large‑scale projects and virtual power plant (VPP) platforms are emerging, but regulatory barriers and permitting delays still hamper progress.

Key Concepts

Grid modernization. This term encompasses physical upgrades (reinforcing lines, replacing ageing transformers, expanding cross‑border interconnectors) and digital solutions (smart meters, real‑time monitoring, automation, and cyber‑security). Modern grids must accommodate two‑way flows, integrate distributed energy resources, and provide visibility from substation to household. They also require new governance to coordinate transmission system operators, distribution system operators (DSOs), and market players.

Energy storage technologies. Batteries (lithium‑ion, sodium‑ion, flow batteries), pumped hydro storage, thermal storage, and hydrogen are the main forms of storage in the European context. Batteries provide fast‑responding flexibility and are modular enough to be deployed in homes, businesses, or utility‑scale facilities. Pumped hydro remains the largest form of storage by capacity, but new reservoirs are rare because of environmental and permitting constraints. Virtual storage pools thousands of small batteries into a single resource through software.

Virtual power plants. A VPP aggregates distributed energy resources—such as home batteries, commercial storage systems, and flexible loads—and dispatches them as a single asset in electricity markets. Advanced platforms use artificial intelligence to forecast supply and demand, optimise revenue streams, and provide services like frequency regulation. VPPs unlock value by enabling small assets to participate in wholesale markets that were once accessible only to large generators.

What's Working and What Isn't

What's Working

• Rapid battery deployment. Europe installed 21.9 GWh of new battery capacity in 2024 and grew its total fleet to about 61 GWh. Several countries are racing ahead: Germany remains the largest market despite a dip in residential installations, Italy’s large‑scale battery segment is booming, and Austria and Sweden reached GWh‑scale installations for the first time.

• Utility‑scale projects. Developers are moving beyond pilot projects to gigawatt‑scale plans. In Belgium, Giga Storage’s GIGA Green Turtle project secured an irrevocable permit for a 600 MW/2 400 MWh battery park. The project will feature twenty batteries, 185 medium‑voltage transformers, five high‑voltage transformers with a total capacity of 1 500 MVA, and a 25 650 m2 planting zone. When complete in 2028, it will store the average annual consumption of 330 000 families and feed it back to the grid. Giga Storage intends to deliver 5 GW of BESS projects in Europe by 2030.

• Virtual power plant growth. Shell‑owned sonnen operates Europe’s largest virtual home battery storage solution. Its VPP links around 25 000 household batteries across Germany, amounting to roughly 250 MWh of capacity. The company aims to increase this to 1 GWh in the coming years. The decentralised storage fleet provides services such as frequency containment reserve and time‑shifting of solar generation, and customers benefit through energy contracts that share market revenues. Similarly, Scottish provider Flexitricity announced in 2024 that its virtual power plant portfolio has surpassed 1 GW, almost doubling in three years and larger than the UK’s newest gas‑fired power station. Flexitricity uses AI‑driven control to dispatch a diverse portfolio of flexible assets, demonstrating that digital aggregation can scale quickly.

• Large batteries coming online. Britain’s 50 MW/75 MWh Thurcroft battery—optimised by Flexitricity for Gresham House Energy Storage Fund—is among the country’s biggest operational batteries. It participates in wholesale markets and balancing services, helping National Grid ESO balance supply and demand in real time. The UK now has close to 1 GW of installed battery storage capacity, and industry estimates that at least 10 GW will be required within the next few years to support a renewables‑led power system.

• Policy momentum. The European Commission’s 14‑point Grid Action Plan calls for doubling cross‑border transmission capacity in the next seven years, adding 23 GW by 2025 and another 64 GW by 2030. It highlights that 40% of distribution networks are over four decades old and advocates investments of €375–425 billion in distribution grids by 2030. The plan emphasises digitisation, streamlined permitting, fair access for storage in electricity markets, and harmonised technical standards.

What Isn’t Working

• Investment lag. The Commission estimates that €1.99–2.29 trillion must be invested by 2050 to make the grid net‑zero ready, but actual investment plans fall short. Grid operators face lengthy permitting processes that can take 4–10 years, equipment shortages, and labour constraints. Without faster approvals and access to finance, transmission and distribution upgrades will not keep pace with renewable deployment.

• Battery growth is slowing. After three consecutive years of doubling, Europe’s battery storage market grew by only 15% in 2024. Projections for 2025 show 29.7 GWh of new installations—still substantial, but far below the annual additions needed to reach 780 GWh by 2030. Home battery installations are declining as the energy crisis wanes and subsidy schemes expire, shifting the burden to utility‑scale projects.

• Aging infrastructure. Many distribution lines are older than four decades. About 40% of Europe’s distribution networks need replacement or reinforcement by 2030. Ageing assets are less resilient to extreme weather, create bottlenecks for renewable projects, and suffer higher technical losses.

• Regulatory fragmentation. Market rules differ across Member States, causing uncertainty for investors and operators. Connection charges, revenue streams, and participation criteria for ancillary services are not harmonised. The lack of a unified approach slows down cross‑border projects and discourages the deployment of storage where it could deliver the most value.

Examples

1. GIGA Green Turtle (Belgium) – Giga Storage’s permitted project in eastern Belgium will build a 600 MW/2 400 MWh battery energy storage system featuring twenty batteries and 185 medium‑voltage transformers. The facility, planned for completion in 2028, will store the annual consumption of roughly 330 000 families and aims to stabilise energy prices. Giga Storage plans to develop 5 GW of such projects across Europe by 2030.

2. Sonnen virtual power plant (Germany) – Shell‑owned sonnen has networked about 25 000 home batteries—equivalent to roughly 250 MWh of capacity—into a virtual power plant. The company expects to scale this to 1 GWh within a few years. The decentralised storage fleet provides frequency containment services and time‑shifts solar generation to periods of higher demand, allowing customers to share in market revenues.

3. Flexitricity virtual power plant (United Kingdom) – In July 2024, Flexitricity announced that its flexible virtual power plant portfolio exceeds 1 GW, surpassing the capacity of the UK’s latest gas‑fired power station. The asset portfolio nearly doubled over three years and is expected to double again. Flexitricity uses advanced AI and machine learning to dispatch its distributed assets, demonstrating that digital aggregation can scale quickly and provide critical flexibility services.

4. Thurcroft battery (United Kingdom) – The South Yorkshire‑based Thurcroft facility, a 50 MW/75 MWh lithium‑ion battery, is one of the largest operational batteries in the UK. Operated by Gresham House Energy Storage Fund and optimised by Flexitricity, it participates in wholesale markets and balancing services, helping National Grid ESO maintain frequency and enabling more renewable integration. The UK presently has nearly 1 GW of battery capacity, but experts estimate it will need at least 10 GW in the near term.

5. Battery market trends (Europe) – European installations reached 21.9 GWh in 2024, increasing the total battery fleet to about 61.1 GWh. In its most likely scenario, analysts expect 29.7 GWh of new capacity in 2025 and around 120 GWh by 2029. However, flexibility studies indicate that around 780 GWh of storage will be needed by 2030 to fully support a renewable‑dominated grid. Germany, Italy, Austria, Sweden and the UK account for the majority of new installations, reflecting the importance of national policies and market structures.

Action Checklist

• Map existing assets and plan upgrades. Conduct a thorough audit of your grid infrastructure, including age, capacity, and digital capabilities. Identify bottlenecks and prioritise upgrades based on safety, resilience and renewable integration needs.
• Invest in flexibility solutions. Deploy batteries, demand‑side response programs, and other flexible assets to defer expensive network reinforcements. Explore behind‑the‑meter and community storage to engage consumers and unlock new revenue streams.
• Streamline permitting and connection. Work with regulators and policymakers to implement fast‑track permitting for grid reinforcements and storage projects. Adopt standardised processes for grid connection and set clear timelines for developers.
• Participate in virtual power plants. Aggregate distributed resources through VPP platforms to access wholesale markets and provide ancillary services. Collaborate with technology providers to ensure cyber‑security and data privacy.
• Advocate and train. Engage in policy dialogues to harmonise market rules across Europe and ensure storage has fair access to all markets. Invest in training and recruitment to address skills shortages in grid planning, digital systems, and battery maintenance.

FAQ

Q: Why is grid modernization essential for renewable integration?

A: Modern grids must handle two‑way flows and balance supply and demand in real time. Without upgraded lines, transformers, and digital control systems, variable renewables like wind and solar can cause congestion and instability. Grid modernization provides the capacity and flexibility needed to integrate thousands of distributed generators and maintain power quality.

Q: What types of energy storage are most common in Europe?

A: Lithium‑ion batteries dominate new deployments because they are modular, efficient, and have quickly falling costs. Flow batteries (zinc, iron or vanadium) offer longer duration and enhanced safety but are still in early commercialisation. Pumped hydro remains the largest storage resource by capacity, though new projects are limited by topography and environmental constraints. Emerging technologies like sodium‑ion and hydrogen are gaining attention for medium‑ and long‑duration storage.

Q: How can organisations participate in virtual power plants?

A: Businesses and homeowners with flexible loads or storage can enrol in VPP programmes through aggregators like sonnen or Flexitricity. The aggregator controls the assets remotely, dispatches them into electricity markets, and shares revenue with participants. Utilities and large energy users can also build their own VPP platforms to manage fleets of batteries, electric vehicle chargers, or industrial processes, helping to monetise flexibility while supporting the grid.

Sources

• European Court of Auditors, “Review 01/2025: Making the EU electricity grid fit for net‑zero emissions.”
• European Commission, “Grids, the missing link – An EU Action Plan for Grids,” 28 November 2023.
• SolarPower Europe, “New report: European battery storage grows 15% in 2024, EU energy storage action plan needed,” press release, 7 May 2025.
• pv magazine international, “Europe’s largest battery storage project secures approval,” 19 April 2024.
• sonnen GmbH, “sonnen to build Europe’s largest virtual home battery storage solution,” press release, 17 August 2023.
• Flexitricity, “Flexible energy pioneer exceeds one gigawatt virtual power plant milestone,” press release, 3 July 2024.
• Flexitricity, “UK’s largest battery set to help the nation’s lights on,” press release, 3 July 2024.