Europe’s power system is undergoing a structural shift. As wind and solar displace conventional baseload generation, grids are increasingly exposed to intermittency and price volatility. Batteries are emerging as a key technology to bridge this gap, absorbing surplus renewable output and dispatching it when needed to keep supply reliable.
BayWa r.e., a Germany-based renewable energy company, is positioning itself at the centre of this shift. Building on its established wind and solar business, the company is developing standalone and hybrid battery energy storage projects across Europe to support flexibility, resilience and grid stability.
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In an interview with BV Swagath and Anwesha Pattanaik of Energy Monitor, Casacchia discusses why Europe’s energy transition is becoming increasingly “flexibility-centric” and what this means for the next phase of battery storage development. Drawing on experience across Europe, Asia-Pacific and Latin America, including previous roles at Enel Green Power, Casacchia examines storage’s changing role in a renewables-led power system.
Energy Monitor (EM): Battery storage is increasingly described as essential to Europe’s clean energy transition. What has changed in the past few years to turn storage from a nice-to-have into a critical part of the energy system?
Teresa Casacchia (TC): Europe has crossed an important threshold. It is moving from a generation-centric energy system to a flexibility-centric energy system. This means the challenge is no longer about simply generating clean electricity; it is ensuring the system remains reliable, flexible and resilient.
As a result, storage and hybrids have become even more valuable. They provide three things the grid of today, and tomorrow, increasingly values: System Adequacy (firm power), System Flexibility (balancing, arbitrage, congestion management) and System Resilience (inertia, voltage support, grid-forming services).
Where solar and wind generation are variable by nature, the benefits of battery storage can help achieve more controllable and dispatchable output – solving one of the biggest challenges of the renewable energy transition.
EM: From a commercial or development standpoint, what tends to surprise developers moving into battery storage from wind or solar?
TC: Those developers moving into battery storage discover very quickly that it is not just an energy asset and that it goes beyond ‘generating and selling electricity’. Battery storage plays a much broader role in the energy system and comes with the considerations to match: when it charges and discharges, where it sits on the network, and how it participates across multiple markets and system services.
This demands developers to acquire a broader mix of market, engineering, trading and optimisation expertise, so they can better evaluate whether today’s pipeline remains fit for tomorrow’s operating framework.
It also marks a shift in role from being a generation developer to a flexibility developer, with a focus on maximising the value of an asset within an evolving power system.
EM: Beyond lithium-ion, which emerging battery technology do you think has the strongest commercial case, and what still needs to happen before it can compete at scale?
TC: At BayWa r.e., we are always monitoring the advancements of technologies such as flow batteries, thermal storage and mechanical storage. But the next post-lithium-ion breakthrough won’t necessarily be a specific chemistry. Instead, it will be the capability to solve the problems lithium-ion is less well suited for: longer-duration flexibility, system resilience and firm capacity.
Alongside chemistry, grid-forming capability will also become increasingly important. As synchronous generation makes up a smaller share of the power mix, batteries will increasingly need to provide some of the grid-stability functions that these conventional generators provide today. But for it to scale, market frameworks need to properly remunerate developers for the system value it provides.
EM: As more battery capacity enters European markets, is there a risk that storage revenues will be cannibalised, and how could that change the business case for new projects?
TC: There is a risk of revenue cannibalisation as more battery capacity enters European markets, particularly in pure energy arbitrage and some ancillary services, where increased competition can compress spreads and prices.
That does not necessarily weaken the case for storage overall, but it does change where value is created. The business case for new projects will increasingly depend on access to markets that reward System Adequacy, System Flexibility and System Resilience and create revenue pools such as capacity remuneration, firm power auctions, balancing markets, congestion management and grid-forming and inertia services.
Project value will come from meeting the future needs of the system and more about location, connection quality, duration, optimisation capability and access to these multiple revenue streams.
EM: As an active member of the European Association for Storage of Energy (EASE), if you could change one piece of European regulation or market design to accelerate battery deployment, what would it be?
TC: If I could change just one thing, it would be to create a harmonised, technology-neutral framework across Europe for procuring flexibility. In this framework, energy storage would be fully recognised as a key source of flexibility and compensated through predictable, market-based mechanisms for the capacity and system services it provides.
Today, the main challenges are fragmentation across markets and regulatory frameworks, and a lack of transparency on flexibility needs. I would address this by requiring Transmission System Operators (TSOs) and Distribution System Operators (DSOs) to regularly assess and publish their flexibility requirements, including where flexibility is needed, when it is needed, and for how long. These needs should then be procured through competitive, technology-neutral mechanisms that allow all solutions, including battery storage, to compete on equal terms and deliver their full value to the system.
EM: What change in the battery storage market do you think is being underestimated or overlooked?
TC: The most overlooked shift in the battery storage market is that flexibility is becoming the new baseload. This is precisely how important flexibility has become to the energy system.
Historically, value came from producing electricity. Now, value will increasingly come from making electricity dispatchable, reliable and available when the system needs it. Trends that might otherwise be overlooked – hybridisation, grid-forming capability, system resilience, flexible access frameworks – will all become part of the mainstream conversation.
