Discover the evolving policies and regulations of the European Union and United Kingdom, with both issuing landmark legislation in the energy storage.
EU energy storage initiatives are a key part of advancing energy security and the transition toward a carbon-neutral economy, improving energy efficiency, and integrating renewable energy sources into electricity systems, and can play an integral role in balancing power grids and saving surplus energy. This is particularly important in the context of EU energy security and the transition away from fossil fuels for both environmental and geopolitical reasons.
To help track this growing industry, the European Union has created a comprehensive database of the European energy storage technologies and facilities. The database includes (1) existing energy storage technologies with their characteristics, (2) front of the meter facilities (operational or in project, that are connected to the generation and the transmission grid), and (3) behind the meter energy storage.
Energy storage also plays an important role in the European Green Deal and the Fit for 55 green transition package, a set of policy initiatives aimed at ensuring the EU gradually becomes climate neutral. The Green Deal envisages that the regulatory framework should foster the deployment of innovative technologies with energy storage.
The European Commission in 2020 published a study on energy storage, which summarized some previous studies and reports, explored current and potential energy storage markets in Europe, and set out policy and regulatory recommendations for energy storage. The European Commission also publishes progress reports on the competitiveness of clean energy technologies on an annual basis, including in respect of technologies and solutions for energy storage and power systems integration.
The EU has adopted its first unified batteries regulation introducing sustainability, recycling, and safety requirements applicable to the design, production, and waste management of batteries produced or sold in the EU.
The current focus of legislative developments in the EU, with the Net-Zero Industry Act and Critical Raw Materials Act coming into force, is reflective of the EU’s focus on the energy security and strategic autonomy of the EU in respect of net-zero technologies and critical raw materials required for energy storage.
Key Regulations and Initiatives
The key regulations relevant for energy storage in the EU include the following:
Focus of EU Regulation
The EU regulation of energy storage is generally spread across a number of regulatory acts, many of which require implementation at the level of the EU member states. In 2023, the EU adopted the new EU Batteries Regulation, which is the first piece of European legislation taking a full lifecycle approach in which sourcing, manufacturing, use, and recycling are addressed and enshrined in a single law.
Further, the EU Commission published a series of recommendations on energy storage, with concrete actions that EU member states can take to encourage greater deployment of energy storage.
In brief, the EU regulation of energy storage focuses on the following:
The EU Batteries Regulation is a comprehensive regulation that covers sourcing, manufacturing, use, and recycling of batteries in the EU and introduces sustainability, recycling, and safety requirements applicable to the design, production, and waste management of batteries produced or sold in the EU. Starting in 2025, the new rules gradually introduce declaration requirements, performance classes, and maximum limits on the carbon footprint of electric vehicles, light means of transport (such as e-bikes and scooters), and rechargeable industrial batteries. The implementation practices and policy approaches in respect of current EU regulation vary among the EU member states.
To bolster the strategic autonomy of the EU in respect of net-zero technologies, the Net-Zero Industry Act, which entered into force in 2024, focuses on net-zero technologies including batteries. The Net-Zero Technologies Manufacturing Projects (NTZ Projects) will benefit from streamlined permitting procedure (and strategic NTZ Projects will have further benefits). The NTZ Projects will likely facilitate access to public funding. Further, state aid rules have been temporarily relaxed to support investments in equipment and technology relevant for net-zero economy transition including batteries.
The Critical Raw Materials Act requires EU member states to, by May 2025 (and within 12 months of each update to the list of strategic raw materials), identify major companies operating on their territory that use strategic raw materials (such as lithium) to manufacture batteries for energy storage. Such companies will be required to carry out a risk assessment of their raw materials supply chain for strategic raw materials and, subject to such risk assessment, may be required to take measures to mitigate any identified risks (e.g., diversify its raw materials supply chains or substitute the strategic raw materials).
The EU member states will also set up and operate an EU Joint Purchasing Mechanism for both unprocessed and processed strategic raw materials. It will be a system to aggregate the demand of interested EU companies consuming strategic raw materials and seek offers from suppliers to match that aggregated demand.
Further development of energy storage regulation at the EU level is likely to continue to be in line with its energy security and energy transition goals.
In 2023, the Energy Act 2023 received Royal Assent and became law in what is described as “the biggest piece of energy legislation in the UK’s history.” Following that, the UK Department for Business and Trade published in November 2023 a UK battery strategy setting out the government’s vision for the country to achieve a globally competitive battery supply chain that supports economic prosperity and the net-zero transition, following a call for evidence launched in August 2023. The battery strategy is associated with the critical minerals strategy, which was refreshed a few months before.
The battery strategy sets out 15 ambitious measures to support the sector, including targeted support for zero-emission vehicles, batteries, and their supply chains. This will involve more than £2 billion of new capital and research and development (R&D) funding for five years (through 2030), building on the work of the Automotive Transformation Fund and the Advanced Propulsion Centre.
The strategy will see more than £60 million invested in R&D, including £38 million for the UK Battery Industrialisation Centre and £12 million for the Advanced Minerals Battery Industrialisation Centre. Another £11 million will go toward 20 competition winners developing technologies across the battery value chain in areas such as artificial intelligence and digital tools to increase battery performance, future technologies such as lithium-metal anodes and sodium-ion batteries, and improved recycling technologies. Further investments will be put toward expanding market access for the trade of critical minerals and promoting high international standards in supply chains when negotiating new free trade agreements.
In December 2024, the UK published the Clean Power 2030 Action Plan outlining the government’s strategy for achieving its clean energy goals by 2030. The plan sets ambitious clean energy targets and targets increases in energy storage capacity, with 23–27 gigawatts (GW) of battery capacity and 4–6 GW of long‑duration energy storage.
The plan followed a October 2024 announcement by the UK government of a new Long Duration Electricity Storage (LDES) investment support scheme that will help build energy storage infrastructure and is expected to boost the investors’ confidence and opportunities. Between January and March 2024, stakeholders were consulted on a proposed approach of using a “cap and floor” regime to enable investment in LDES assets. Following that, the UK government decided that an LDES “cap and floor” scheme (guaranteeing minimum income for developers in return for a limit on revenues) should be introduced as the optimal policy approach for the framework to best facilitate rapid and efficient LDES investment.
The LDES investment scheme will be divided into one application route for mature technologies and a separate route for new innovation, and Ofgem (the Great Britain energy regulator) will regulate the scheme.
The UK’s energy storage market continues to experience strong growth. In 2024, operational capacity of energy storage resources was 4.6 GW/5.9 GWh, which was projected to increase to 7.4 GW/11.6 GWh by the end of 2024. Moreover, the future looks promising, with total planned capacity for energy storage projects of 85 GW/175 GWh.
Current Regulatory Requirements
Until the much-awaited Energy Act 2023 was issued, the UK legislative arsenal did not include a specific framework for energy storage. The Electricity Act 1989, the main piece of legislation governing electricity in Great Britain, was updated by the Energy Act 2023, effective December 26, 2023, and now includes a definition of energy storage: “energy that was converted from electricity and is stored for the purpose of its future reconversion into electricity.”
Ofgem clarified in 2020 that electricity storage is deemed to be electricity generation for the purposes of the Electricity Act 1989. As a result, any energy storage operator would require a generation licence unless an exemption applies. Under the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (SI 2001/3270), the Class A so-called “small generators” exemption applies to sites producing no more than 10 megawatts (MW), or 50 MW for a generating station with a declared net capacity of less than 100 MW.
When a generation license is required, the holder must comply with a number of industry codes (namely the Grid Code, Distribution Code, Balancing and Settlement Code, and Connection and Use of System Code) and the license obligations in relation to all generation assets, including storage, that it operates.
Ofgem has introduced in the generation license standard conditions
Nonexhaustive List of Technologies
Ofgem has provided a nonexhaustive list of technologies that fall within the scope of the regulatory definition of storage. These include electrochemical batteries (e.g., flow batteries), gravity energy storage (e.g., pumped hydro), air-based storage systems, kinetic energy systems (e.g., flywheels), thermal storage, chemical storage, and electromagnetic storage.
Application for a License
A standard license application form is available, as well as guidance, under the Schedule to the Electricity Licence Application Regulations 2019.
LDES Cap and Floor Regulatory Framework
In order to implement the LDES investment support scheme, Ofgem is required to publish a joint technical document with the UL Department for Energy Security and Net Zero in the first quarter of 2025. This document will set out the details of the LDES cap and floor regime and the allocation and eligibility criteria for approving projects. Ofgem is also developing a cap and floor licensing framework. Ofgem is expected to open an application window in the second quarter of 2025 to approve new LDES projects for the cap and floor regime.