The global energy transition has entered a new paradigm. Renewable capacity additions reached unprecedented levels in 2024, with global renewable energy capacity growing by a record-breaking 15.1% to reach 4,448 gigawatts as per a report published by the World Economic Forum. Institutional capital is increasingly recognising that generation assets without dispatchability represent incomplete infrastructure investments. Battery Energy Storage Systems (BESS) have evolved from supporting technology to primary value drivers, fundamentally altering risk-return profiles and creating new asset classes that sophisticated investors cannot afford to overlook.
The market inflection is unmistakable: while the exact market size varies by research methodology, leading analysts consistently show strong growth trajectories. As per reports published by MarketsandMarkets and Energy-Storage, global battery energy storage market size was valued at USD 25.02 billion in 2024, while other sources indicate the global BESS market size was estimated at $7.8 billion in 2024 and is poised to reach $25.6 billion by 2029, growing at a CAGR of 26.9%. Despite varying estimates, all major research firms project robust double-digit growth in BESS investments through the end of the decade.
For infrastructure investors accustomed to traditional power assets, this transformation demands new analytical frameworks that account for storage’s multifaceted value proposition. At WElink, our project intelligence spanning Southern European and sub-Saharan African markets demonstrates that hybrid renewable-plus-storage developments consistently outperform generation-only assets in risk-adjusted returns. More critically, the data reveals storage is becoming the differentiating factor in asset bankability, offtaker preferences, and long-term value creation.
The curtailment crisis: When generation becomes liability
European renewable markets are experiencing a fundamental challenge that undermines traditional project economics: systematic curtailment during peak generation periods. This phenomenon, once considered a temporary grid management issue, has evolved into a structural constraint that threatens the viability of generation-only investments.
An article published by Reuters states that in Spain, 1.7 TWh of renewable energy was curtailed in 2024 alone—a 13% increase from 2023. Meanwhile, congestion management costs have surged, from an annual average of €390M (2017–2020) to €1.7B in 2023, and up to €2.5B in 2024. According to Fortune Business Insights puts future projections regarding curtailment at 5% in 2027-2028, especially affecting nodes in Extremadura and Aragon.
The issue extends beyond Spain. As per Inerdata, in Britain, 10% of wind generation in 2024 was curtailed, with 8.3 TWh of wind energy rejected from the grid due to insufficient transmission capacity. This came at a cost of £393 million. The WEF went on to publish an article that states solar and wind curtailment increased by 29% between 2023 and 2024 in California, demonstrating this is a global phenomenon affecting mature renewable markets.
This market failure creates a compelling investment thesis for storage-integrated projects. BESS enables renewable assets to capture and time-shift curtailed energy, transforming what would otherwise be lost generation into valuable peak-period dispatch. The economics are particularly attractive in markets with high peak-to-trough price spreads, where storage arbitrage can generate attractive returns on battery capital.
Storage as infrastructure: Revenue diversification and risk mitigation
The investment case for BESS extends far beyond simple energy arbitrage. Storage assets generate revenue across multiple streams that exhibit low correlation, creating portfolio effects that reduce overall project risk while enhancing returns:
Capacity markets and grid services: European transmission system operators increasingly rely on storage assets for frequency regulation, voltage support, and grid balancing services. These ancillary service revenues provide steady, predictable cash flows that operate under long-term contracts providing infrastructure-like return profiles. Unlike energy revenues, which fluctuate with commodity prices, grid service payments offer more stable revenue streams.
Corporate offtake premiums: Enterprise customers are demonstrating willingness to pay premiums for guaranteed renewable supply during peak demand periods. This “dispatchability premium” reflects corporate sustainability commitments that require 24/7 clean energy, not just renewable energy certificates. Microsoft, Google, and Amazon have all structured power purchase agreements specifically requiring dispatchable renewable supply, creating a differentiated market segment that values storage capabilities.
Peak shaving and demand response: Industrial and commercial customers increasingly contract with storage operators for peak demand management, generating revenues while supporting grid stability during periods of peak system stress.
The revenue diversification achieved through storage integration fundamentally alters project risk profiles. While renewable-only assets face merchant energy price risk and curtailment exposure, storage-integrated projects distribute revenue risk across uncorrelated markets, reducing cash flow volatility.
Capital markets response: Institutional allocation patterns
The sophistication of capital deployment in BESS reflects institutional recognition of storage’s infrastructure characteristics. Global energy storage investment patterns reveal distinct preferences among investor classes:
Infrastructure funds and pension capital: Long-term institutional investors are targeting utility-scale storage assets with contracted revenue streams. These investments exhibit infrastructure-like risk-return profiles supported by regulated revenue streams and contracted services. Major pension funds and infrastructure managers are increasingly allocating capital to storage development platforms.
Private equity and growth capital: Financial sponsors focus on integrated storage platforms that capture development, construction, and operational value. These strategies target higher returns through active asset management and value creation across the storage ecosystem. Leading private equity firms have established dedicated energy storage investment strategies.
Development finance and blended capital: Multilateral institutions are structuring concessional financing for hybrid renewable-plus-storage systems in emerging markets, recognising storage’s role in grid stability and economic development. Development finance institutions view storage as essential infrastructure for economic growth in developing nations.
Regulatory evolution: From technology support to infrastructure recognition
Policy frameworks globally are transitioning from supporting renewable energy deployment to ensuring grid reliability and energy security. This shift fundamentally benefits storage assets, which provide the flexibility and reliability that intermittent renewables cannot deliver independently.
European flexibility markets: The EU’s Clean Energy Package establishes market mechanisms that compensate storage assets for providing grid flexibility services. Under these frameworks, storage operators receive capacity payments for providing frequency regulation services, creating predictable revenue streams independent of energy market volatility.
U.S. investment tax credit extension: The Inflation Reduction Act’s 30% investment tax credit for standalone storage projects has fundamentally altered project economics, reducing capital costs and enhancing returns. This policy change has unlocked significant previously uncommitted storage investment, demonstrating how supportive policy can accelerate market development.
Carbon pricing and grid decarbonisation: As carbon pricing mechanisms expand globally, storage assets benefit from their role in enabling higher renewable penetration. Storage systems that facilitate renewable integration can monetise carbon credits, adding additional revenue streams that are particularly valuable in high-carbon-price jurisdictions.
Technology cost trajectories and performance improvements
Battery technology costs continue to decline while performance metrics improve, enhancing the fundamental economics of storage investments. Manufacturing scale improvements and supply chain optimisation continue driving cost reductions across all major battery chemistries.
The investment implications extend beyond simple cost reduction. Battery technology improvements in cycle life, round-trip efficiency, and degradation rates directly impact project economics and operational cash flows:
Cycle life extensions: Leading battery manufacturers now guarantee extended cycle counts for utility-scale applications, representing operational lives that align with traditional infrastructure investment horizons. This longevity reduces replacement capital requirements and enhances long-term returns.
Efficiency improvements: Round-trip efficiency improvements for premium lithium-ion systems directly increase arbitrage revenues and reduce operational losses, improving project economics.
Degradation management: Advanced battery management systems and thermal controls reduce annual capacity degradation, preserving revenue generation capabilities throughout project life and supporting debt financing with longer tenor profiles.
WElink’s market intelligence: Portfolio performance and strategic positioning
Our development portfolio demonstrates storage integration’s financial impact through real transaction data. The performance metrics reveal storage’s transformational effect on project economics:
Dispatchability value creation: Hybrid projects in our portfolio achieve improvements in levelized cost of electricity when storage optimizes dispatch timing relative to grid constraints and price patterns. This improvement directly translates to enhanced project valuations and improved debt terms.
Grid constraint solutions: Storage enables renewable development in transmission-limited areas by providing local grid support services and reducing peak injection requirements. This capability has unlocked previously uncommercial sites, expanding development opportunities relative to transmission-constrained scenarios.
Risk-adjusted return enhancement: Revenue diversification across energy, capacity, and ancillary service markets reduces project cash flow volatility, enabling higher leverage ratios and lower cost of capital. The combination of reduced risk and additional revenue streams increases project returns relative to comparable renewable-only investments.
Forward market dynamics: Structural demand drivers
Emerging demand patterns reinforce storage’s strategic importance beyond current market applications. Data centre electricity consumption is projected to increase significantly by 2030, with hyperscale operators specifically contracting for 24/7 renewable supply. Major technology companies have made commitments to purchase clean energy with 24/7 matching, demonstrating the scale of dispatchable renewable demand from the technology sector.
Electric vehicle adoption requires grid flexibility to manage charging demand patterns, particularly for commercial fleet applications that require predictable charging availability. Industrial electrification necessitates reliable clean power for process-critical operations, where power quality and availability are more important than cost optimisation.
The convergence of these trends creates sustained demand for dispatchable renewable energy that extends beyond current market applications. Storage assets positioned to serve these emerging demand patterns will benefit from premium pricing and long-term contract opportunities that provide infrastructure-like return stability.
Investment thesis: Storage as essential infrastructure
The evidence demonstrates that BESS has evolved from supporting technology to essential infrastructure that enables the energy transition while generating attractive risk-adjusted returns for institutional investors. The combination of multiple revenue streams, declining technology costs, supportive policy frameworks, and emerging demand drivers creates a compelling investment thesis that aligns with infrastructure capital’s requirements for predictable, long-term returns.
WElink’s development strategy reflects this market evolution. Our integrated approach to renewable-plus-storage development delivers dispatchable clean energy that serves the needs of grid operators, corporate offtakers, and industrial customers while generating superior returns for our investment partners.
The storage opportunity represents more than technology deployment—it’s the foundation for renewable energy’s maturation into reliable, bankable infrastructure that supports economic growth while achieving decarbonisation objectives. For institutional investors seeking to participate in the energy transition, storage integration is no longer optional; it’s essential for competitive returns and portfolio resilience in tomorrow’s energy markets.
