Adapting to energy storage needs: gaps and challenges arising from the European directive for the electricity internal market

The increasing integration of renewable energy sources into the electricity sector for decarbonization purposes necessitates effective energy storage facilities, which can separate energy supply and demand. Battery Energy Storage Systems (BESS) provide a practical solution to enhance the security, flexibility, and reliability of electricity supply, and thus, will be key players in future energy markets. Directive 2019/944, which focuses on common rules for the internal market of electricity, provides a regulatory framework for the deployment of energy storage facilities. However, several gaps and challenges remain regarding the implementation of the directive, particularly in insular energy systems with immature storage infrastructures such as Cyprus, an EU Member State. This study examines these challenges and gaps by investigating the case study of Cyprus while also presenting the handling of energy storage in other European countries such as Germany and Poland. The primary aim of this study is to identify gaps in the legislation regarding energy storage and potential bottlenecks or monopolistic approaches that could hinder the widespread deployment of BESS under the liberalization of the energy market. In light of several BESS technologies available in the market, the study focuses on lithium-based technologies, which account for the largest share of the BESS market and are projected to grow at the highest compound annual growth rate by 2030. Therefore, the authors concentrate on Lithium BESS. The study highlights the crucial role of storage facilities in transforming the power generation sector by shifting toward renewable sources of energy. As such, the study emphasizes the importance of effective regulatory frameworks in enabling the deployment of BESS, particularly in insular energy systems. Overall, this study sheds light on the gaps and challenges facing the deployment of BESS, providing valuable insights for policymakers and stakeholders to design effective regulatory frameworks to facilitate the widespread adoption of BESS.