Global battery storage installations are booming, and so is Tesla’s utility-scale battery business.

Tesla has just signed a multi-year supply and execution agreement with clean energy infrastructure provider NatPower for more than 25 gigawatt-hours (GWh) of battery energy storage systems (BESS) in Europe, as the continent is accelerating battery deployment to make the most of its domestic renewable energy resources.

Europe’s battery storage and renewables-plus-storage installations are booming and set to further accelerate in the coming years as many European markets look to protect themselves from volatile fossil fuel prices and geopolitically-triggered energy crises.

In fact, battery storage systems are booming not only in Europe but in all parts of the world, including the United States.

As part of the deal with NatPower, Tesla will provide its battery energy storage system Megapack, as well as EPC and bankable trading services, with long-term revenue warranties, the energy infrastructure developer said this week. Projects under the agreement will be sited in Italy and the United Kingdom and will be owned and operated by NatPower.

The five initial projects in Italy and in the UK will be the first delivery phase of a program with a total capacity target exceeding 100 GWh. Aggregate construction value across the full scope is estimated at $4-5 billion, and expected project revenues exceeding $15 billion over 20 years, NatPower said.

“The sector has access to technology and capital but still struggles to deliver infrastructure consistently and within the required timelines,” commented Fabrizio Zago, CEO of NatPower.

“What we have built with Tesla is an ecosystem that enables alignment between capital and execution, and that can be replicated across multiple markets.”Related: UK Climate Panel Urges Faster Electrification to Lower Energy Bills

The over 25 GWh storage capacity covered by the agreement will provide grid stabilization, renewable generation optimization, and dispatchable capacity for high-demand end users, including data centers and energy-intensive industrial operations, NatPower says. NatPower has “a strong vision for scaling battery deployments quickly and efficiently across Europe,” said Mike Snyder, VP Tesla Energy & Charging.

The scaling of battery deployment everywhere in the world would benefit utility-scale battery manufacturers such as Tesla.

The U.S. firm’s Megafactories producing the Megapack in Lathrop, California, and Shanghai, China, have a combined manufacturing capacity of 80 GWh, or 20,000 units, per year. According to Tesla, its Megapack output could provide enough energy storage to retire every year 400 fossil fuel peaker plants of 100 MW each.

Europe’s battery storage market surged last year and is set to quadruple by 2030, the SolarPower Europe association said in a report this week. This year, annual installations are expected to top 50 GWh, SolarPower Europe said. The annual pace of new additions is then projected to jump to as much as 138 GWh in 2030.

Moreover, Europe’s renewables-plus-batteries market is also set to soar in the coming years, Aurora Energy Research said in a report last month. Capacity installations of renewable energy co-located with batteries for storage are expected to surge in Europe from 6 gigawatts in 2025 to as much as 35 GW by 2030.

The United States, for its part, installed a record 3.3 GW/8.4 GWh of battery energy storage systems in the first quarter, surpassing the previous Q1 record by 54%, as utility, commercial, and residential installations all hit new highs, showed the latest U.S. Energy Storage Monitor report released by the American Clean Power Association (ACP) and Wood Mackenzie.

The U.S. battery energy storage market is set to nearly quadruple over the next six years, the report projects. BESS installations are expected to reach 200 GW/655 GWh of cumulative installed energy storage capacity by 2031, driven mainly by the utility sector, which will make up 85% of installations through 2031.

“Co-location and contracting with large loads will be a key market driver for the foreseeable future,” said Allison Feeney, research analyst at Wood Mackenzie.

By Tsvetana Paraskova for Oilprice.com

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