The economic landscape for battery storage in Southeast Europe (SEE) is undergoing a significant transformation as electricity market volatility reshapes value pools for flexible energy assets. The increasing unpredictability of electricity prices is prompting market participants to view battery energy storage systems (BESS) as a crucial tool for capitalizing on intraday price fluctuations and addressing demand peaks.
During calendar week 13 (23–29 March), the region’s electricity markets exhibited notable volatility, with day-ahead prices averaging between €90/MWh and €120/MWh. Early April saw prices surge beyond €150/MWh in various markets. This volatility poses challenges for traditional baseload generation, yet it enhances opportunities for storage assets capable of rapid charge-discharge cycles.
The revenue potential for BESS in SEE is increasingly diversified. Intraday arbitrage stands out as the primary revenue source, with price spreads typically ranging from €20–40/MWh, and occasionally expanding to €50–90/MWh during periods of system imbalance. With an estimated 250–330 cycles per year, this revenue base is becoming integral to investment considerations.
In addition to intraday trading, balancing services are emerging as a vital secondary revenue stream. The growth of renewable energy, particularly solar, is intensifying the challenges faced by system operators in maintaining frequency stability. This has led to an expansion of balancing markets across SEE, where revenues from frequency containment and restoration services are now estimated between €25,000–60,000 per MW annually.
Another significant revenue opportunity lies in peak price capture. Events characterized by scarcity pricing—where electricity prices exceed €140/MWh and can reach up to €200/MWh—are increasingly common. These events, often resulting from sudden drops in renewable generation or spikes in demand, are becoming more frequent as system flexibility remains constrained.
The overall revenue potential for BESS in SEE is estimated at €80,000–180,000 per MW per year, contingent on market conditions and asset optimization strategies. This revenue level supports internal rates of return between 10–16%, with potential upside scenarios reaching 18–24% during periods of heightened market volatility.
The drivers behind this evolving landscape are evident. The rising share of renewable energy sources has introduced new price variability patterns, notably with midday compressions and evening peaks becoming more pronounced. Additionally, the ongoing reliance on gas-fired generation as the marginal price setter maintains elevated price levels even when renewable output improves. Furthermore, limited interconnection capacity within SEE restricts market participants’ ability to fully exploit price differences, reinforcing local volatility.
From a financial perspective, the appeal of BESS is bolstered by relatively moderate capital costs compared to Western European markets. Capital expenditures typically range from €450–600 per kWh, or €0.9–1.2 million per MW, allowing storage projects in SEE to achieve competitive returns under conservative assumptions.
However, challenges persist within this evolving framework. Regulatory environments governing storage participation in balancing markets are still developing, necessitating sophisticated optimization strategies to maximize returns across various market segments. Moreover, the lack of fully established capacity remuneration mechanisms in many SEE countries introduces uncertainty into long-term revenue forecasts.
Despite these hurdles, it is clear that battery storage is transitioning from a niche technology to a fundamental component of the regional energy landscape. As volatility continues to define electricity markets in SEE, the capacity to effectively capture and monetize short-term price movements will play an increasingly critical role in determining asset value.
