In Southeast Europe (SEE), the landscape of battery storage economics is evolving significantly as volatility in electricity markets reshapes the value pools for flexible energy assets. This transition is critical for market participants who are increasingly identifying battery energy storage systems (BESS) as vital tools for capitalizing on price fluctuations driven by intraday trading, peak demand occurrences, and balancing market discrepancies.
During calendar week 13 (23–29 March), electricity markets exhibited notable volatility, with day-ahead prices averaging between €90/MWh and €120/MWh, and early April saw spikes exceeding €150/MWh in certain regions. While traditional baseload generation faces challenges from such fluctuations, the environment has become more conducive for assets that can execute rapid charge-discharge cycles.
The revenue potential for BESS in SEE has diversified into several layers. Intraday arbitrage remains a primary revenue source, with typical spreads during CW13 ranging from €20–40/MWh, occasionally extending to €50–90/MWh during system imbalances. With an estimated 250–330 cycles per year, this establishes a robust revenue foundation that is increasingly pivotal to investment considerations.
A secondary revenue stream is emerging through balancing services, particularly as the integration of renewable energy sources—especially solar—grows. System operators are encountering heightened difficulty in maintaining frequency stability and addressing short-term imbalances, which has prompted the expansion of balancing markets across SEE. Revenues for frequency containment and restoration services are now projected to be between €25,000–60,000 per MW annually.
The occurrence of scarcity pricing events further enhances revenue opportunities for storage assets. Instances where electricity prices surpass €140/MWh, and occasionally reach €200/MWh, are becoming more frequent due to sudden drops in renewable generation or spikes in demand. These events underscore the growing value of storage systems capable of short-duration dispatch.
The overall revenue potential for BESS in SEE is now estimated at €80,000–180,000 per MW per year, contingent on market dynamics and asset optimization strategies. This revenue range supports equity internal rates of return between 10–16% under base-case conditions, with potential increases reaching up to 18–24% during periods characterized by heightened market volatility.
<pSeveral structural factors contribute to this shift. The rising share of renewable energy—particularly solar—has resulted in new price variability patterns, marked by midday price compression and pronounced evening peaks. Additionally, ongoing reliance on gas-fired generation as the marginal price setter keeps price levels elevated even when renewable output improves. Limited interconnection capacity within SEE further restricts market arbitrage opportunities, reinforcing local price volatility.
<pInvestment prospects for BESS are also bolstered by comparatively moderate capital expenditures relative to Western European markets, with CAPEX typically ranging from €450–600 per kWh, or approximately €0.9–1.2 million per MW. This positioning allows storage projects within SEE to achieve competitive returns even under conservative scenarios.
<pDespite these positive developments, challenges persist. Regulatory frameworks governing storage participation in balancing markets continue to evolve, necessitating sophisticated optimization strategies to maximize returns across diverse markets. Moreover, the lack of fully developed capacity remuneration mechanisms in many SEE countries introduces uncertainty into long-term revenue forecasts.
<pAs the region's energy landscape transforms, it is evident that battery storage is moving from a niche technology to a fundamental element within the regional energy system. With volatility increasingly defining electricity markets in SEE, the capability to capture and monetize short-term price movements will play a crucial role in determining asset value moving forward.
