Energy storage
Where does the value sit?
Invest beyond the cell, not in commoditised storage hardware.
"Make hay while the sun shines" is literal here. As solar and wind scale, the challenge is no longer producing clean electrons when conditions are favourable. It is storing or shifting the overabundance so it can power homes, factories and grids when the sun sets and the wind slows.
Storage is what makes the rest of the transition pay off. It cuts curtailment, firms up grids and pushes diesel and gas peakers off the system. Without flexibility, every extra GW of solar or wind eventually starts cannibalising its own value.
We do not see energy storage as a single market. Utility-scale Li-ion hardware is commoditising, and the venture opportunity sits beyond the cell: software and VPP (virtual power plant) orchestration, commercial and industrial (C&I) optimisation, industrial thermal, battery-lifecycle tools and off-grid microgrids. What they share is that they keep earning as battery hardware margins fall.
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Start with the segment
Value accrues unevenly. The ranking below is how we see it today.
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Read the geography
Market design determines investability. France favours demand-side flexibility and C&I, and its intraday spreads are widening; Germany and Spain reward trading and optimisation; Great Britain is the established reference market for revenue stacking; Italy is becoming attractive for contracted storage through MACSE.
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Look at revenue quality
Recurring or contracted revenue, customer ownership, asset control, and resilience to arbitrage compression.
The battery storage paradox
Why the money moves up the stack: the more batteries a market has, the less each one earns from price swings.
The more batteries succeed in reducing price volatility, the less valuable pure volatility arbitrage becomes. The effect varies by market and competes with new sources of volatility (renewable growth, demand shifts, network constraints), and optimisation fees tied to asset revenues face the same compression. That does not break the thesis. It sharpens it: arbitrage is the on-ramp, not the moat.
To hold their value as spreads narrow, companies need structural revenue streams. We believe the winners will not be the companies most exposed to volatility today, but those that remain valuable after volatility compresses.
- Capacity contractsPaid for being available
- Contracted C&I savingsOn the customer's own bill
- Industrial heat replacementDisplaces gas
- Avoided dieselOff-grid and islands
- Recurring software feesDispatch and optimisation
Ancillary-service revenues and performance-linked optimisation fees still need stress-testing for saturation and price compression.
A large market, a narrow venture one
The numbers are big, but size and venture attractiveness are different things. Here is the picture before we say where we think value sits.
Global energy storage investment, 2024. Deployment capex, not startup funding.
Added globally in 2025, excluding pumped hydro.
Added globally in 2025, +48% on 2024, excluding pumped hydro.
Excluding the US DOE's US$1.76B Hydrostor commitment. VC −72%, yet installations +49% to above 15 GWh, 2025 vs 2024. Wood Mackenzie's LDES grouping includes some sub-10-hour systems.
Disclosed cumulative equity in Avnet Silica's sample of European storage-hardware and manufacturing-related software startups (excludes end-user SaaS). Crunchbase data as of 22 Sept 2025.
Added in the EU-27 in 2025 (+45%). Cumulative fleet 77.3 GWh.
Eight segments, how we read them
Where we think venture-scale value is most likely to accrue today. It is a view, and it will move.
The most interesting ground today is software and VPP, C&I optimisation and industrial thermal. Utility-scale Li-ion is essential to the grid, and structurally harder for a venture-backed company to win.
Beyond the cell, mapped
The value sits beyond the cell. These are the players we follow in each segment, shown for context. Inclusion is not an endorsement, and several of the names shown are already well funded.
Software and VPP is the highest-value layer and the most crowded, so a defensible wedge matters: an asset class, a country or control of dispatch.
Same battery. Different markets.
As of 5 October 2026. The same battery or optimiser earns very different revenue depending on the country. What changes is how each market pays for flexibility: through contracts, regulation, several revenue streams, or market prices.
Revenue from contracts is protected from the spread compression described above. Revenue that follows market prices is not, and regulated ancillary markets saturate. That is why we read the country before the company.
Watch pointsFirst auctions of the reformed French capacity mechanism (from Nov 2026) · German grid-fee reform and the 2026–2027 capacity auctions · GB NESO dispatch and balancing reforms · MACSE eligibility and later rounds · Spain's first capacity auctions and Portugal's design · Nordic country-by-country FCR/FFR rules.
On C&I flexibility, several founders we spoke to see France as years behind Germany and Great Britain, with small and mid-sized business customers still thinly served.
How a country pays for flexibility matters as much as the technology. We find software that can earn under several sets of rules more convincing than a business that depends on one country's.
Not a technology problem. A deployment one.
Storage companies rarely fail because the product does not work. The route to revenue is too slow, too bespoke or too capital-hungry.
We think of storage companies as deployment businesses first and technology businesses second.
What makes a strong company
For each segment: what convinces us, what worries us, and who tends to buy.
How a company charges matters
Batteries can create real value for C&I customers where site loads, tariffs, asset costs and market access line up. The question is whether the startup captures it through a recurring model.
The strongest C&I companies sell recurring software that sits on the customer's existing energy contract, and leave the battery's installation and financing to partners.
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How it charges
Three revenue models, from strongest to weakest.
StrongestSubscription / SaaS
A recurring fee for software that optimises dispatch, tariffs and flexibility markets.
Works if the software truly controls assets.
ConditionalEnergy-as-a-Service
A partner funds and runs the asset. The customer pays a fixed fee or shares savings.
Works with project finance, not venture equity.
WeakestCapex / outright sale
The customer buys hardware. The vendor earns a one-off margin.
Only works with a real software layer on top.
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How it sells
Distribution is the second filter.
Direct salesBest customer ownership, but slow.
EPCs and installersFaster, with less margin and control.
Utility partnershipsCan scale fastest; integration and negotiations drag, and white-label risk.
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What founders told us
Two founders, in their own words.
Wout LagaeCo-founder, Pleevi
Today a typical C&I site has a trading algorithm on the battery, a BMS on the building, a separate system for the chargers and another for the solar, each optimizing its own asset and often working against the others. The value sits at site level.
Ulysse De WildeCEO, ReflectFrance is a bit of an island on flexibility. What's starting here now with smaller business customers happened in Germany and the UK about five years ago.
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Three questions we ask
SavingsAre the savings real?
RepeatabilityDoes the model repeat across similar customers?
RevenueCan it earn from both bill savings and flexibility markets?
Important to the grid. Harder as a venture bet.
Some storage models matter a great deal to the energy system and still struggle to produce venture returns. These are the four patterns we see most.
Commoditised hardware
Cells, packs and generic integration are dominated by scaled players. Better performance alone rarely wins.
Unstable revenue signals
Merchant-only BESS earns from spreads that compress as batteries arrive. Single-mechanism plays are exposed to rule changes.
Infrastructure before traction
Funding assets or bespoke projects with venture equity before demand repeats is a long road.
Models that struggle to scale
Residential-only, highly bespoke industrial systems and hydrogen for power-to-power all find scale or economics difficult today.
- Software and VPPMay be less defensible if utilities internalise optimisation.
- Industrial thermalMay scale slowly if factories resist change.
- Long-durationMay stall without bankable multi-day revenue.
- Li-ionCosts may keep falling and crowd out alternatives.
Value sits beyond the cell.
Energy storage is a core layer of the transition, but not a single venture market. The value sits beyond the cell, in the layers that sell flexibility, where companies win on revenue quality and customer ownership rather than manufacturing or balance-sheet scale.
Long-duration matters, and we are watching it closely. The case becomes compelling once there is a contracted buyer and a credible cost-down path. How that flexibility market works across every asset, not only batteries, is the subject of our next deep dive.
Building in that space?
Talk to usTechnologies of energy storage
The technologies covered here fall into three families: electrochemical and chemical fuels, mechanical and thermal. Electrical storage such as supercapacitors is a further category not covered. Below, a short description of each, then our view of the main technologies.
Batteries and fuels
Electrochemical storage converts electricity into a chemical state inside a battery (lithium-ion, flow, metal-air). Chemical fuels such as hydrogen are produced from electricity and used later, a different business case. Batteries are the most widely adopted form of new storage, with Li-ion the frontrunner.
Mass, pressure and motion
Pumped hydro and gravity systems store gravitational potential energy, flywheels store kinetic energy, compressed-air systems store energy through compression. Pumped hydro and cavern-based compressed air are large-scale, long-lived and geographically constrained; flywheels and some gravity concepts are not.
Heat and cold
When the end use is heat, storing energy directly as heat or cold avoids the losses of converting it back into electricity. Storage losses and charging efficiency still matter, and systems that return electricity face those conversion losses.
- IEA (2024). Batteries and Secure Energy Transitions.
- IEA (2025). Electricity 2025; World Energy Investment 2025; Renewables 2025.
- LDES Council (2024). 2024 LDES Annual Report.
- BloombergNEF (2024). Energy Storage Market Outlook 2024.
- Wood Mackenzie (2025). Global Energy Storage Outlook to 2035.
- Sympower (2024), Series B1 €21.3M. Sifted (2024), enspired €25M. Tech.eu (2023–2026), Kraftblock and Entrix rounds; Companion.energy €7.8M seed (June 2026).
- EIT / EU Innovation (2025). Heatventors and Epyr funding.
- Proparco / FMO (2023). Husk Series D mini-grid financing; Bboxx and Winch Energy.
- Energy-Storage.News / electrive (2023–2026). TWAICE and volytica funding.
- Energy Dome (2022–2026). CO₂ Battery Series B €55M, €17.5M EIC award, Google agreement; CMBlu and Ore Energy coverage. PV Magazine (2026), Ore Energy 100-hour pilot at EDF Lab Les Renardières.
- Ofgem, NESO & Modo Energy (2024–2026). UK Capacity Market, DFS, Balancing Mechanism.
- European Commission (22 Dec 2025). Commission approves reform of French capacity mechanism.
- European Commission (2 Sept 2026). Commission approves German capacity mechanism of up to €35 billion.
- BOE (17 Sept 2026). Orden TED/966/2026, mercado de capacidad en el sistema eléctrico peninsular español.
- RTE (2026). Bilan électrique 2025, principaux résultats.
- Terna (1 Oct 2025). Terna completed the first MACSE auction.
- BloombergNEF (2025). Energy Transition Investment Trends 2025, abridged.
- BloombergNEF (7 May 2026). Energy Storage Enters the 100-Gigawatt Era.
- Wood Mackenzie (13 Jan 2026). Global energy storage market surpasses 100 GW annual installation milestone in 2025.
- Wood Mackenzie (9 Mar 2026). LDES 2025 outlook.
- Wood Mackenzie (17 Sept 2025). Virtual power plant capacity expands to 37.5 GW (North America).
- US DOE (2025). Pathways to Commercial Liftoff: Virtual Power Plants, 2025 update.
- SolarPower Europe (28 Jan 2026). EU installs 27.1 GWh of new batteries in 2025.
- Avnet Silica (2025). European Energy Storage Startups Raise €2.14B, dataset as of 22 Sept 2025.
- IEA (2025). Renewables 2025, renewable heat.
- IEA (2024). SDG7: Data and Projections, access to electricity.
- Socomec (19 June 2025). Acquisition of PowerUp.
- Energy Pool (28 Oct 2025). Strategic fundraising round with Pearl Infrastructure Capital.
- Bpifrance (12 July 2024). Enerdigit annonce une opération de 40 millions d'euros.