The renewable energy system is a complex construct. And subsidies can't be the panacea. At least, that is the opinion of Melanie and Jordy, Investment Managers at EnBW New Ventures and Eneco Ventures.
In this opinion piece, we explore with Melanie and Jordy what they believe to be the true path for battery storage integration and the accomplishments necessary for storage systems. We also discuss why batteries are more than just a financial investment.
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How energy shortages challenge renewables and why batteries are the answer
Dunkelflaute is a typical German word. It describes the notion of being heavily dependent on natural energy sources such as the sun or wind. Because their availability varies depending on the weather, renewable energies cannot supply electricity reliably, but only intermittently at best. This would jeopardize security of supply. But is this true?
Historically, energy systems have relied on fossil fuels for their stability and dispatchability, using inertia, and enabling quick adjustments to meet fluctuating energy demands. However, the environmental impact of fossil fuel consumption and the geopolitical situation has prompted an urgent reevaluation of energy sources, therefore, a greater independence is urgently needed.
As more economies shift toward renewable energy sources, it becomes increasingly important to address the gaps associated with intermittent power generation. In particular, energy storage technologies, the digitization of the grid and targeted regulatory frameworks are essential to ensure grid reliability ensuring system efficiency of all contributors: the generation and the grid.
To understand how these challenges can be addressed, especially through storage solutions, we now turn to Melanie’s perspective.
Melanie: The Real Path for Battery Storage Integration
Battery storage is increasingly viewed as a critical enabler for stabilizing renewable-heavy power systems, bridging the gap between intermittent generation and real-time demand across multiple grid levels. Yet, the narrative around storage cannot simply mirror that of renewables, nor can it follow the same trajectory or timeframe. At a recent Energy Storage Europe event, one of the major takeaways was clear: clamoring for subsidies to achieve stable cash flows is not the solution. Rather than relying on static subsidies to secure predictable returns, the sector should advocate for performance-based incentives. The focus must be on lessons learned from market integration to ensure that storage becomes an integral part of the energy system - not just a financial play.
Energy storage must go beyond the simplistic view of charging when prices are low and feeding into the grid when prices are high. Yes, price arbitrage remains a foundational business case, it captures only a fraction of the potential that comes along with battery storage. It’s about enhancing overall system efficiency through multi-usage capabilities. Unlocking broader value streams - such as grid-forming capabilities, congestion relief and behind-the-meter optimization require redesigned market structures and interoperability standards..
That said, the much-hyped "battery tsunami" won’t happen without viable investment cases. But what ‘viable’ is depends on whom you are talking to. The answer cannot be just higher subsidies rather cutting red tape and introducing regulatory incentives that accelerate deployment. One key area that needs reform is how grid fees are structured for owners, operators, and beneficiaries. This is especially relevant for the commercial and industrial (C&I) sector, where the current grid fee structure rather penalizes flexible energy behavior, e.g. discouraging dynamic load-shifting, a model that no longer aligns with today’s increasingly volatile energy landscape.
Battery storage has the potential to be a game-changer
Battery storage has the potential to be a game-changer, but it will only realize its transformational potential if it is systematically integrated into market design, grid planning and procurement frameworks. The focus needs to be shifted from individual (non-recourse) project ROI to system-level resilience and flexibility. A tough nut to crack since the single projects still needs to deliver ROI. So - everything at the same time!
Gridlocked or Grid-Ready? The Challenge of Integration
Jordy: Smarter Energy Investments Beyond Heavy Capex
It’s about strategy. While large-scale projects like grid-scale storage and offshore wind demand long-term, capital-intensive financing, there’s also an urgent need for agile, software-driven solutions that optimize the energy ecosystem in real-time.
Decentralization is key. Co-locating batteries with industrial sites and data centers, integrating AI-driven forecasting, and leveraging long-duration energy storage (LDES) alongside solar and short-term storage will create a more resilient system. The problem? Scalable LDES is still in its early stages. Flow batteries, thermal storage, hydrogen, and compressed air energy storage are promising, but regulation remains a major bottleneck to international scaling.
Instead of locking funds into 30-40 year infrastructure-heavy projects, we should incentivize software-driven energy trading, automated demand response, and solutions like vehicle-to-grid (V2G) that empower consumers and industrial sites in demand-side management. Energy communities, which could offer much-needed grid relief, remain under-incentivized, with current regulatory frameworks favoring suppliers who bear imbalance risks and costs.
Heavy-capex projects with long payback periods are better suited for corporate investment, infrastructure funds, or public-private partnerships. But startups can still play a crucial role in limiting the capital expenditure burdens on DSOs and TSOs. Smarter forecasting, AI-powered optimization, and flexible financing models will be the difference between a grid that’s strained and a grid that’s truly built for the future.
Melanie: Why the Energy Transition Needs Its Regulatory Renaissance
Over the past few years, the conversation around renewable energy has matured to making the system behind solar and wind smarter, more resilient, and far more integrated. And while co-location of PV, wind, and storage was once seen as an optional upgrade, it’s now the backbone of a modern, flexible grid.
It unlocks participation in PPAs, Day-Ahead and Intraday trading, even ancillary services in real time. But here's the catch: if your weather forecast is off, you're not just losing revenue, you're racking up costly imbalance fees. And in today’s volatile energy markets, that margin for error is razor-thin.
That’s where we’re seeing real white space for VC innovation. In my opinion we need asset-light solutions and software that can coordinate forecasting, market access, and grid services in a seamless way. Think orchestration layers for co-located assets, imbalance risk management tools for BRPs and aggregators, or community energy platforms that tie social infrastructure into market participation.
But technology alone won't cut it. The real gamechanger? A regulatory reset. Static subsidies are relics of the past. What we need are dynamic and performance-based incentive models that reward assets for the real value they add in stabilizing the grid and reducing redispatch. Plus, we’re now entering a phase where system intelligence is just as critical as installed capacity. And the next wave of innovation will come from those who understand the hidden levers of grid management: redispatch 2.0, balancing groups, the EU taxonomy, grid fee structures.
Let’s talk about the white space we’re not tapping into:
- The distribution grid below substations is still analog — here, sensor tech and edge computing can make a massive difference.
- Flexibility beyond industry: commercial buildings, residential complexes, and urban mobility hubs remain largely dormant in the flexibility conversation.
- Customer-side orchestration is still nascent, especially for SMEs and businesses operating across multiple sites.
- And finally: interoperability. Energy tech needs to become as plug-and-play as SaaS. APIs, data standards, and digital twins aren't nice-to-haves - they're preconditions for scale.
We want to see startups that are building digital infrastructure for a system that’s becoming too complex to manage manually. Think AI-powered grid operation, real estate that’s energy-aware, and infrastructure that exists more as code than concrete. The next decade will be defined by how smartly we run the system. And VCs stepping into this space can
Smart Capital for a Complex Sector
Jordy: Not Every Energy Sector Is a VC Play - And That’s Okay
Venture capital has played a crucial role in accelerating climate tech innovation, but not all areas of the energy transition are suited for VC investment. Heavy-capex projects with long payback periods—such as offshore wind, grid-scale battery storage, and hydrogen infrastructure—are better aligned with corporate investment, infrastructure funds, or public-private partnerships.
Take offshore wind, for example. While Contracts for Difference (CfD) structures help mitigate negative net present value (NPV) projects, the sheer scale and cost of these developments leave little room for typical VC-backed plays. Similarly, while startups driving battery innovation may attract funding, utility-scale storage remains a long-term, capital-intensive endeavor that requires structured financing models rather than quick VC exits. Hydrogen infrastructure follows a similar trajectory—while electrolyzer startups can secure funding, full-scale hydrogen production, storage, and transport demand billions in upfront investment, making it more suitable for corporates, governments, and large funds.
The challenge in scaling renewable energy isn’t just technological—it’s financial.
The challenge in scaling renewable energy isn’t just technological—it’s financial. We need new financing models, smarter market incentives, and evolved structures like CfD to make these projects viable. Offshore wind, in particular, is facing a tough tendering environment, with rising costs, volatile electricity prices, and shifting government policies making projects less attractive. A reimagined CfD system that integrates wind and hydrogen tenders could enhance feasibility and accelerate industrial electrification.
Ultimately, the future of energy investment requires a diversified approach. Venture capital will continue to fuel innovation, but for large-scale infrastructure, we need a blend of government support, corporate investment, and financing mechanisms tailored to long-term sustainability.
Making the Grid Smarter – Together
The future of energy depends not only on technology and capital, but also on our ability to intelligently align the two. As Melanie and Jordy explain, battery storage is more than just a buffer; it’s a system enabler. Similarly, capital encompasses more than just cash; it includes strategy, timing, and fit.
To accelerate the energy transition, we must move beyond subsidies toward smarter regulations, performance-based incentives, and investment models that match the complexity of the grid. Whether we're rethinking market integration, optimizing grid flexibility, or reimagining the role of venture capital, one thing is certain: transformation will come from coordination, not silos. The energy transition involves designing intelligence into every layer of the system.