Volatility lifts battery storage revenues in South-East Europe, but regulatory and market design risks persist

Battery storage economics in South-East Europe are moving into a more durable phase as persistent electricity-market volatility reshapes the value pools available to flexible assets. For investors, the shift matters because it changes storage from a niche play into a more central component of how markets manage short-term imbalances—while also raising questions about how long current revenue levels can be sustained.

Intraday spreads become a core earnings base

Market participants increasingly view intraday price movements as one of the most efficient ways to capture value for storage. During calendar week 13 (23–29 March), electricity markets showed both downward corrections and rapid rebounds, making monetisation more tangible for assets able to cycle quickly.

Across the SEE region, day-ahead prices averaged between €90/MWh and €120/MWh, with early April spikes pushing levels above €150/MWh in several markets. While that volatility can undermine traditional baseload generation economics and complicate retail hedging strategies, it tends to favour resources designed for fast charge-discharge cycles.

In this environment, intraday arbitrage remains the dominant element of the BESS revenue stack. Spreads during CW13 typically ranged between €20–40/MWh, widening to €50–90/MWh at times when system imbalance was more pronounced. With roughly 250–330 cycles per year, this creates a core revenue base that is increasingly central to investment cases rather than merely marginal.

Balancing services add a second layer as renewables rise

Beyond trading, balancing services are emerging as an important secondary stream. As renewable penetration increases—especially solar—system operators face greater difficulty maintaining frequency stability and managing short-term imbalances. The article notes that balancing markets across SEE have gradually expanded as a result.

Revenues for frequency containment and restoration services are estimated at €25,000–60,000 per MW annually. This matters because it links storage value not only to price volatility but also to operational needs created by variability in renewable output.

Scarcity events create opportunities for short-duration dispatch

Peak price capture forms another layer of potential earnings. The frequency of scarcity pricing events—where electricity prices exceed €140/MWh and occasionally reach €200/MWh—provides additional opportunities for storage to monetize short-duration dispatch.

The article attributes many of these events to sudden drops in renewable generation or spikes in demand. It also points to constrained system flexibility as a factor behind their increasing occurrence.

Total revenue potential strengthens, supporting higher return ranges

Taken together, total revenue potential for BESS in SEE markets is estimated at €80,000–180,000 per MW per year depending on market conditions and how assets are optimised across opportunities. Under base-case assumptions, this level of revenue supports equity internal rates of return (IRRs) of 10–16%, with upside scenarios reaching 18–24% during periods of heightened volatility.

The structural drivers behind the improvement include rising renewable penetration that intensifies price variability (including midday compression alongside evening peaks), continued reliance on gas-fired generation as the marginal price setter—keeping prices elevated even when renewables perform better—and limited interconnection capacity within SEE that restricts full arbitrage across regions.

Lower capital costs help competitiveness—but policy uncertainty remains

The investment case is further supported by comparatively moderate capital costs versus Western European markets. CAPEX is described as typically €450–600 per kWh or about €0.9–1.2 million per MW, enabling competitive returns even under conservative assumptions.

However, risks remain. Regulatory frameworks governing how storage participates in balancing markets are still evolving, and extracting value through “revenue stacking” requires sophisticated optimisation strategies across multiple market segments. In addition, many SEE countries lack fully developed capacity remuneration mechanisms, adding uncertainty to longer-term revenue outlooks.

Even with those constraints, the direction described is clear: storage is shifting from a niche technology toward a core part of the regional energy system. As volatility becomes more defining for SEE electricity markets, the ability to capture—and monetise—short-term price movements will increasingly determine asset value.