RSM: Battery storage systems sector seeing growth as renewables expand
Battery storage is now increasingly seen as strategic infrastructure as the market for Battery Energy Storage Systems (BESS) enters a new phase of growth, according to RSM analysis. New hardware and software are emerging as regulations ramp up, especially in Europe.
The most significant shift in the global energy sector right now is the transition from baseload-centric power systems to networks based more on flexibility. Alongside that shift is the growing importance of BESS, which are now considered part of the critical infrastructure in Europe.
This shift is underpinned by the global shift to renewable energy, with total investments reaching a new high of $2.3 trillion in 2025. Storage technology is gradually reaching maturity as solar and wind power capacity grows. But the European supply chain also faces challenges, chief among them is a reliance on East Asian suppliers of battery cells and other essential components. EU sustainability regulations have also made procurement more difficult and costly.
The rise of battery storage systems
Driven by the global energy transition and the rapid integration of variable renewables, the Battery Energy Storage Systems (BESS) market is seeing rapid growth. Global deployments are projected to scale from 247 gigawatt-hours in 2025 to 360 gigawatt-hours in 2026, with cumulative capacity on track to reach nearly 2 terawatts by 2035.
China currently dominates the sector, though the United States and Europe are steadily expanding thanks to supportive policy incentives and evolving energy security needs. Beyond traditional grid balancing, the market is increasingly propelled by surging electricity demand from AI data centers and other developments.
New technologies and supply chains
There has been a technical shift in how batteries are made: Lithium iron phosphate (LFP) is now the dominant chemistry for stationary energy storage. That is thanks to its better safety metrics, longer cycle life, and cost advantages over competing technologies. Despite other competing technologies like sodium-ion and nickel, LFP is now clearly the new industry standard.
The BESS supply chain remains heavily concentrated in China, which creates strategic dependency risks for Europe and forces global developers to closely audit vendor country-of-origin exposure, mineral traceability, and cybersecurity.
Outside of manufacturing, another area of growth in the BESS sector is in software and system integration. Tesla holds the leading position in the integrator segment. Software is crucial in this sector, which relies not just on the durability of hardware, but also on complex algorithms that manage batteries and help companies operate in wildly dynamic markets, where significant changes happen in mere milliseconds.
What it means for European companies
Emerging EU frameworks (like the Battery Regulation and Net Zero Industry Act) are driving the BESS market toward strategic autonomy, pushing procurement criteria toward strict traceability and environmental performance. By 2027, all industrial batteries will need a digital Battery Passport, compelling developers to secure transparent data from suppliers on carbon footprints and raw material sourcing.
Meanwhile, major grid bottlenecks across Europe, particularly in the Netherlands, have shown that the changes are needed in the way grid access works. In response, since last year BESS developers have been offered discounts on grid fees in exchange for allowing curtailment during peak congestion.
New structures like Tolling Agreements and BESS-as-a-Service are also lowering corporate entry barriers while providing predictable returns for investors. To secure long-term bankability, developers and investors must now prioritize software performance over a single-minded focus on cell chemistry, plan for end-of-life recycling, and target projects that solve localized grid constraints.
“Success requires navigating European regulatory requirements, addressing grid congestion, and managing dependencies,” said Mario van den Broek, partner at RSM in the Netherlands.
“Overall, BESS is no longer just a storage technology. It is becoming a regulated, software-driven and supply-chain-sensitive infrastructure asset, where long-term value depends on grid access, revenue optimization, supplier resilience, lifecycle transparency and eligibility for EU industrial-policy support.”
