Energy Storage Technologies: Essential for the 21st Century Energy System

The author of this article is Andriy Konechenkov, Chairman of the Ukrainian Association of Renewable Energy (UARE). In 2025, the global energy sector experienced substantial changes, as energy storage installations definitively stepped out of the shadows of generation. They ceased to be merely a 'complementary technology' in Ukraine and became a separate, dynamic segment of the global energy transition. By the end of 2025, the global market added 106 GW of new energy storage capacity, demonstrating an annual growth rate of 43%. The total installed capacity reached approximately 270 GW. This is no longer just a story about a promising market segment, but a reality without which the energy system of the 21st century simply cannot function.

Against this backdrop, Europe is also actively transforming. After a period when energy storage technology was primarily associated with household batteries 'behind the meter,' the focus is increasingly shifting towards large industrial and grid solutions. The International Energy Agency (IEA) explicitly states that the development of flexibility, networks, energy storage, and the integration of renewable energy sources (RES) have become key areas of energy investment in Europe in 2025.

Economic factors also play a crucial role in this process. According to BloombergNEF, in 2025, the average price of battery packs for stationary storage fell to a historic low of $70 per kWh, which is 45% lower than the previous year. For the first time, energy storage installations became the cheapest segment among all lithium-ion technologies, even cheaper than batteries for electric vehicles. This is the threshold after which the market begins to think only about how quickly to scale further. It was the same with fossil fuels, then with solar and wind, and now it is time for energy storage technologies.

However, prices are only one side of the coin. The other side is the new nature of demand, which is also influencing the development of technologies. Today, an increasing number of sectors require not just electricity, but guaranteed continuous power supply with a specified duration of autonomous operation. This is why global experts note that one of the new drivers of the energy storage market has become data centers and artificial intelligence.

From my perspective, I would add the defense industry to this list. Today, the European Parliament positions energy and energy supply as a critical strategic variable for defense readiness, industrial resilience, and security in Europe. In the United States, the potential of storage systems is being analyzed to ensure the autonomy of military bases. Energy facilities are increasingly becoming key military targets alongside military infrastructure. This can be observed in the context of Ukraine and the conflict in the Middle East. In simple terms: 'Energy storage technologies are now needed not only by the electricity market but also by those who think in terms of continuity, reserves, resilience, and critical infrastructure.'

At the same time, for Ukraine, an important question remains regarding what place it will occupy in this trend and segment. For Ukraine, energy storage installations are a matter of energy system resilience and, without exaggeration, the resilience of the state. In the face of constant attacks from Russia on critical infrastructure, energy storage technologies are one of the few technologies capable of combining short-term security with long-term modernization. They are necessary not only to survive peak hours but also to restructure the architecture of the Ukrainian energy system into a more decentralized, flexible system capable of withstanding losses from major nodes and integrating an increasing share of renewable energy sources, particularly wind generation.

The first step towards launching the energy storage market in Ukraine was a law passed in the summer of 2022, which came into effect under number 2046-IX 'On Amendments to Certain Laws of Ukraine Regarding the Development of Energy Storage Installations.' This law defined energy storage for the first time as a separate type of economic activity and established the status of energy storage operators as a separate participant in the electricity market. This created a foundation for further development. However, the real applied significance of this regulation began to take shape only when the market received economic incentives. One of the most important decisions in this regard was the extension until January 1, 2029, of VAT and customs duty exemptions for the import of specific energy-generating equipment. For the energy storage segment, this is critical, as battery cells, power electronics, and inverter systems account for a lion's share of the capital costs of any energy storage project.

The law adopted in February this year, Law No. 4777-IX, provides several positive changes for the implementation of energy storage technologies: the allocation of hybrid projects into a separate category with a guaranteed share of at least 10% of the total annual volume of 'green' auctions; addressing the issue of double tariff burden — grid tariffs are now calculated solely based on the difference between consumption and electricity supply, significantly improving the financial model of such projects; raising the threshold for mandatory licensing to 5 MW, as well as providing energy storage operators the ability to supply electricity directly to consumers with whom they are connected at a single grid point without the need to obtain a supplier's license; and the cable pooling mechanism, which allows for the most efficient use of existing grid infrastructure and significantly reduces connection costs.

Another turning point was the development of the ancillary services market. During 2024-2025, NEC 'Ukrenergo' conducted special auctions that effectively formed the first true business model for large energy storage systems in Ukraine. This is where one of the most important changes occurred: thanks to five-year contracts for ancillary services, energy storage systems transitioned from the category of 'technological experiment' to the category of 'bankable asset.'

These decisions collectively made the first large project cases with energy storage technologies a reality. The most striking of these is the energy storage complex with a capacity of 200 MW and a capacity of 400 MWh, implemented by DTEK Renewables in Ukraine.