France battery market expected to expand rapidly by 2030, but faces saturation risks, Aurora analysis says
Fixed-price offtake agreements can significantly enhance returns under adverse scenarios and de-risk investments, with fair value estimates ranging between 94€ and 103.3 € kW/year.
PARIS (AURORA ENERGY RESEARCH)—Analysis by Aurora Energy Research estimates that by 2030, France will reach a 179% ratio of installed battery capacity to procured capacity in the ancillary service market that helps balance the grid, indicating a high risk of market saturation, similar to trends seen in other European countries.
The French electricity mix continues being dominated by nuclear, gas, and hydro, but as aging nuclear assets retire, Aurora sees batteries playing a critical role in balancing the system. The global power markets analytics provider highlights the need for developers to consider ancillary service market saturation risk in investment decisions.
France’s installed battery capacity surpassed 1 GW in 2024, a tenfold increase since 2020, according to the analysis. This growth has been fueled by expanding revenue streams from ancillary services, declining CAPEX costs, and a 70% increase in intermittent renewable capacity, particularly a doubling of solar PV deployment capacity and a strong expansion in wind.
The growth in battery capacity increases market competition, applying downwards pressure on prices as more conventional technologies are pushed out of merit. France’s shift to a pay-as-clear model for aFRR in June 2024 is one example of evolving market dynamics that incentivise battery deployment. Yet, Aurora warns that the limited depth of the aFRR market leaves it particularly vulnerable to oversupply. In its overbuild scenario, which includes all battery projects under consideration, in planning, or under construction, Aurora estimates a near tenfold increase in battery capacity in France, from approximately 1 GW in 2024 to 9 GW by 2030.
Aurora further points to fixed-price offtake agreements, which can significantly enhance returns under adverse scenarios and de-risk investments, with fair value estimates ranging between 94 € and 103.3 € kW/year. Although these agreements do not allow assets to capture merchant upside, they offer stable, contracted revenues and shift market risk to the offtaker, thereby supporting higher leverage, longer debt tenors, and helping to meet Debt Service Coverage Ratio (DSCR) thresholds.
Christina Rentell, Research Lead for Iberia and France, at Aurora Energy Research says:
The battery storage market in France is expanding rapidly, but with deployment dominated by the development of large batteries, markets are at a higher risk of saturation.
“Effectively hedging against downside scenarios, such as saturation risk, will be key to facilitating continued large scale battery deployment, whilst ensuring emissions from ancillary services remain low as nuclear capacity declines.”
Notes to Editors
The authors of the study will present detailed findings during the upcoming public webinar: “Charging Ahead: Navigating Risks in French Battery Storage Projects” scheduled for 24 April 11:00–12:00 CEST. Register here to attend the webinar.
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