CATL sees Europe’s storage market moving from scale to bankability

As renewable penetration rises across Europe, CATL says the energy storage market is entering a more demanding phase, where system design, long-term reliability, financing confidence and local service capability are becoming as important as battery cost.

Europe’s energy storage market is no longer defined only by rapid project growth or falling battery prices. For CATL, the next stage of the market will be shaped by a more difficult question: whether battery energy storage systems can operate as long-term grid infrastructure, with the reliability, service support and financial credibility required by developers, investors, insurers and regulators.

That was the central message from Kevin Tang, Director of ESS Europe, CATL. In an interview during SNEC 2026 in Shanghai. Kevin said the underlying driver for storage demand in Europe remains clear: renewable energy has already reached a high share in the electricity mix, and the grid now needs more flexible assets to support it.

According to Kevin, close to half of Europe’s electricity in 2025 came from renewable sources, with the share even higher in Germany, the Nordic region and several other markets. At that level of penetration, electrochemical storage is no longer a marginal add-on to solar and wind projects. It is becoming part of the power system’s basic support structure.

“Storage is increasingly being treated as a kind of new infrastructure,” Kevin said in substance, arguing that investors are no longer looking only at initial capital expenditure. They are beginning to assess how a storage asset performs over 10, 15 or 20 years, and whether the revenues promised in the financial model can be supported by real product performance.

Kevin estimates that Europe could see cumulative storage installations of 500 GWh to 800 GWh over the next five years, depending on policy development, grid connection reform, permitting and business model maturity. The figure is an estimate rather than a formal forecast, but it reflects CATL’s view that Europe remains one of the most important long-cycle markets for large-scale energy storage.

Recent grid events may also accelerate that shift. Kevin said the large blackout in Spain in April 2025 forced European policymakers and system operators to look again at the question of whether power grids can safely absorb high levels of renewable generation without sufficient flexibility. The event, he said, is likely to speed up recognition of the role that storage can play in grid stability, frequency response and system resilience.

Europe’s market structure is still fragmented. The UK, Italy, Poland and other countries have developed capacity market mechanisms or other revenue support schemes, but many projects still depend heavily on merchant revenues, energy trading and ancillary services. Project duration is also increasing. Kevin noted that when CATL first introduced its EnerOne DC container product in the UK in 2020, the typical project was around 50 MW / 50 MWh, or roughly one hour of storage. Today, the UK market has moved toward two- to three-hour systems, while larger projects are increasingly connected at transmission level and moving toward GWh scale.

That trend helps explain CATL’s product evolution from EnerOne to larger containerized systems and, more recently, TENER Stack. Kevin said the logic behind these products is not simply to increase the size of the battery system, but to raise energy density at the station level while still allowing projects to be built, transported, approved and operated within real-world constraints.

In Europe, those constraints matter. A product that looks efficient on paper may face obstacles because of container height, visual impact, planning approval, road transport limits, bridge restrictions or site infrastructure. Kevin said CATL takes such factors into account early in system design. For example, he said a TENER Stack container weigh no more than 36 tonnes, a limit intended to keep it transportable across nearly all European markets.

This reflects a noticeable shift: storage system value is increasingly determined by project execution, not only by cell chemistry. Developers and EPC partners need systems that can reduce civil work, shorten installation time, simplify logistics and lower project delivery risk. For investors, those considerations affect bankability as much as headline battery cost.

Kevin argued that long-term credibility is now one of the industry’s biggest issues. Many suppliers offer degradation curves, availability commitments and 10- or 20-year performance promises. But in many cases, those promises to depend heavily on corporate credit rather than long-term field evidence. For storage to become a mature infrastructure asset class, he said, the industry needs a more robust chain of confidence linking suppliers, third-party institutions, banks, insurers, developers and asset owners.

CATL’s answer to that problem is large-scale validation. Kevin highlighted the company’s energy storage test and demonstration platform in Xiamen, which he said has a maximum 35 kV grid connection capability and can test storage power stations of up to 100 MWh. The platform is designed to examine system behavior under harsher conditions than normal operation, including grid interaction, extreme operating scenarios, thermal runaway, large-scale fire testing and high-voltage coupling.

The purpose, Kevin said, is to explore system design boundaries before projects are deployed in the field. In normal operation, some risks may appear only under rare combinations of conditions, such as an extreme grid event or an unusual sequence of failures. CATL wants to know how a full system behaves when PCS, battery, EMS and grid dispatch requirements interact under those conditions.

Such data, Kevin said, can support not only internal product development, but also the broader financing and insurance ecosystem. If insurers and banks can better understand the actual tested limits of a storage system, they can price risk more accurately. Regulators and local authorities may also gain more confidence in permitting, grid connection, fire safety and operational approval processes.

For CATL, Europe’s storage opportunity is therefore not only a product export story. It is also a localization story. Kevin said CATL recognized the importance of local manufacturing, service and supply chains early in its European expansion. He pointed to the company’s German facility, which he said has more than 90% local employees and more than 1,000 local suppliers. CATL has also invested in training centers, customer training, logistics, after-sales networks and fire-safety-related service capability.

The company’s European blueprint is expected to grow further through its Hungarian plant and its joint venture with Stellantis, although specific capacity figures should be checked against the latest official company disclosures. Kevin said the goal is not only to manufacture locally, but also to build a service ecosystem capable of supporting batteries and storage systems throughout their operating life.

That includes recycling and circular economy activities. Kevin said CATL sees long-term value creation across the full battery chain, including collection, assessment, reuse and recycling of retired batteries. Not all batteries can be directly reused, and not all are suitable for second-life applications, but determining their value requires a long-term system of testing, service and industrial cooperation.

Kevin also discussed sodium-ion batteries as a complementary technology for future storage applications. He said CATL’s third-generation sodium-ion battery will see demonstration projects this year. The technology has already been used in vehicles on a smaller scale, but CATL is now beginning to introduce it into storage scenarios.

Sodium-ion batteries are not expected to replace lithium-ion batteries across all applications. Instead, Kevin described them as a complementary route with advantages in certain high-temperature and low-temperature environments, as well as benefits linked to resource availability and supply chain security. For a GWh-scale storage project, which may involve more than one million cells, manufacturing maturity, quality control and supply chain stability are critical.

Kevin said different storage applications — including frequency regulation, peak shaving, capacity markets, energy arbitrage and emerging long-duration use cases — will require different technology choices. CATL’s strategy is to match product routes to specific operating needs rather than treat storage as a single standardized market.

Kevin sees that Europe’s storage sector is entering a more disciplined phase. Demand remains strong, but the market is becoming more selective. Product suppliers will need to prove not only that they can deliver large systems at competitive prices, but also that those systems can be transported, permitted, insured, financed, operated, serviced and eventually recycled.

For CATL, that is where scale, validation, local presence and technology diversification converge. Kevin framed the company’s role in Europe around three themes: ecosystem building, deeper industrial collaboration and value innovation through circular economy.

In that sense, CATL’s European storage strategy is not simply about shipping more battery containers into a growing market. It is about convincing customers that storage can become a dependable infrastructure asset — and that the company can support it over its full life cycle.