EU and UK Energy Storage Regulation in 2026 and Beyond

EUROPEAN UNION DEVELOPMENTS

EU energy storage initiatives are a key component of efforts to advance energy security,  integrate renewable energy into electric systems, support the transition toward a carbon-neutral economy, improve energy efficiency, and integrate renewable energy sources into electricity systems, all while also playing an integral role in balancing power grids and storing surplus energy. This is particularly important in the context of EU energy security and the transition away from fossil fuels, driven by both environmental and geopolitical considerations. 

To help track this growing industry the European Union has created a comprehensive database of the European energy storage technologies and facilities, comprising (1) existing energy storage technologies and their characteristics, (2) front-of-the-meter facilities (operational or in development and connected to generation and the transmission grid), and (3) behind-the-meter energy storage. The database is intended to improve transparency and policy coordination as storage deployment accelerates across the EU.

Energy storage also plays an important role in the European Green Deal and the Fit for 55 green transition package, a set of policy initiatives aimed at ensuring the EU gradually becomes climate-neutral. The Green Deal envisages a regulatory framework that fosters the deployment of innovative technologies, including energy storage.

The European Commission published a study on energy storage in 2020 summarizing prior research, assessing current and potential storage markets in Europe, and setting out policy and regulatory recommendations. The European Commission also publishes progress reports on the competitiveness of clean energy technologies on an annual basis, including in respect of technologies and solutions for energy storage and power systems integration.

The EU also adopted its first unified batteries regulation, introducing sustainability, recycling, and safety requirements applicable to the design, production, and waste management of batteries produced or sold in the EU.

Recent legislative developments in the EU, including the Net-Zero Industry Act, Critical Raw Materials Act, and newly adopted Clean Industrial Deal, reflect the EU’s increasing focus on energy security, strategic autonomy, and competitiveness in respect of net-zero technologies and the critical raw materials required for energy storage.

Key Regulations and Initiatives

Key EU-level regulations relevant to energy storage in the EU include the following:

• Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (the EU Electricity Directive)
• Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity initiatives (the EU Electricity Regulation)
• European Parliament Resolution of 10 July 2020 on a comprehensive European approach to energy storage (2019/2189(INI))
• REPowerEU, as amended, including the amendments to the Renewable Energy, Energy Performance of Buildings, and Energy Efficiency Directives, which included all energy storage projects under the new permitting rules for renewables projects
• The revised Renewable Energy Directive, which is expected to positively impact the energy storage industry by accelerating projects development across the EU
• EU Commission Recommendation of 14 March 2023 on Energy Storage – Underpinning a decarbonised and secure EU energy system 2023/C 103/01
• Regulation (EU) 2023/1542 of the European Parliament and of the Council of 12 July 2023 concerning batteries and waste batteries, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC
• Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for strengthening Europe’s net-zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724 (the Net-Zero Industry Act)
• Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724, and (EU) 2019/1020 (the Critical Raw Materials Act)

Focus of EU Regulation

EU regulation of energy storage is generally spread across a number of regulatory acts, many of which require implementation at the member state level. In 2023, the EU adopted the EU Batteries Regulation, the first piece of European legislation to take a full lifecycle approach to battery regulation, addressing sourcing, manufacturing, use, and recycling within a single legal framework.

The EU Commission also published a series of recommendations, with concrete actions that EU member states can take to encourage greater deployment of energy storage.

In brief, EU regulation of energy storage focuses on the following:

• Public support, strategy, and other policy aspects (for more information on EU state aid to energy projects, see our article)
• Permitting
• Effectiveness of energy markets and capacity mechanisms, including the establishment of the European entity of distribution system operators (EU DSO)
• Grid aspects
• Tariffs requiring the EU member state not to discriminate against energy storage projects in its tariffs’ regulations
• Incentivizing development of net-zero technologies and autonomy in respect of critical law materials required for energy storage
• Overall competitiveness and independence of EU industry

EU Batteries Regulation

The comprehensive EU Batteries Regulation covers sourcing, manufacturing, use, and recycling of batteries in the EU and introduces sustainability, recycling, and safety requirements applicable to the design, production, and waste management of batteries produced or sold in the EU.

Starting in 2025, the new rules gradually introduced declaration requirements, performance classes, and maximum limits on the carbon footprint of electric vehicles, light means of transport (such as ebikes and scooters), and rechargeable industrial batteries. Carbon footprint declarations are required first, followed later by performance classes, and only then by maximum lifecycle carbon footprint thresholds. The implementation practices and policy approaches in respect of current EU regulation vary among member states.

NZT Projects

To bolster the strategic autonomy of the EU in respect of net-zero technologies, the Net-Zero Industry Act, which entered into force in 2024, focuses on net-zero technologies including batteries. The Net-Zero Technologies Manufacturing Projects (NZT Projects) will benefit from streamlined permitting procedures, and strategic NZT Projects will have further benefits. The NZT Projects will likely facilitate access to public funding. Further, the Clean Industrial Deal State Aid Framework allows targeted aid to support investments in equipment and technology relevant for net-zero economy transition including batteries.

Critical Raw Materials Act

The Critical Raw Materials Act requires EU member states by May 2025 (and within 12 months of each update to the list of strategic raw materials) to identify major companies operating within their territory that use strategic raw materials (such as lithium) to manufacture batteries for energy storage. These companies would be required to carry out a risk assessment of their raw materials supply chain for strategic raw materials and, subject to such risk assessment, possibly be required to take measures to mitigate any identified risks (e.g., diversify its raw materials supply chains or substitute the strategic raw materials).

The act also establishes an EU Joint Purchasing Mechanism for unprocessed and processed strategic raw materials, aggregating demand from participating EU companies consuming strategic raw materials and seeking offers from suppliers to meet that aggregated demand.

Clean Industrial Deal and Affordable Energy Action Plan

In July 2025, the European Commission released the Clean Industrial Deal, a roadmap aligning climate policy and industrial competitiveness under a single growth strategy for EU industry, with a particular emphasis on energy‑intensive sectors and clean technologies. For a more detailed overview, please refer to our Empowered publication.

A central pillar of the Clean Industrial Deal is affordable energy, recognising that access to reliable, low‑carbon energy at competitive prices is a precondition for industrial decarbonisation and long‑term competitiveness.

To this end, the Commission simultaneously proposed the Action Plan for Affordable Energy, which combines short‑term measures for lowering energy bills with structural reforms, including an upcoming Industrial Decarbonisation Accelerator Act to tackle permitting bottlenecks for industrial energy access and a stronger role for cross‑border PPAs and Contracts for Difference to de‑risk clean power supply to industry. The action plan links lower energy prices to  accelerated deployment of renewable generation and energy storage, treating storage as a critical flexibility resource needed to reduce price volatility.

The Clean Industrial Deal also lays out a broad implementation toolbox that interacts with instruments already relevant to energy storage, including plans for a €100 billion Industrial Decarbonisation Bank and full rollout of the Critical Raw Materials Act through strategic projects and an EU Critical Raw Material Center.

In the medium term, the Clean Industrial Deal is designed to underpin EU leadership in clean‑tech value chains (including batteries and other storage‑related technologies) by aligning funding, trade, foreign‑investment controls, and competition policy with industrial decarbonisation and circular‑economy objectives.

Further development of EU-level energy storage regulation is likely to continue to be in line with its energy security and energy transition goals, presumably with increased emphasis on the EU industry’s competitiveness in line with the Clean Industrial Deal.

UNITED KINGDOM DEVELOPMENTS

Following the issuance of the Energy Act 2023, which was at the time described as “the biggest piece of energy legislation in the UK’s history,” the UK Department for Business and Trade published a UK battery strategy setting out the government’s vision for the country to achieve a globally competitive battery supply chain that supports economic prosperity and the net-zero transition.

The battery strategy set out 15 ambitious measures to support the sector, including targeted support for zero-emission vehicles, batteries, and their supply chains. This involved more than £2 billion of new capital and research and development funding for five years (through 2030). In June 2025, the Department for Business and Trade announced a £542 million investment in the Battery Innovation Programme under the Advanced Manufacturing Sector Plan aimed at accelerating battery research, innovation, and manufacturing scale-up between 2026 and 2030.

In December 2024, the UK published the Clean Power 2030 Action Plan outlining the government’s strategy for achieving its clean energy goals by 2030. The plan set ambitious clean energy targets and targets increases in energy storage capacity, with 23–27 gigawatts (GW) of battery capacity and 4–6 GW of long‑duration energy storage.

LDES Cap and Floor Regulatory Framework

The Clean Power 2030 Action Plan followed the UK government’s announcement of a new Long Duration Electricity Storage (LDES) investment support scheme to help build energy storage infrastructure and boost investors’ confidence and opportunities.

After stakeholders were consulted on a proposed approach of using a “cap and floor” regime to enable investment in LDES assets, the government decided that an LDES “cap and floor” scheme (guaranteeing minimum income electricity storage for developers in exchange for a limit on revenues) should be introduced as the optimal policy approach for the framework to best facilitate rapid and efficient LDES investment.

The LDES investment scheme, regulated by Ofgem (the Great Britain energy regulator), is divided into one application route for mature technologies and a separate route for new innovation. To implement the LDES investment support scheme, Ofgem published a joint technical document with the UK and the Department for Energy Security and Net Zero in March 2025, setting out the details of the LDES cap and floor regime and the allocation and eligibility criteria for approving projects.

Ofgem also published the application guidance and eligibility assessment framework for “Window 1” of the LDES cap and floor scheme in April 2025. Developers who sought support to build new LDES projects in that context are expected to obtain an investment support decision by summer 2026.

The UK energy storage market continues grow rapidly. In 2025, operational energy storage capacity reached 7 GW/10 GWh, compared to approximately 4.6 GW/5.9 GWh in 2024. 

Current Regulatory Requirements

Until the much-awaited Energy Act 2023 was issued, the UK legislative arsenal did not include a specific framework for energy storage. The Electricity Act 1989, the main piece of legislation governing electricity in Great Britain, was updated by the Energy Act 2023, effective December 26, 2023, and now includes a definition of energy storage: “energy that was converted from electricity and is stored for the purpose of its future reconversion into electricity.”

Ofgem clarified in 2020 that electricity storage is deemed to be electricity generation for the purposes of the Electricity Act 1989. As a result, any energy storage operator would require a generation licence unless an exemption applies. Under the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (SI 2001/3270), the Class A so-called “small generators” exemption applies to sites producing no more than 10 megawatts (MW), or 50 MW for a generating station with a declared net capacity of less than 100 MW.

When a generation license is required, the holder must comply with a number of industry codes (namely the Grid Code, Distribution Code, Balancing and Settlement Code, and Connection and Use of System Code) license obligations in relation to all generation assets, including storage, that it operates.

Ofgem has introduced in the generation license standard conditions:

• a definition of electricity storage, which is the “conversion of electrical energy into a form of energy which can be stored, the storing of that energy, and the subsequent reconversion of that energy back into electrical energy”; and
• a new “E1” license condition requiring the storage provider to record and make available accurate information regarding their electricity storage facility to their relevant suppliers; the E1 condition aims to facilitate the correct application of final consumption levies, irrespective of the size of the storage facility.

Nonexhaustive List of Technologies

Ofgem has provided a nonexhaustive list of technologies that fall within the scope of the regulatory definition of storage. These include electrochemical batteries (e.g., flow batteries), gravity energy storage (e.g., pumped hydro), air-based storage systems, kinetic energy systems (e.g., flywheels), thermal storage, chemical storage, and electromagnetic storage.

Application for a License

A standard license application form and guidance are available under the Schedule to the Electricity License Application Regulations 2019.