Plug In or Stay Out: EU's 2026 Ultimatum for Large Energy Storage

Breaking News! Starting in 2026, European Energy Storage Systems with a capacity of 1MW or more may be required to have grid connection capabilities!

Recently, the European Transmission System Operator Network (ENTSO-E) released its second-phase technical report on grid connection systems. The report indicates that new energy storage systems and Renewable EnergyPower Plants with a rated capacity exceeding 1MW will be required to provide grid connection capabilities to stabilize the power grid, and provides specific technical definitions.

The report clarifies the core indicators that grid-connected energy storage systems must meet:

▍Voltage and Frequency Control Capabilities: The system must maintain voltage stability during grid frequency or phase fluctuations, be able to provide reactive current instantaneously, and maintain synchronization without external reference.

▍Fast Response and Damping Requirements: Current response time: <10 milliseconds; Power oscillation damping rate: ≥5

▍Synthetic Inertia Support: The system needs to provide millisecond-level synthetic inertia, equivalent to the inertia constant of a virtual synchronous machine, to support frequency fluctuations.

The disturbance withstandability system must pass voltage dip, step change, and phase angle change tests to ensure stable operation under grid disturbances. The "Phase Two Report" is a step in the EU grid regulation development process. While not legally binding, it is a crucial revision to the upcoming *Requirements for Generating Systems Networks* (NC RfG 2.0).

Once the European Commission adopts this requirement in its finalization of NC RfG 2.0, ENTSO-E will issue subsequent implementation guidance documents (IGDs) for national regulators and grid operators to implement.

According to documents from the European Distribution System Operators Entity (EU DSO Entity), NC RfG 2.0 is expected to be finalized in 2026. After taking effect in EU member states, member states can set a transition period based on their local grid conditions, typically around three years.

This means that most energy storage projects are expected to begin fully implementing grid connectivity requirements in 2028-2029.

For energy storage developers, it is essential to plan ahead and upgrade energy storage control systems, grid-type PCS, and testing solutions to avoid being caught off guard!

What is "Grid Construction"?

To understand "grid construction," we first need to understand "grid synchronization."

From a conceptual definition perspective, in a power system, grid synchronization typically refers to generator sets or equipment operating as synchronous generators, whose speed and phase must be synchronized with the power grid. In other words, these devices need to "follow" the frequency and phase of the grid to ensure a stable power supply.

Grid construction, on the other hand, refers to the ability of generating equipment or systems to operate independently without external grid support, maintaining stable voltage and frequency to provide power to loads. Grid construction capability generally refers to equipment capable of "building and forming a grid," which can continue operating during grid failures or establish independent microgrids in remote areas.

Simply put, the difference between the two can be summarized as follows:

• Grid Synchronization: The generating equipment operates synchronously with the existing power grid.

• Grid Construction: The generating equipment can independently form a grid to supply power to loads.

In recent years, with the acceleration of global energy transition, power systems in various countries are experiencing the dual challenges of high-proportion renewable energy grid integration and high-proportion power electronic equipment access. This poses a severe challenge to the voltage and frequency stability of power systems, leading to decreased system inertia, increased oscillation risks, and a serious threat to the safe and stable operation of the power grid.

Against this backdrop, grid-based energy storage technology has emerged.

As a revolutionary energy storage technology, the core of grid-based energy storage lies in its equipped PCS (Power Processing System), which, like a traditional generator, can autonomously set voltage and frequency parameters to form a stable voltage source. It not only possesses energy storage capabilities but can also actively adjust during grid fluctuations, providing inertia support, suppressing oscillations, and even independently constructing microgrids.

Specifically:

• Firstly, grid-based electrochemical energy storage systems should have grid control functions, providing inertia and short-circuit capacity to the system. During steady-state and transient processes, the amplitude and phase angle of the grid-based energy storage converter terminal voltage should have a certain maintenance capability, enabling it to share the unbalanced power of the grid, with a power response time of no more than 5 ms.

• Secondly, the grid-connected electrochemical energy storage system should be able to receive and respond to AGC and AVC commands sent by the dispatch center.

• Thirdly, the grid-connected electrochemical energy storage system should have black-start capability. During black-start, there should be no significant circulating current or oscillation issues between the various converters, and the maximum deviation of the effective current value should not exceed 5%.

• Fourthly, the grid-connected electrochemical energy storage system should have a certain frequency and voltage tolerance capability, maintaining operation within a frequency deviation of ±2Hz; the voltage at the energy storage terminal should be flexibly adjustable within the range of 0% to 130% according to the system's needs.

Finally, the grid-connected parameters of the grid-connected electrochemical energy storage system are uniformly managed by the grid dispatch department. Before grid connection, the coordination of key grid-connected parameters (grid and source parameters) should be completed, and on-site parameter measurements should be performed.

Global demand is surging, attracting major manufacturers to enter the market.

Research estimates suggest that from 2024 to 2034, to maintain grid stability, the world will need to add 1400GW of Battery Energy storage capacity using grid-based energy storage technology; within the next five years, the global penetration rate of grid-based energy storage technology is expected to reach 20%.

According to publicly available industry data, the current global average penetration rate of grid-based energy storage is approximately 10%. Regionally, Australia has the highest penetration rate at approximately 23%, attributed to its aggressive energy transition goals (achieving 82% renewable energy generation by 2030) and unique grid structure requirements.

Objectively speaking, Australia's grid is primarily based on a single backbone network, and the high penetration of distributed energy sources poses stability challenges. Grid-based technology has become a key means to address frequency regulation and voltage support. It is understood that Australia has also included grid-based energy storage in its national electricity market priority actions for fiscal year 2026.

In Europe and the United States, the penetration rates of grid-based energy storage are 8.6% and 2.6% respectively, and are expected to increase significantly in the coming years.

In China, the penetration rate of grid-based energy storage is currently only 1.5%. However, in recent years, with the rapid growth of new energy installed capacity, grid-based energy storage technology has taken center stage in the national new energy strategy!

On June 4, 2025, the National Energy Administration launched the first batch of pilot projects for new power systems, listing grid-based technology as the top priority among the seven key areas. The new policy further requires that the penetration rate of grid-based energy storage exceed 30% by 2027! New projects in regions with difficult power grid absorption, such as Northwest China and Xinjiang, must be equipped with grid-based capacity.

Meanwhile, local policies are also stepping up support. Major renewable energy provinces like Xinjiang and Inner Mongolia are directly providing 30% investment subsidies, while Tibet and Xinjiang have launched 1.2GW demonstration projects. Grid-based energy storage has been upgraded from an "optional configuration" to a "mandatory standard."

Driven by both policy and market demand, the domestic grid-based energy storage market has experienced explosive growth: According to data from the CESA Energy Storage Application Branch's industry database, from January to September 2025, China's newly installed grid-based energy storage capacity reached 2.9GW/9GWh, accounting for over 10% of the market. In terms of capacity, the new installed capacity in the first nine months of this year has already surpassed the total new installed capacity of 8.9GWh for the entire year of 2024.

As of the end of September 2025, the cumulative operational capacity of grid-based energy storage in China has reached 6GW/19.1GWh! Of particular note is the rapid expansion of grid-based energy storage in China, moving from the power supply and grid sides to the user side and microgrids. From January to September 2025, six new user-side grid-based energy storage projects were added, surpassing the number of power supply-side projects.

However, focusing on the present, the widespread adoption of grid-based energy storage technology still faces objective challenges:

On the one hand, the cost of grid-based energy storage systems is 8%-12% higher than ordinary energy storage due to the need to upgrade inverters, control systems, and software. On the other hand, industry standards are not yet unified.

It is worth noting that the second-phase technical report released by ENTSO-E clearly defines the core indicators that grid-based energy storage systems need to meet. If adopted, this could serve as a reference for establishing industry standards for grid-based energy storage.

Regarding costs, the global average price of battery energy storage has decreased by 10% to 40% over the past year, which can offset some of the increased costs. Furthermore, we can expect the development of AI scheduling technology, which may further reduce the cost of grid-based energy storage systems in the future!