Capacity Markets for Battery Storage: A 2026 Guide to Europe's Six Key Schemes
Capacity payments are increasingly helping European batteries get financed, accelerated by a welcome EU law. If you're new to capacity mechanisms or capacity markets, Gridcog's Thinking Energy explainer video is a good place to start.
The EU's 2024 market reform is changing the picture
The 2024 electricity market reform (Regulation 2024/1747) turns capacity mechanisms from a last-resort measure into a structural part of the market. It requires every member state to assess its flexibility needs and set an indicative target for non-fossil flexibility - storage and demand response. National assessments are due by July 2026, with targets following in January 2027, and dedicated support schemes are allowed on top where investment falls short.
While the direction is set at EU level, pay-out and derating factors are left to each market. Capacity revenue is derated MW multiplied by the clearing price. The derating factor - the share of nameplate capacity counted as firm at peak - is the part regulators can define explicitly, and per asset. It's reset at each auction and falls as storage scales, so the same asset can clear at a fraction of its previous round's value.
The six capacity markets to watch
Here's a summary of the key capacity markets our customers are modelling. They sit at very different stages of maturity.
Great Britain
GB has the oldest scheme, running since 2014. Its annual T-4 and T-1 auctions contracted roughly 1.8 GW of battery obligations combined in early 2026 (576 MW in the T-1, 1,224 MW in the T-4), on contracts of up to 15 years.
Derating is set by duration - about 84% for eight-hour assets and 42% for four-hour. This has particularly accelerated long-duration energy storage: 4h+ wins jumped from around 120 MW to nearly 900 MW year on year.
Poland
Poland has run its capacity market since 2018, with batteries included in the last four rounds, from 2022 to 2025. Derating for BESS slid sharply over that period, from 95% to 60% to around 13%, and contracted volumes fell for the first time in 2025.
The 2025 round cleared at 465 PLN/kW/year (roughly €107/kW/year), about double the year before, with contracts running for 17 years.
Belgium
Belgium launched its Capacity Remuneration Mechanism (CRM) in 2021, and batteries have taken almost all its new-build capacity since - from 130 MW in the first round to around 1 GW across the three 2025 auctions, roughly 1.6 GW cumulatively to 2029/30.
It pays through reliability options: developers bid against a strike price and repay above it, with capacity revenue floored at zero. One 2025 round cleared near €74,300/MW/year.
Italy
Italy launched MACSE in 2025, the one scheme built specifically for storage, aimed at the southern and island zones and at longer durations. The first and only round so far (September 2025, delivery 2028) took about 10 GWh across 15 projects and 1.5 GW, averaging 6.6 hours, on 15-year contracts. It cleared at a weighted €12,959/MWh/year, about 65% under the €37,000 cap, and was four times oversubscribed.
The next round is due late 2026. A standard capacity market runs in parallel, so southern zones net one mechanism against the other.
Spain and Germany
Spain and Germany are yet to launch their first capacity market rounds. Spain's ten-year mechanism was approved in 2026 and holds its first auctions this year, with 9-, 5- and 1-year tracks and a grid-fee exemption for flexibility. Germany is designing a scheme for 2027, driven by the EEG state aid expiry at the end of 2026.
Why capacity payments matter for financing
A capacity payment acts as a long-dated floor - 15 years in GB and Italy, 17 in Poland. That floor lets a developer raise cheaper debt and reach FID, which is why these markets are so elemental to accelerating the industry, even when they only count towards a portion of the project due to derating factors or strike-price repayments.
Speak to the Gridcog team if you're interested in modelling capacity markets for your energy projects.
