Greek Battery Projects on Track for 12% Returns as Gas Volatility Reshapes Storage Economics

Europe’s persistently turbulent gas markets are reshaping the investment case for battery energy storage, with new analysis from Aurora Energy Research projecting internal rates of return of 12% annually for standalone battery projects in Greece.

The consultancy’s modelling shows that two-hour storage systems commissioned in 2027 are expected to outperform projects brought online in 2030 by roughly two percentage points. The gap is driven by elevated wholesale electricity prices — forecast at around €100 per megawatt-hour through 2029 — and wide intraday price spreads that storage operators can arbitrage.

Greece’s heavy reliance on imported gas amplifies the effect. Natural gas accounts for between 35 and 45 percent of the country’s electricity generation, leaving the market especially sensitive to supply disruptions and price spikes.

The outlook could tighten further if the European Union proceeds with its planned exit from Russian gas in September 2027. A full halt of deliveries via the TurkStream pipeline could push Greek gas prices up by an estimated 27%, providing an additional near-term tailwind for storage and renewable projects — though Aurora calculates the knock-on effect on project IRR at less than one percentage point.

Analysts caution that the current advantage may not last. Aurora’s Sokratis Al Zoampi noted that while recurring geopolitical crises are establishing a “new norm of elevated price volatility,” regulatory responses and growing storage capacity will gradually compress intraday spreads — which explains the softer return expectations projected for assets entering service later in the decade.

Source: pv Europe