Record curtailment and temperatures in Europe indicate clear need for energy storage

Europe generated 614 TWh of electricity from hydropower in 2025 and added 1533 MW of new hydropower capacity, including 725 MW of pumped storage. Total installed hydropower capacity now stands at 263 GW, with pumped storage accounting for 57 GW.

The region’s power system is entering a decisive phase as rapidly expanding wind and solar generation increases pressure on grids and exposes shortages in long-duration electricity storage and non-fossil flexibility. Solar generation alone increased by 16% in 2025 compared to the previous year. However, grid congestion, renewable curtailment and negative electricity pricing are increasingly limiting the full benefits of renewable energy deployment.

Countries including the Netherlands, Germany, Sweden, Spain, Belgium, and France recorded more than 500 hours of negative electricity pricing in 2025, driven largely by transmission bottlenecks, insufficient system flexibility and periods of renewable oversupply.

At the same time, Europe’s continued dependence on gas-fired power generation has heightened concerns around energy security, affordability and strategic dependence amid geopolitical instability and volatile fuel prices. This has accelerated calls for greater European energy sovereignty, placing electrification, storage and grid flexibility at the centre of policy discussions.

Pumped storage, the world’s dominant large scale energy storage technology, is increasingly seen as a critical solution to these challenges. Europe’s identified development pipeline now includes 59 GW of pumped storage projects alongside 8 GW of conventional hydropower.

Momentum accelerated in 2025 with the launch of the Paris Pledge, jointly co-ordinated by IHA and Eurelectric and supported by more than 50 organisations. The initiative called for urgent action to unlock Europe’s pumped storage pipeline through faster permitting, revenue stabilisation mechanisms and stronger recognition of long-duration electricity storage in EU policy frameworks.

Further structural reforms are expected through the European Commission’s proposed Grids Package, which aims to strengthen EU-level grid planning, prioritise cross-border ‘energy highways’ and accelerate permitting timelines for storage projects. If implemented, the reforms could significantly reduce delays that have historically constrained hydropower and pumped storage development.

Several European countries advanced major hydropower and pumped storage projects during 2025. Austria officially opened the 480 MW Limberg III pumped storage plant, while Germany approved the 300 MW Riedl pumped storage facility near Passau. Lithuania continued expansion of the Kruonis pumped storage hydroelectric plant, and Estonia launched an international tender for its first pumped storage project at Paldiski. Norway approved its largest greenfield hydropower development in six decades, while Spain commissioned the first pumping station at the Valdecañas pumped storage project.

Hydropower’s strategic role was further highlighted by the large scale Iberian blackout affecting Spain and Portugal in April 2025, which demonstrated the importance of hydropower plants with black-start capability in restoring grid stability and electricity supply.

Despite growing recognition of hydropower’s system value, major barriers remain. Lengthy and complex permitting procedures continue to delay projects across Europe, while regulatory uncertainty around license renewals and market structures discourages investment in modernisation and expansion. Existing electricity markets also often fail to fully remunerate critical hydropower services such as inertia, frequency regulation and black-start capability.

Industry stakeholders argue that clearer recognition of long-duration electricity storage, alongside mechanisms that provide long-term revenue visibility, will be essential to unlocking private capital and accelerating deployment. The UK’s proposed cap-and-floor scheme for long-duration storage has emerged as one of the strongest examples of how targeted policy support can rapidly stimulate investor confidence. Europe’s mature hydropower fleet, combined with its industrial capabilities and domestic supply chains, provides a strong foundation for delivering greater system resilience, lower curtailment costs and enhanced energy independence as the continent’s energy transition accelerates.

Malcolm Turnbull, IHA President, commented: “As electricity systems become more dependent on variable renewables, and geopolitical tensions make reliance on imports more challenging, countries are increasingly recognising the importance of flexibility, long-duration storage and resilient domestic generation. Hydropower and pumped storage are uniquely positioned to provide these services at scale.”

Eddie Rich, IHA CEO, said: “This year's Outlook tells a clear story. Pumped storage will definitely double globally in next 15 years. But we can and must go further. If the right policy changes are made, it should triple and if governments treat water batteries and chemical batteries equally, the industry will quadruple capacity by 2040.”

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