Europe’s battery operators are set for one of their most lucrative winters yet as short-term power-price swings approach levels last seen during the 2022 energy crisis.

Gas prices are trading near their highest in four years as the war in Iran roils energy markets, making electricity more expensive when gas-fired plants are needed to meet demand. At the same time, Europe’s growing fleet of wind and solar farms is increasingly pushing prices sharply lower when renewable output is abundant. The result is a widening gap between the highest and lowest electricity prices within a day.

Europe has spent about $40 billion on batteries since the last crisis, leaving a vastly expanded fleet poised to profit from those swings. This winter could also show whether that expansion is large enough to let the batteries deliver on their promise: curbing price spikes and ultimately reducing costs for consumers.

In the UK, Europe’s biggest battery market, the average daily gap between the highest and lowest priced hours soared 80% from a year ago to about £123 per megawatt-hour in September. The swings are set to become even more pronounced in the coming months.

“Cooler weather and unpredictable wind levels are already driving bigger swings in daily power prices, which creates a much better environment for batteries,” said Paul Sheffield, chief commercial officer at Drax Group Plc, a UK power generator ramping up investments in the sector.

Batteries could also help address a wider structural problem. As more renewables are built and influence the market, the need for flexible capacity also grows. As Europe shies away from fossil fuels and new nuclear plants take many years to build, batteries are increasingly stepping in to fill that role. Everyone from energy majors to utilities and infrastructure funds is piling in.

Some are already profiting. Harmony Energy Ltd., which manages 10 battery sites across the country, saw September earnings at about £4 million ($5.3 million) across the fleet, the most ever and 62% above the average so far this year, according to founder Peter Kavanagh.

The industry has also become more exposed to wholesale power prices. Historically, operators earned most of their money from so-called ancillary services, where batteries are paid to help balance the grid and maintain its frequency. But that market has become saturated as capacity expanded. Wholesale trading accounted for almost 73% of the industry’s UK revenue in the 12 months through August, compared with less than 20% in 2022, according to data from industry consultant Modo Energy Ltd.

The expansion in capacity is intensifying competition for the same price swings, creating what the industry calls cannibalization: as more batteries enter the market, each one can potentially earn less.

Kavanagh said that the UK market has become more crowded as capacity surged, putting pressure on revenue per battery. Even so, it remains large enough to absorb significantly more storage, he said. The UK’s utility-scale battery capacity will rise to an estimated 10.4 gigawatts this year from about 2 gigawatts in 2022, according to BloombergNEF.

UK’s rapid growth has been replicated elsewhere in Europe. German utility-scale battery capacity will rise to about 4.6 gigawatts this year from 1.2 gigawatts in 2022, and France’s will quadruple to 1.2 gigawatts.

Modo Energy this month increased its forecast for 2027 revenue for a two-hour German battery by about 20% from its July estimate, largely because of higher gas prices. The outlook now hinges partly on the Middle East conflict, Europe’s ability to refill its low gas stores and the severity of winter cold snaps. “The UK and the rest of Europe will be more susceptible to volatility,” Kavanagh said.