The Commercial Opportunities for Utility-Scale Batteries in Germany

What is the “hottest battery market in Europe”? Germany can make a strong claim for the title. 

High levels of renewables deployment, high power price volatility, increasing negative pricing events, and growing grid constraints are all reasons why Germany is a likely pick to be the location of the “next big battery boom”.

Germany’s battery deployment over the past three years was very strong in the residential segment (from 1.6 GW deployed in early 2022 to 10 GW as of March 2025!). Now there’s a push for large-scale BESS deployment driven by both the physical need for and commercial opportunity from grid services. 

The current situation for utility-scale BESS in Germany is similar to where the Great Britain (GB) market was five years ago. Now, the GB market for utility-scale batteries has reached a very high level of saturation and maturity, and the BtM battery space is starting to garner increasing attention – especially as new regulations like P415 incentivise smaller-scale assets to also serve the grid (check out our P415 video to find out more about this). 

‍But back to Germany, with a possible utility-scale BESS-boom on the horizon, in this blog, I’ll cover the key commercial opportunities that large-scale batteries have right now, as well as emerging ones – and, of course, how you can model these in Gridcog.

Core Revenue Streams for Utility-Scale Batteries

Currently, utility-scale batteries in Germany can leverage the three most prevalent, well-established revenue streams: wholesale market arbitrage, ancillary services, and regulated tenders.

1. Wholesale Market Arbitrage

Batteries can optimise their operations by participating in Germany’s wholesale electricity markets, capitalising on price arbitrage opportunities. 

• Day-Ahead and intraday auctions provide opportunities to buy electricity when prices are low (or even negative) and sell when prices are high, generating profit from price differences.
• Intraday continuous trading allows batteries to dynamically adjust their dispatch strategy in response to real-time price movements, enhancing their arbitrage opportunities. Real time markets can have more price volatility than the Day-Ahead and Intraday Auctions.
• Inter-market physical and virtual trading allows traders to bid into one market (e.g., Day-Ahead), churn/unwind their position, and subsequently bidding into another market (e.g., Intraday Continuous) – benefitting from the price spread between markets at different gate closure times. 

For example, let’s imagine a battery that buys 1 MWh on the Day-Ahead market at 20 €/MWh for 3pm on the delivery day. Then, the delivery day comes around and the Intraday Continuous market price actually becomes 100 €/MWh (maybe there were some unexpected weather changes and much less wind than initially expected). The battery now sells the 1 MWh into the Intraday Continuous market and makes 80 €/MWh, so 80€ profit. 

Note: These revenue examples depend on many other market participation assumptions, battery optimisation assumptions (such as forecasting accuracy or uncertainty), and other project-specific factors such as grid connection limits, battery depth of discharge, daily cycles, round-trip efficiency... reach out if you’d like to find out more! 

2. Ancillary Services

All electricity systems require rapid-response services to maintain grid stability, and batteries play a crucial role in delivering these services. Germany is no exception. Below are some of the key ancillary services markets BESS can participate in Germany:

• Frequency Containment Reserve (FCR): Batteries must respond within 30 seconds to stabilise grid frequency deviations, providing an essential service to the transmission system operator (TSO). This service is symmetric, i.e., in both an upwards and downwards direction, so the battery needs to have sufficient headroom or footroom to deliver in both directions.
• Automatic Frequency Restoration Reserve (aFRR): This service, activated within five minutes, helps restore grid balance by adjusting power supply and demand. This service is asymmetric, i.e., split by service direction (Up and Down) and includes both capacity and activation prices (for the energy that is shifted to deliver the contract).
• Manual Frequency Restoration Reserve (mFRR): The main difference between mFRR and aFRR is in the name: mFRR is activated manually by the TSO and usually serves as a third defence, getting activated after 12.5 minutes. This service is also split by service direction (Up and Down). 

For example, a 3 MW/2hr battery might bid 2 MW into aFRR Up (capacity) at a price the battery deems profitable (pay-as-bid). It then has to reserve these 2 MW over the entire 4-hour product duration period, in case the TSO activates the bid and the battery has to discharge. If this is the case, the battery will receive additional payments at the value of aFRR Up activation (energy) prices for every kWh actually discharged. 

Check out my more detailed videos on “Key ancillary frequency services in Europe” and “Modelling a battery in FCR and aFRR in Germany”. 

3. Tenders and Regulated Contracts

Germany’s TSOs are actively tendering large-scale battery projects to improve grid stability. These initiatives include:

• Grid Boosters (Storage as Transmission Asset - SATA): These large-scale batteries are contracted to help reduce grid congestion and support network stability.
• Innovation Tenders: Similar to the German BNetzA solar tenders, innovation tenders support co-located storage with renewable energy, offering financial incentives for new deployments via a market premium (or wholesale “floor price”). In the September 2024 round, for example, around 587 MW of assets (this is the total of both solar and storage in the hybrid plants) received an innovation surcharge of 6.74–7.45 c/kWh. 

These revenue examples depend on many other market participation assumptions, battery optimisation assumptions (such as forecasting accuracy or uncertainty), and other project-specific factors such as grid connection limits, battery depth of discharge, daily cycles, round-trip efficiency... Reach out if you’d like to find out more! 

Emerging Business Cases for Utility-Scale Batteries

Beyond established markets, new opportunities are developing in Germany, offering additional revenue potential or revenue risk management for batteries, which can make project financing easier. 

1. Tolling Agreements and Power Supply Contracts

These agreements secure revenues for batteries and can be seen as a pendant to solar’s PPAs. Battery operators can secure long-term revenue stability by entering these contracts with utilities and corporate energy buyers, allowing third parties to use battery storage capacity in exchange for fixed payments, reducing exposure to market volatility. Importantly, the increased security in revenue streams aims to facilitate debt financing, which is hoped to in turn accelerate BESS deployment. 

2. Potential Capacity Market and Long-Term Flexibility Contracts

Germany does not currently have a structured capacity market, but discussions are ongoing. If implemented, a capacity market could provide additional revenue certainty for batteries by compensating them for their availability to supply power during periods of high demand. Similar to the above, this revenue stream is more secure than a purely merchant model. 

It is uncertain what shape or form this market will take on. The previous government mentioned four options: a) a capacity hedging mechanism, b) a decentralised capacity market, c) a centralised capacity market or d) a combined capacity market. We will have to see which direction the new government will go. 

3. Cross-European Balancing Market Participation (MARI & PICASSO)

Germany’s integration into European balancing platforms such as MARI (mFRR platform) and PICASSO (aFRR platform) presents significant commercial opportunities:

• Batteries can benefit from higher activation rates by bidding into a broader European market, increasing their chances of dispatch.
• Price arbitrage across borders enables batteries to respond to balancing needs in countries where demand and prices are higher.
• Smaller batteries can participate more easily through international aggregation, unlocking new revenue streams beyond national markets.

As more European countries integrate their balancing markets, cross-border trading of flexibility will become a crucial element of revenue optimisation for batteries in Germany.

4. New markets: Reactive Power and Local Grid Services

As grid congestion increases, newer markets such as the reactive power market, known as “Blindleistung”, or the super-fast “Momentanreserve” are gaining attention. Although the regulatory framework is still evolving, these markets could provide new income streams for batteries. Additionally, as distribution system operators (DSOs) seek decentralised flexibility, local congestion management services are expected to emerge, allowing batteries to play a greater role in supporting regional grid stability. This type of revenue stream is well underway and becoming standardised in the UK via the DNO flex services. 

Navigating Complexity with Gridcog

Understanding and modelling the commercial opportunities for batteries in Germany requires sophisticated techno-economic analysis. Gridcog enables anyone looking at different battery revenue strategies (project developers, investors, asset owners, etc) to simulate how a battery would operate under different market conditions, optimising dispatch strategies, revenue projections, and risk assessments.

With Gridcog, users can evaluate different value stacks and market participation strategies to determine the most profitable pathways for their assets. By leveraging powerful simulations, stakeholders can make informed investment decisions and navigate the complexities of Germany’s evolving energy landscape.

If you’re looking to find out more about this topic, check out this Thinking Energy video below: https://www.gridcog.com/videos?wchannelid=gyr1lozdli&wmediaid=c5rayf61as 

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