Show Notes
Battery storage in Germany has a grid connection problem: far more projects want to connect than the grid can take, so Germany has scrapped first come, first served and moved to a maturity-based allocation scheme that rewards projects that are ready to build. But for 50Hertz and Germany's other transmission system operators, connecting BESS is only half the challenge. Merchant batteries could push grid congestion costs and grid fees up, or bring them down. Wilhelm Kiewitt, Head of Energy Economics at 50Hertz, one of Germany's four transmission system operators, joins Ed Porter to explain how a grid operator sees the battery boom from the inside. They cover: Why Germany scrapped first come, first served for grid connections, and how the new maturity-based scheme scores projects on land, permits and finance instead of speed. How 50Hertz went from a handful of transmission connection requests a year to more than 100, and why even the 14GW of batteries already holding grid reservations may not all get built. Should batteries pay more towards wider grid upgrades? Why Wilhelm says no, and why data centres are a different case. Dynamic grid fees or smaller bidding zones? Where Wilhelm and Ed disagree on the cleanest way to send batteries to where the grid needs them. Could merchant batteries cut Germany's roughly 4 billion euros a year in congestion management costs, or push them up? Building in Germany? Ask Ko, Modo Energy's AI analyst, what a battery earns there today, how it compares with wind and solar, and where power prices are heading. Try for free. Transcript available here Themen: Batteriespeicher, Netzanschluss, Reifegradverfahren, Netzentgelte, Engpassmanagement, 50Hertz
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Battery storage in Germany has a grid connection problem: far more projects want to connect than the grid can take, so Germany has scrapped first come, first served and moved to a maturity-based allocation scheme that rewards projects that are ready to build. But for 50Hertz and Germany's other transmission system operators, connecting BESS is only half the challenge. Merchant batteries could push grid congestion costs and grid fees up, or bring them down. Wilhelm Kiewitt, Head of Energy Economics at 50Hertz, one of Germany's four transmission system operators, joins Ed Porter to explain how a grid operator sees the battery boom from the inside. They cover: Why Germany scrapped first come, first served for grid connections, and how the new maturity-based scheme scores projects on land, permits and finance instead of speed. How 50Hertz went from a handful of transmission connection requests a year to more than 100, and why even the 14GW of batteries already holding grid reservations may not all get built. Should batteries pay more towards wider grid upgrades? Why Wilhelm says no, and why data centres are a different case. Dynamic grid fees or smaller bidding zones? Where Wilhelm and Ed disagree on the cleanest way to send batteries to where the grid needs them. Could merchant batteries cut Germany's roughly 4 billion euros a year in congestion management costs, or push them up? Building in Germany? Ask Ko, Modo Energy's AI analyst, what a battery earns there today, how it compares with wind and solar, and where power prices are heading. Try for free. Transcript available here Themen: Batteriespeicher, Netzanschluss, Reifegradverfahren, Netzentgelte, Engpassmanagement, 50Hertz
Battery storage investment in Europe now depends less on whether the revenue exists and more on how it gets financed. With Italy's first MACSE auction won largely by a single player while Germany's fully merchant market is pushing lenders towards shorter, tighter debt, investors have to work out what makes a battery project bankable without a long-term contract. Grace Kankindi, Deputy Head of Investment Management at Aquila Clean Energy, joins Ed Porter to walk through how she assesses battery investments across multiple European markets. They cover: - Why the first MACSE auction worked as designed, even though prices cleared low and one bidder took most of the contracts, and what new anti-concentration rules could change in round two. - What happens to Italian battery projects that miss out on MACSE, from tolling to the capacity market, and why Italian lenders still won't back fully merchant projects. - How lenders are financing merchant batteries in Germany, with debt terms of around 3 to 7 years instead of 15 to 20, and cash sweeps to pay debt down faster. - The risk investors most often underprice, the optimiser, and why the lowest profit share isn't always the cheapest deal as German two-hour battery revenues fall. - Why timing decides returns in smaller markets like Lithuania and Finland, why Poland is next on Grace's radar, and why she thinks contracted revenue is riskier than it looks. Want to stress-test how a German battery's revenues hold up as saturation sets in? Ko, Modo Energy's AI analyst, is built for exactly these questions. Transcript available here Chapters 0:00 Intro 1:22 MACSE Auction Results and What People Got Wrong 2:38 Italy Battery Storage Investment Beyond MACSE 5:18 MACSE vs Merchant by Italian Price Zone 6:29 Battery Revenue Strategies Without a MACSE Contract 10:05 Battery Project Finance: MACSE, Tolling and Merchant 12:12 Second MACSE Auction and Anti-Concentration Rules 13:58 Merchant Battery Financing in Germany 16:14 What Lenders Want From a Merchant BESS Project 18:38 German Battery Revenue Saturation 20:27 Battery Optimiser Risk and Profit Share 23:12 Dynamic Grid Fees in Germany 25:25 Diversifying a Battery Portfolio Across 12 Markets 28:13 Lithuania and Finland Battery Storage Markets 30:13 Where to Invest Next: Poland 31:12 Best Performing Battery Assets in 10 Years 33:46 The Hidden Risk in Contracted Battery Revenue
Battery storage investment in Europe now depends less on whether the revenue exists and more on how it gets financed. With Italy's first MACSE auction won largely by a single player while Germany's fully merchant market is pushing lenders towards shorter, tighter debt, investors have to work out what makes a battery project bankable without a long-term contract. Grace Kankindi, Deputy Head of Investment Management at Aquila Clean Energy, joins Ed Porter to walk through how she assesses battery investments across multiple European markets. They cover: - Why the first MACSE auction worked as designed, even though prices cleared low and one bidder took most of the contracts, and what new anti-concentration rules could change in round two. - What happens to Italian battery projects that miss out on MACSE, from tolling to the capacity market, and why Italian lenders still won't back fully merchant projects. - How lenders are financing merchant batteries in Germany, with debt terms of around 3 to 7 years instead of 15 to 20, and cash sweeps to pay debt down faster. - The risk investors most often underprice, the optimiser, and why the lowest profit share isn't always the cheapest deal as German two-hour battery revenues fall. - Why timing decides returns in smaller markets like Lithuania and Finland, why Poland is next on Grace's radar, and why she thinks contracted revenue is riskier than it looks. Want to stress-test how a German battery's revenues hold up as saturation sets in? Ko, Modo Energy's AI analyst, is built for exactly these questions. Transcript available here Chapters 0:00 Intro 1:22 MACSE Auction Results and What People Got Wrong 2:38 Italy Battery Storage Investment Beyond MACSE 5:18 MACSE vs Merchant by Italian Price Zone 6:29 Battery Revenue Strategies Without a MACSE Contract 10:05 Battery Project Finance: MACSE, Tolling and Merchant 12:12 Second MACSE Auction and Anti-Concentration Rules 13:58 Merchant Battery Financing in Germany 16:14 What Lenders Want From a Merchant BESS Project 18:38 German Battery Revenue Saturation 20:27 Battery Optimiser Risk and Profit Share 23:12 Dynamic Grid Fees in Germany 25:25 Diversifying a Battery Portfolio Across 12 Markets 28:13 Lithuania and Finland Battery Storage Markets 30:13 Where to Invest Next: Poland 31:12 Best Performing Battery Assets in 10 Years 33:46 The Hidden Risk in Contracted Battery Revenue
Batteries earn volatile revenues, but lenders want fixed ones. Financial swaps that trade a fixed payment for floating battery revenue, from day-ahead spreads to full revenue indices, are how that gap is starting to close. Chris Kennedy, Founder & Managing Director at Miranda Energy, joins Ed Porter in Berlin to explain how battery swaps actually work, where basis risk hides, and why he treats power volatility as an asset class in its own right. They cover: - Why basis risk is the most misunderstood part of day-ahead TB swaps, and how round-trip efficiency, degradation schedules, payout caps and availability adjustments bring the swap closer to what the asset really earns. - How day-ahead swaps are evolving into total revenue swaps benchmarked to broader battery revenue indices like Modo Energy's, and why capturing more of the revenue stack cuts basis risk further. - Why fixed-for-floating battery swaps borrow the ISDA playbook from interest rate markets, and how a TB swap let a German solar portfolio hedge the duck curve without building a battery. - Why Chris sees volatility, not the depreciating battery, as the asset to own, and how ten-year TB swaps, credit-light offtakes for BESS SPVs and 245MW of fixed offtakes across Germany, Poland and Hungary set Amaranth Energy apart from the big trading houses. - Chris's contrarian view: the market puts too much weight on backwardation in the TB forward curve, when spreads may prove directionally persistent as solar continues to outpace flexibility. Want to go deeper on battery revenue swaps and indices? Sign up for free to Ko, Modo Energy's AI analyst, at modoenergy.com Exploring a battery revenue swap? Talk to our team about using Modo Energy indices in your contracts. Chapters: 0:00 Intro 1:19 Basis Risk in Day-Ahead Battery Swaps 3:42 Unlimited Liability, Payout Caps and Availability 6:54 Total Revenue Swaps and Battery Revenue Indices 8:21 Battery Offtakes: Profit Shares, Floors and Tolls 9:55 Fixed-for-Floating Swaps and ISDA 11:21 German Solar, Negative Rates and the Duck Curve 13:23 Virtual Battery Hedge for Solar Portfolios 16:48 Three Use Cases for TB Swaps 17:27 Power Volatility as an Asset Class 19:57 Prop Shops vs Trading Houses 22:16 Credit-Light Offtakes for BESS SPVs 23:52 Options, Volga and Exotic Battery Hedges 26:22 Poland, Hungary and Emerging BESS Markets 29:48 Spain and Negative Power Prices 31:44 The Ideal Swap Counterparty 33:31 Contrarian View
Batteries earn volatile revenues, but lenders want fixed ones. Financial swaps that trade a fixed payment for floating battery revenue, from day-ahead spreads to full revenue indices, are how that gap is starting to close. Chris Kennedy, Founder & Managing Director at Miranda Energy, joins Ed Porter in Berlin to explain how battery swaps actually work, where basis risk hides, and why he treats power volatility as an asset class in its own right. They cover: - Why basis risk is the most misunderstood part of day-ahead TB swaps, and how round-trip efficiency, degradation schedules, payout caps and availability adjustments bring the swap closer to what the asset really earns. - How day-ahead swaps are evolving into total revenue swaps benchmarked to broader battery revenue indices like Modo Energy's, and why capturing more of the revenue stack cuts basis risk further. - Why fixed-for-floating battery swaps borrow the ISDA playbook from interest rate markets, and how a TB swap let a German solar portfolio hedge the duck curve without building a battery. - Why Chris sees volatility, not the depreciating battery, as the asset to own, and how ten-year TB swaps, credit-light offtakes for BESS SPVs and 245MW of fixed offtakes across Germany, Poland and Hungary set Amaranth Energy apart from the big trading houses. - Chris's contrarian view: the market puts too much weight on backwardation in the TB forward curve, when spreads may prove directionally persistent as solar continues to outpace flexibility. Want to go deeper on battery revenue swaps and indices? Sign up for free to Ko, Modo Energy's AI analyst, at modoenergy.com Exploring a battery revenue swap? Talk to our team about using Modo Energy indices in your contracts. Chapters: 0:00 Intro 1:19 Basis Risk in Day-Ahead Battery Swaps 3:42 Unlimited Liability, Payout Caps and Availability 6:54 Total Revenue Swaps and Battery Revenue Indices 8:21 Battery Offtakes: Profit Shares, Floors and Tolls 9:55 Fixed-for-Floating Swaps and ISDA 11:21 German Solar, Negative Rates and the Duck Curve 13:23 Virtual Battery Hedge for Solar Portfolios 16:48 Three Use Cases for TB Swaps 17:27 Power Volatility as an Asset Class 19:57 Prop Shops vs Trading Houses 22:16 Credit-Light Offtakes for BESS SPVs 23:52 Options, Volga and Exotic Battery Hedges 26:22 Poland, Hungary and Emerging BESS Markets 29:48 Spain and Negative Power Prices 31:44 The Ideal Swap Counterparty 33:31 Contrarian View