Which markets have seen the most dealmaking activity and why?
It should come as no surprise that the first optimisation agreements emerged five to six years ago in GB – the maiden European country to develop an advanced utility-scale BESS market. Spurred by multiple revenue stacking opportunities available to BESS – from the dynamic frequency response product suite to wholesale arbitrage, the Balancing Mechanism, imbalance, and inertia services – GB has led the way in deal activity. As of 26 May 2025, the country accounted for nearly 45% of contracted capacity, with almost 2.7 GW signed and 35 out of 63 deals captured by Pexapark’s BESS Deal Tracker.
However, activity is no longer confined to GB. Driven by strong fundamentals and a sheer need for flexibility, Germany is emerging as a dealmaking hotspot. In the first five months of 2025 alone, 11 BESS deals were announced in Germany, totalling 540 MWh. With ancillary services defying saturation predictions and new revenue streams – such as inertia – coming up, we expect continued momentum in Europe’s largest and most liquid power market. That said, the German optimisation market is still at an early development stage. Lenders are not yet fully comfortable, and most deals have been merchant-based and short-term.
Beyond GB and Germany, the Netherlands stands out with four large-scale agreements announced in the past year. In another sign of the market’s move out of infancy, several markets – including Austria, Denmark, Greece, and Bulgaria – recently recorded their first-ever BESS optimisation deals.
How has the market evolved in terms of duration and size?
Most BESS offtake deals announced in 2020-2022 were predominantly for one-hour assets in GB. At the time, frequency response – where shorter-duration batteries excel – dominated the revenue stack and shaped asset design.
A lot has changed since then. Rising wholesale market volatility driven by increasing renewable penetration, declining CAPEX, and ongoing improvements in battery energy density have driven a transition toward longer-duration systems.
Indeed, the average duration of deals tracked by Pexapark has increased from just one hour in 2020 to 2.3 hours in 2025, signalling a broader strategic shift from solely focusing on ancillaries to trading across the whole stack.
Deal sizes are also growing exponentially, from an average deal size of 75 MW across 20 deals with disclosed capacity in 2024 to 138 MW across 24 deals in 2025 (as of May). This is again a function of falling CAPEX, strategies to deploy more MWs to capture multi-market value, and growing lender appetite to finance larger-scale BESS assets.
What types of deal structures have taken shape in the market?
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This article is Part 1 of a 4 part BESS Brief series. Click here to read the next article: ‘BESS Financing is Entering a New Phase’
