Household electricity bills across Europe remain stubbornly high, yet on wholesale markets some generators are occasionally paid to consume power. This paradox stems from the rapid growth of renewables: solar and wind produce when the weather allows, not when consumers need it. In moments of oversupply, prices can even turn negative.
That is why large-scale battery storage systems, known as BESS (Battery Energy Storage Systems), have become indispensable. They absorb surplus energy and release it when demand peaks. Their strategic importance has triggered a genuine gold rush, with Italy and Germany at the forefront.
Italy: 300 GW of connection requests
By the end of 2025, requests for high- and extra-high-voltage storage connections submitted to Terna, Italy's transmission system operator, had reached 300 GW. Yet only 56 GW had received approval, and just 6.8 GW were ready to start construction. Installed storage capacity stood at 7.4 GW of power and 17.9 GWh of energy. Terna estimates that by 2030 Italy will need around 72 GWh, a figure expected to rise further in 2040 scenarios.
The 300 GW requested are not all imminent projects; many represent advance bookings on the future electricity system. In her State of the Union address on 16 September, European Commission President Ursula von der Leyen noted that in 2025 Europe installed more than 80 GW of new renewable capacity, while six times that amount is still waiting to connect. "We must invest faster… speed up grid connections… develop storage," she said.
Germany's even bigger battery rush
Germany exhibits the same dynamic in an even more extreme form. In 2025 alone, grid operators received 18,158 applications for large storage systems, totalling 573.5 GW. Connection offers covered 54.2 GW, but only 3.6 GW were actually in operation at medium voltage and above. The Bundesnetzagentur warns that some applications are duplicates: developers may submit the same project at multiple grid points and decide later where to build. In practice, what is being traded are options, not just batteries.
Storage becomes an asset class
The story of German company Kyon Energy illustrates how quickly financing has evolved. In January 2024, TotalEnergies acquired it from its three founders for 90 million euros upfront plus earn-outs. Kyon had developed 770 MW and had a pipeline of another 2 GW. At the time, co-founder Philipp Merk said financing large batteries was still difficult, so Kyon would build with its own capital and seek bank refinancing only once operational.
Two years later, the picture is different. In 2026, TotalEnergies sold a 50% stake in eleven Kyon projects (789 MW, 1,628 MWh) to Allianz Global Investors. In July, a project financing of around 440 million euros, underwritten by ten financial institutions, was announced. Structured tolling agreements—essentially leasing battery capacity—secure contracted revenues and make cash flows more predictable.
Value before construction
Stefano Endrizzi, a partner at MergersCorp, works on extraordinary finance deals in renewables. "How many players have the financial strength to build? Very few, perhaps one in fifty," he notes. Many, however, can secure land and develop a project "entirely on paper." Value is created even before construction begins. Large investment funds and EPC contractors prefer to acquire authorised projects and move straight into development—a way to buy time without navigating the labyrinth of permitting.
Italy's first battery auction attracts a wave of bids
Competition is already visible in Italy. At the first MACSE auction in September 2025, Terna awarded 10 GWh of capacity, all in lithium-ion batteries. Bids were more than four times the volume on offer, and the weighted average price fell to 12,959 euros/MWh per year, compared with a reserve premium of 37,000 euros—a drop of around 65%.
Capital is pouring in. In 2025, Modo Energy counted 82 BESS deals in Europe, up from 25 a year earlier, with a disclosed value of 8.6 billion euros. Reported debt rose from 1.4 to 6.1 billion euros; project finance accounts for half of all transactions.
Clampdown on phantom projects
The European Commission has acknowledged the problem. In its December 2025 grid connection guidelines, it identifies speculative applications and projects that fail to progress as a cause of long queues. It cites hoarding of grid capacity, multiple applications for the same project, and even cases where a connection is blocked to later sell the rights. Countermeasures include criteria linked to project maturity, deadlines, penalties, and financial deposits that can be forfeited if investment does not proceed.
Italy has already begun to adjust course. The Bollette decree of February 2026 introduced a reform to tackle the "virtual saturation" of the grid: capacity will have to be definitively allocated to authorised projects, and some connections obtained by immature schemes may lapse. The implementing decree from MASE was signed on 8 September; the final regulatory step from ARERA is still pending.
The paradox is that this clampdown comes after years of efforts to speed up procedures. The RED III directive set shorter deadlines for many permits and provided fast-track lanes for renewables and storage attached to generating plants. In Italy, procedures for stand-alone BESS have also been streamlined. Now, the challenge is to balance speed with selectivity—ensuring that the battery gold rush delivers real projects, not just paper promises.
