Germany, Netherlands emerging as BESS optimization, offtake deal hotspots

The BESS dealmaking landscape in Europe has evolved dramatically over the past four to five years, driven by diminishing battery pack costs and the emergence of stackable revenue streams in mature markets, Pexapark said in a new brief. Germany and Netherlands have emerged as hotspots for optimization and offtake, after Great Britain’s convincing lead for several years.

Navigating the fast-paced battery energy storage system (BESS) optimization market is a new challenge for the industry, given the growing number of players, the lack of standardization, and the speed of contractual innovation, Pexapark said in its BESS Brief. To support market participants, the firm has launched the BESS Deal Tracker, which captures the vast majority of publicly disclosed optimisation and offtake deals across European markets.

The first optimization agreements emerged five to six years ago in Great Britain – the maiden European country to develop an advanced utility-scale BESS market. Of note, the electricity systems of Great Britain and Northern Ireland are separate.

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 – Great Britain has led the way in deal activity. As of May 26, it accounted for nearly 45% of contracted capability, with almost 2.7 GW signed and 35 out of 63 deals captured by the said Deal Tracker.

Austria, Denmark, Greece, Bulgaria join market with first deals

However, 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, totaling 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,” said the brief’s author and the organization’s Senior Analyst and BESS Lead Apostolis Valassas.

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.

Evolving BESS duration, size

Most BESS offtake deals announced in 2020-2022 were predominantly for one-hour assets in Great Britain. 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, the decline in required capital expenditures (capex), and ongoing improvements in battery energy density have driven a transition toward longer-duration systems.

More megawatts were contracted in the first five months of this year than in 2024 in total

Indeed, the average battery duration in 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 75 MW across 20 deals with disclosed operating power in 2024 to 138 MW across 24 deals in 2025, as of May. It is again a function of falling capex requirements, the strategies to deploy more megawatts to capture multi-market value, and growing lender appetite to finance larger-scale BESS assets, according to the report.

Pexapark, which provides of price data, market intelligence, and advisory services for renewable energy, was one of the knowledge partners at this year’s edition of Belgrade Energy Forum, organized by Balkan Green Energy News.