Battery Storage’s Biggest Challenge May No Longer Be Technology, But Market Design

Battery storage financing is entering a new phase. At Balkan Battery Day 2026, discussions showed that while battery technology has matured rapidly, financing projects has become increasingly dependent on revenue visibility, optimisation strategies and market design rather than hardware alone.

Moderated by Iulian Harpa, the panel brought together experts from development banks, legal advisory, optimisation platforms and consulting, including Pavle Milekic (EBRD), Alex Blomfield, Elena Kalogeropoulou (Optimus Energy), Kristofer Fröjd (Decade Energy) and Loukas Botsis (Baringa).

Although each speaker approached the topic from a different perspective, they all arrived at the same conclusion: successful battery projects are increasingly built around predictable cash flows rather than technology specifications. 

Banks Finance Revenue, Not Batteries

One of the clearest messages came from Pavle Milekic of the EBRD, who explained that lenders are not financing battery containers or individual technologies.

They finance future cash flows.

That distinction is particularly important for battery storage because project revenues vary significantly between markets.

A project in Greece faces a very different commercial environment from one in Romania or Serbia due to differences in:

• balancing markets
• ancillary services
• regulatory frameworks
• taxation
• renewable penetration
• market volatility

Unlike solar or wind projects, where production profiles can be forecast with relatively high confidence, battery revenues depend on market evolution, operational decisions and changing regulatory conditions.

This creates a more sophisticated financing environment.

Project Finance Is Becoming Operational

Alex Blomfield, Partner Clyde & Co highlighted how battery storage is fundamentally changing traditional project finance.

Unlike conventional renewable assets, batteries require continuous operational management throughout their lifecycle.

As a result, financing now extends well beyond EPC contracts and equipment specifications.

Lenders increasingly examine:

• degradation warranties
• cycling limitations
• augmentation rights
• EMS software integration
• dispatch strategies
• interface risks between contractors

The contractual structure of battery projects is therefore becoming more complex, involving technology suppliers, software providers, integrators and optimisation companies operating together.

Project finance increasingly resembles operational risk management.

Optimisation Is Becoming a Core Asset

Another major theme came from Elena Kalogeropoulou of Optimus Energy, who explained how battery profitability increasingly depends on optimisation rather than simple charging and discharging.

Modern battery assets operate simultaneously across:

• day-ahead markets
• intraday trading
• balancing markets
• reserve services
• multiple market positions

Small operational decisions, such as cycling frequency, resting periods or state-of-charge management, can significantly influence project economics over their lifetime.

The discussion reinforced an important market trend: competitive advantage increasingly comes from operating battery assets intelligently rather than simply owning them.

Infrastructure Investors Require Operational Excellence

Kristofer Fröjd of Decade Energy compared today’s battery sector to the evolution of professional sports teams.

Early battery projects generated exceptionally high returns, allowing investors to absorb operational inefficiencies.

As markets mature, however, margins naturally compress.

According to Fröjd, some early battery projects in Sweden achieved unlevered returns of 30-40%. Today, those returns are significantly lower, placing greater emphasis on optimisation, operational discipline and cost management.

The sector is gradually evolving from a speculative growth market into an infrastructure market where execution quality determines long-term performance.

Developers increasingly require:

• diversified revenue strategies
• advanced optimisation
• long-term operational planning
• market analytics
• strong ecosystem partnerships

Hybrid Revenue Models Are Emerging

Looking ahead, Loukas Botsis of Baringa described how financing structures are also changing.

Instead of relying exclusively on merchant revenues, future battery projects are increasingly expected to combine:

• tolling agreements
• floor mechanisms
• spread hedges
• cross-border hedging
• co-located renewable generation
• partial merchant exposure

These hybrid revenue structures aim to balance upside potential with the level of certainty required by lenders.

Several examples from Romania and other European markets illustrated how developers are already combining contracted revenues with merchant optimisation strategies.

Regulation Still Shapes Bankability

Despite growing investor appetite, regulation remains one of the biggest variables affecting project finance.

Several speakers noted that battery regulation across Southeast Europe continues to evolve, creating uncertainty for both developers and lenders.

Alex Blomfield referred to Romania’s previous double charging of grid fees for battery charging and discharging as an example of how relatively small regulatory details can significantly affect project economics.

For financiers, confidence in future market mechanisms is often just as important as today’s regulatory framework.

Battery Storage Is Becoming an Ecosystem Business

The discussion concluded with a broader observation.

Battery storage is no longer simply a technology business.

Successful projects increasingly depend on the coordination of an entire ecosystem involving:

• technology providers
• software platforms
• optimisation specialists
• traders
• legal advisers
• grid operators
• regulators
• financial institutions

As Europe’s storage market matures, competitive advantage will increasingly come from understanding how these elements work together.

The conversation around battery storage is therefore shifting from technology alone to the ability to structure, optimise and finance projects that remain resilient throughout their operational lifetime.