Inertia service could boost German BESS

A new grid inertia service in Germany could boost returns for battery energy storage system (BESS) projects by 1-2 percentage points. The service, called Momentanreserve, is procured by transmission system operators (TSOs) to maintain system frequency, but no assets are yet providing it due to a lack of prequalified inverters.

Philipp Hesel, a senior associate at Aurora Energy Research, provided the analysis to Energy-Storage.news. He stated that all market players are waiting for the first inverters to be certified for inertia provision. The service began procurement at the start of 2026.

Market design and revenue potential

Hesel highlighted two key advantages of the new market. BESS can provide inertia alongside other services without sacrificing those other revenue streams. Also, it is a premium scheme where TSOs publish a price, allowing any qualified provider to participate at that rate.

This structure enables asset operators to secure 10-year contracts with TSOs. Hesel called this the first bankable, long-term revenue stream in Germany without merchant risk. Marie-Sophie Braun, head of markets & regulatory affairs for developer Kyon, agreed operators should be able to stack inertia revenues on top of existing applications.

"Depending on the technical design and commercial optimization strategy, participation can often be achieved with limited impact on other revenue opportunities," Braun says.

A more conservative view

Not all estimates are as high. In a LinkedIn post, Ahmed Elbaz, head of BESS execution for Enpal, gave a more conservative projection. He estimated the boost to internal rate of return (IRR) at around 0.9 percentage points, based on a market coupon of about €10,000 per megawatt.

Elbaz addressed rumors of potential revenues reaching €25,000 per megawatt. He called that figure a theoretical ceiling that would require massive modifications to the revenue stack and a higher fault current from the power conversion system.

Grid-forming capabilities and access

The decision for developers today is whether to invest in grid-forming inverter capabilities. Elbaz argued the consideration is less about the IRR boost and more about securing future grid access.

Grid-forming capabilities are already mandatory for BESS projects connecting at the extra-high voltage level (220kV and 380kV) as of June 1, 2026. The requirement may soon extend to the 110kV level, though it is not yet obligatory there or at medium voltage levels.

A note of caution from abroad

The growth of BESS in such stability services is not guaranteed. In March, the UK's National Energy System Operator (NESO) awarded no contracts to battery storage projects in its Stability Market Round 2. This surprised the market and was attributed to modifications in eligibility criteria. The move sparked debate over whether it intentionally favored thermal plants or was a conservative approach to a critical service.

Braun emphasized that the successful development of the inertia market will depend on aligning technical capabilities, grid requirements, and commercial strategies. Both Hesel and Braun are scheduled to speak at the Energy Storage Summit Germany 2026 in Berlin.