Battery storage turns bankable as Switzerland scales solar

Battery energy storage systems in Europe are securing multi-year contracts and multiple revenue streams that lenders use when assessing financing. Those arrangements are drawing attention as Switzerland plans to expand solar capacity and phase out nuclear plants in the 2030s.

In Germany, tolling agreements allow battery owners to lease capacity to traders, utilities or renewable generators that need to cover imbalance risk or avoid penalties. Contracts typically run five to seven years or longer and provide a steady fee for availability, improving access to project debt.

Spain has held auctions for a capacity market that pay battery operators for being on standby to supply power during critical shortages rather than for continuous dispatch. The transmission operator set a reliability benchmark equivalent to roughly 1.5 hours of shortage per year. Actual exposure reached 2.41 hours in 2025 and could rise toward six hours in future scenarios. Winning an auction secures a long-term contract for availability.

Italy’s MACSE program provides state-backed payments for storage readiness while allowing operators to pursue additional income from arbitrage and grid services. MACSE-supported capacity in Italy rose from about 1.1 GWh to more than 7 GWh in two years.

Across these models, revenue stacking is common: projects combine capacity payments, tolling or leasing fees, arbitrage, frequency response, inertia services and black-start readiness. Several standby and ancillary service roles require batteries to be available rather than cycled continuously, which reduces wear and can extend useful life to 15–20 years compared with more intensive arbitrage operations.

Long-term contracts are a central factor in financeability. Predictable multi-year revenue streams let lenders assess debt serviceability and provide lower-cost capital, enabling larger projects. Investors and developers still face three main risk categories: market risk about competition and future price levels over five to ten years; financial risk tied to cash-flow stability and debt servicing; and operational risk related to equipment performance, downtime and maintenance.

Technology choices affect revenue access and operational risk. Grid-forming inverters can set network parameters and support inertia and black-start services; grid-following systems generally cannot. Many batteries installed three to four years ago lack grid-forming capability. Lithium iron phosphate chemistry is widely used for scalability and lower cost and can produce project returns in the mid-teens to low twenties percent under favorable economics. Investors evaluate alternatives with longer life or lower degradation and require certifications for safety, environmental compliance and suitability for European regulations and logistics.

Operational factors that affect uptime and degradation include supplier selection, warranty terms, spare-parts availability and the quality of operations and maintenance. Projects with long-term availability contracts still require flexibility to add revenue streams or integrate technological upgrades over their lifetime.

Switzerland’s plans to scale solar generation and retire nuclear capacity in the 2030s increase demand for flexible grid assets. Tolling agreements, capacity auctions and state-backed readiness payments are examples of contractual mechanisms used in neighboring countries to create predictable income for storage projects.