IN Brief:
- Axpo has signed a ten year physical tolling agreement with Zelestra.
- The proposed four hour battery will provide 207MW of power and 830MWh of storage.
- Construction is planned for 2027, followed by commercial operation in 2028.
Axpo has signed a ten year physical tolling agreement covering a 207MW/830MWh battery energy storage project being developed by Zelestra in northeastern Italy.
The four hour installation is planned for Friuli-Venezia Giulia, one of Italy’s most industrialised regions. Construction is expected to begin in 2027, with commercial operation scheduled for 2028.
Under the arrangement, Zelestra will build, own, and operate the project, while Axpo will provide optimisation and flexibility services. Dispatch will take place within the limits of the grid connection, equipment warranties, operating procedures, and contractual obligations.
The toll provides Zelestra with long term revenue visibility while giving Axpo access to the physical operating capability of the asset. It is Axpo’s first battery tolling agreement in Italy.
A physical toll separates ownership of the infrastructure from responsibility for market dispatch. The asset owner receives contracted payments, while the tolling counterparty uses the battery within agreed technical parameters and retains exposure to specified market revenues and operating costs.
The allocation of charging energy, losses, degradation, availability, imbalance exposure, and maintenance risk will depend on the contract. Those details have not been disclosed, although they will determine how closely the incentives of the owner, optimiser, and equipment suppliers remain aligned.
At maximum output, the system would discharge for approximately four hours. That duration can support energy shifting across extended price periods while preserving access to balancing and reserve services requiring faster response.
The project increases Zelestra’s authorised Italian storage portfolio to 970MW. Before the tolling period can begin, the development must move through final equipment selection, grid interface design, procurement, civil works, commissioning, and operating approval.
Long term contracts move into battery finance
Battery projects have traditionally relied on combinations of wholesale price arbitrage and short term ancillary service revenue. Those markets can be attractive, but forecasting them across the operating life of an asset becomes more difficult as additional storage capacity increases competition.
A long term toll can reduce part of that uncertainty by converting variable merchant income into a more predictable contracted payment for the owner. The optimiser accepts greater market exposure in return for control over an asset capable of responding across several products.
The structure resembles arrangements used for conventional generation, gas storage, and other flexible infrastructure, although batteries introduce distinct operating constraints. Available energy changes continuously, charging creates an input cost, and every operating decision affects degradation and future capacity.
Optimisation software must weigh immediate market value against cycle limits, temperature, state of charge, warranty conditions, expected future prices, and contractual availability. Dispatching at the highest visible price will not always be the most valuable strategy if it prevents participation in a later service or accelerates cell ageing.
The four hour configuration provides greater energy depth than many early European batteries. It can sustain discharge through longer evening peaks or renewable shortfalls, while the additional cells increase project cost and require a commercial model that values duration as well as converter power.
Italy’s electricity system is adding renewable generation while retaining substantial regional differences in demand, network capability, and generation mix. Friuli-Venezia Giulia combines industrial load with cross border and domestic power flows, giving flexible assets several potential operating roles.
The battery’s network contribution will depend on its connection point and dispatch. Charging and discharging on the appropriate sides of a constrained boundary may reduce congestion, while identical operation in another location could add little local value or increase network loading.
Connection studies will need to cover maximum import and export, fault levels, harmonics, reactive power capability, voltage performance, protection coordination, and interactions with existing equipment. A 207MW charging load can be as significant to the network as a generator of the same rating.
Different commercial arrangements are already emerging across Europe. A German project being developed by MaxSolar and Saft uses an existing wind connection, while the Italian toll focuses on allocating market and revenue risk around a considerably larger standalone asset.
Storage performs several functions without relying on one universal source of income. Some projects are linked directly to renewable generation, others are contracted for network services, and many combine capacity payments with merchant optimisation.
The Axpo and Zelestra agreement establishes a ten year operating framework before construction begins. Delivery still depends on equipment availability, financing conditions, connection progress, and successful commissioning, but the project now has a defined commercial counterparty for its first decade of operation.
Its performance will provide a reference for other Italian developers assessing whether long term optimisation agreements can support large four hour batteries without placing every technical and market risk on the asset owner.
