IN Brief:
- The Hilgermissen battery will provide 99MW of power and 297MWh of energy capacity.
- Centrica Energy will optimise the three-hour asset across German wholesale and ancillary-services markets.
- Engineering and procurement are planned for 2026, followed by construction in 2027 and operation in 2028.
Zelestra and Centrica Energy have signed a physical tolling agreement for the 99MW/297MWh Hilgermissen battery energy storage system in Lower Saxony, establishing a commercial route into Germany’s wholesale and ancillary-services markets before construction begins.
Zelestra will develop, build, own, and operate the standalone battery, while Centrica Energy will trade and optimise the contracted capacity. Engineering and procurement are planned during 2026, construction is scheduled for 2027, and full operation is targeted for the second half of 2028.
The three-hour plant will be dispatched across Germany’s day-ahead and intraday markets, alongside ancillary services used to support frequency and system balance. The companies have not disclosed the contract length, revenue-sharing mechanism, or other commercial terms.
Under a physical tolling arrangement, the asset owner provides the storage capacity and the trading counterparty decides when to charge and discharge it within agreed technical limits. The structure can give developers greater certainty over utilisation and revenues, while allowing an optimiser to control flexible capacity without owning the underlying plant.
Cassim Mangerah, managing director of Centrica Energy, said: “This agreement with Zelestra is an important milestone for Centrica Energy in Germany and another step forward in delivering on our strategy. The continued growth in our German flexibility portfolio demonstrates the demand for our optimisation capabilities and further strengthens our position in one of Europe’s most dynamic flexibility markets.”
Centrica Energy manages more than 18.8GW of capacity under contract across Europe, with renewable assets accounting for more than 85% of that portfolio. Hilgermissen extends its position in a German flexibility market shaped by rising renewable output, increasingly variable intraday prices, and tighter balancing requirements.
The battery’s duration is significant in operational terms. Pairing a 99MW power rating with 297MWh of energy capacity allows the plant to sustain maximum discharge for about three hours, subject to conversion losses, auxiliary loads, and minimum state-of-charge limits. That is longer than the one-hour configuration used by many earlier European projects and gives the operator more scope to shift energy between market periods.
Lower Saxony combines substantial wind generation with a large industrial load base spanning automotive manufacturing, chemicals, agriculture, and food production. Storage cannot replace network reinforcement or dispatchable generation, but it can absorb electricity during periods of high output and return it when the system is tighter, reducing curtailment where grid conditions and market signals permit.
Mathias Kuenicke, chief executive of Zelestra in Germany, said: “Hilgermissen adds 300 MWh of flexible capacity to one of Europe’s most connected grids and largest energy storage markets. This tolling agreement with Centrica Energy is a vote of confidence in our BESS platform, and it builds directly on the pipeline we’re growing across Germany, with more than 2 GW of solar, wind and storage projects in development.”
The agreement reflects wider use of long-term optimisation and tolling contracts for European battery projects. Pure merchant exposure can deliver strong returns when price spreads and balancing revenues rise, but it can make project finance more difficult because future income remains uncertain. Contracted arrangements divide some of that risk between developers, investors, and specialist trading businesses.
Optimisation still has to respect the physical limits of the plant. Repeated cycling contributes to battery degradation, while reserve commitments can restrict the energy available for wholesale trading. Centrica will need to coordinate several markets without breaching warranty conditions, connection requirements, or the operating envelope agreed with Zelestra.
The commercial contract does not remove delivery risk. Equipment selection, transformer and switchgear procurement, fire-safety design, grid studies, and connection works remain ahead of the project. The companies have not identified the battery or inverter suppliers, leaving the plant’s round-trip efficiency, usable capacity, augmentation strategy, and long-term availability dependent on later engineering decisions. Grid-code compliance and control-system integration will also determine which services the battery can enter at commissioning.
Germany’s growing battery pipeline will also increase competition for revenues before Hilgermissen enters service. Wholesale spreads may remain attractive as variable generation expands, but ancillary-service markets can become saturated as more fast-response capacity connects. A three-hour plant has more operating options than a short-duration unit, although its larger energy inventory brings higher capital and replacement costs.
Hilgermissen must pass through detailed engineering, procurement, construction, grid connection, testing, and commissioning before Centrica can operate the contracted capacity. The 2028 target places the project in a power system expected to contain substantially more renewable generation, and a considerably busier market for flexible assets.
