• The agreement covers Zelestra’s 99 MW, three-hour Hilgermissen battery project in Lower Saxony.
• Centrica Energy will trade and optimise the 297 MWh system across Germany’s power and ancillary services markets.
• Construction is scheduled to begin in 2027, with commercial operations expected in the second half of 2028.

Centrica Energy and Zelestra have signed a physical tolling agreement covering 297 MWh of battery storage capacity in Germany.

The agreement supports Zelestra’s planned Hilgermissen battery energy storage system, a 99 MW standalone facility with three hours of storage duration.

Zelestra will develop, construct, own and operate the project. Centrica Energy will manage the contracted capacity through its multi-market trading and optimisation platform.

Engineering and procurement work is due to conclude this year. Construction is expected to begin in 2027, followed by full operations in the second half of 2028.

Tolling model shifts market risk

Under a physical tolling agreement, one party controls the commercial dispatch of a battery while the asset owner retains ownership and operational responsibility.

The arrangement can provide storage developers with greater revenue visibility. It also gives trading companies access to flexible capacity without requiring direct ownership of the underlying infrastructure.

Centrica Energy plans to optimise the Hilgermissen battery across Germany’s Day-Ahead, Intraday and Ancillary Services markets.

That multi-market approach allows the system to respond to price changes, balancing needs and grid conditions. It may also reduce exposure to any single revenue stream.

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.”

Battery tolling agreements are becoming more important as developers seek bankable structures for storage projects. Revenues can fluctuate sharply because they depend on wholesale spreads, grid-service prices and market competition.

Long-term optimisation agreements can help allocate those risks between developers and experienced energy traders.

Storage supports Germany’s renewable buildout

The project will be located in Lower Saxony, one of Germany’s most industrialised and energy-intensive regions.

The state hosts major automotive, agricultural and food-processing industries. It also has extensive wind and biomass generation.

That combination creates a growing need for flexible power resources. Batteries can absorb electricity when renewable production is high and release it when demand rises or generation falls.

They can also provide rapid-response services that help grid operators maintain frequency and system stability.

Germany’s power system is becoming more dependent on variable renewable generation as the country retires fossil fuel capacity and expands wind and solar. Grid congestion and periods of negative electricity prices have increased the value of storage and flexible demand.

The Hilgermissen project is therefore positioned as both a commercial trading asset and a piece of regional energy infrastructure.

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Mathias Kuenicke, CEO 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.”

Germany attracts larger storage portfolios

Zelestra said the project builds on its experience delivering large-scale energy assets in other markets. The company is also developing more than 2 GW of solar, wind and storage projects across Germany.

For Centrica Energy, the agreement expands its German flexibility portfolio and strengthens its role in battery optimisation.

The deal also reflects a wider shift in European energy investment. Storage developers are moving beyond merchant-only business models and adopting contracted structures that can improve financing prospects.

For investors, the key question is no longer whether Europe needs battery storage. The focus is shifting toward how projects secure reliable revenues, manage market exposure and connect to constrained grids.

Germany offers significant opportunity, but competition is increasing. Project value will depend on location, connection rights, operating strategy and access to multiple markets.

Hilgermissen brings those elements together in one of Europe’s largest power systems. Its development will test how effectively tolling agreements can support the next phase of Germany’s battery buildout while advancing the country’s broader decarbonisation goals.