Germany's first capacity auction went to gas, Belgium's to batteries

Between 27 October and 3 November two European capacity auctions closed and gave opposite answers to the same question. Germany handed its first long-term capacity contracts to gas plants, while Belgium contracted four-hour batteries and selected no two-hour ones at all in its furthest-out round. For anyone sizing a battery, the week turned discharge duration from a design detail into the condition that decides whether a contract is available.

Germany awarded 15-year contracts to gas, Belgium to four-hour batteries

The Bundesnetzagentur announced the winners of Germany's first auction for long-term capacity on 3 November, the date it committed to when it opened the tender in July. RWE said the same day that it had won contracts for three hydrogen-compatible gas-fired power stations in North Rhine-Westphalia totalling around 2,100 reduced megawatts: roughly 730 at Voerde, 700 at Weisweiler and 700 at Werne. Only 85 per cent of a gas plant's installed capacity counts towards that reduced figure under the Electricity Supply Security and Capacity Act. Winners hold the capacity available for 15 years in exchange for an annual payment, and RWE said construction on the first station should begin within weeks.

Two features of the German design decided who could bid. Eligibility turns on being able to supply secured electricity over a long stretch, with further conditions on siting and on technical properties such as providing inertia to hold network integrity even in hours when a plant is not feeding in. Separately, the reduced capacity a bid is measured in comes from a factor fixed in law that varies by technology and scores what a plant actually contributes when the system is tight. Both tests read on how long an asset can keep going, and the first contracts to be confirmed went to gas.

Belgium ran a comparable mechanism in the same fortnight and got a different result. Elia published the outcomes of three capacity remuneration mechanism auctions covering the 2027-28, 2028-29 and 2030-31 delivery periods, reported on 3 November. The Y-2 round for 2028-29 contracted 1.6 GW, of which roughly 0.5 GW was new battery capacity; two-hour batteries took 5.98 per cent of selected volumes and four-hour batteries 31.74 per cent, behind combined cycle gas. The Y-4 round for 2030-31 contracted 0.8 GW, again with around 0.5 GW of new batteries split between one-year and multiyear contracts, and this time no two-hour battery was selected at all while four-hour units made up 61.75 per cent of the volume, well ahead of every other technology.

Capacity revenue per megawatt moved as the duration mix did. Belgium's 2027-28 delivery period had been secured at a weighted average of €30,944 per megawatt per year across its auctions, for a total of about €200 million. The Y-2 round cleared at €21,643 and cost about €34 million. The Y-4 round cleared at €18,143 and cost about €14 million, with supply exceeding demand by 3.1 GW. The Y-1 auction for 2027-28 contracted nothing: once cross-border contributions and capacity that was available but not bidding had been counted, the required volume fell to zero.

If you own or are financing a battery in a market with a capacity mechanism, the question to settle before the engineering one is how many hours that mechanism pays for. A two-hour system that clears in one country can be effectively unbiddable in the next, and Belgium shows the answer going to zero rather than simply shrinking. Read the clearing prices as a direction as well as a number: Belgian capacity revenue per megawatt came down across the three delivery periods in this round, so a business case leaning on it needs the rest of the stack, in wholesale, intraday and balancing, carrying weight alongside. Where an asset cannot reach a capacity contract at all, market access across several products is the route that is left.

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British developers put a number on buying too much long duration

Eight British battery developers spent the week arguing that their regulator is about to procure more long-duration storage than the system needs. The group, trading as the Campaign to Deliver Affordable Energy Storage, published analysis by Baringa on 27 October comparing Ofgem's proposed 7.6 GW first cap-and-floor award with Baringa's own central case of 4.4 GW by 2035. The modelling puts the gap at a net socio-economic welfare loss of about £1.3 billion over 2030 to 2055 and a consumer welfare loss of about £1.6 billion, driven by higher cap-and-floor payments and wider wholesale market effects.

The line that matters to anyone running a short asset is the revenue one. Baringa models two-hour battery revenues falling 13 per cent under the 7.6 GW scenario, and estimates that around 5 GW less short-duration capacity would be built by 2035 as a result. It puts the additional consumer exposure to floor payments at roughly £110 million a year on average. The report does not argue against long-duration storage: it says the technology will play a critical role and that the open questions are scale and timing.

Ofgem's minded-to decision from June 2026 covers 16 projects on a revenue floor and ceiling over roughly 25 years, including 11 lithium-ion systems with durations up to 18 hours alongside pumped hydro, compressed air and a vanadium flow battery, as ESS News set out on 30 October. Under the scheme long duration means at least eight hours. The 7.6 GW sits at the top of the 2.7 to 7.7 GW range NESO recommended in 2025, and final awards have not been made. Ofgem's director of major projects, Beatrice Filkin, said in July that the regulator would push back if the regime looked detrimental to consumers, and that it was keen not to distort a short-duration market already delivering a strong pipeline.

For BESS asset owners and portfolio managers, in Britain and in every market watching the model, the lesson is that a support scheme aimed at one duration band reprices the others. A 13 per cent haircut on two-hour merchant revenue is the sort of number that moves a debt sizing, and it would arrive through policy rather than through trading. If your assets sit at the short end, breadth is the defence: more products, more markets, and dispatch that follows value as it moves between them instead of parking in whichever service paid best last year. If you want to work through the mechanics before committing to anything, our knowledge bot handles the first round of questions.

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Europe's largest operating battery switched on at three and a half hours

BW ESS started commercial operations at Hams Hall in the West Midlands on 2 November, 350 MW and 1,240 MWh, the largest battery in Europe to reach that stage. Sungrow supplied the system, it sits next to National Grid's Hams Hall substation, and it reached commercial operation 20 days after energisation. A second phase takes the site to 400 MW and 1,424 MWh. The ratio is the detail to hold on to: roughly three and a half hours of discharge at full output.

Revenue on the first phase rests on a ten-year floor and optimisation agreement signed with EDF earlier in 2026, and the debt behind it, announced on 21 October from OCBC, Rabobank and Societe Generale in equal shares with Rabobank as facility agent, closes at the commercial operations date. EDF has described Hams Hall as the longest-duration battery it has contracted, optimised through its PowerShift platform.

Four days before the switch-on the same owner bought into France, taking two standalone projects of 100 MW and 400 MWh each from Recurrent Energy, in Calvados and the Eastern Pyrenees. Both are four-hour systems in advanced development, giving BW ESS a 200 MW and 800 MWh platform in what is its seventh market globally. Its chief executive and co-founder framed the purchase around France needing rapid-response flexibility alongside its nuclear base, as weather-sensitive demand and a changing generation mix make system conditions more variable.

Both transactions were put together the same way, and that structure is the transferable part. If you operate BESS, PV assets or C&I loads, note that the floor here did not replace active trading, it sat underneath it, and the optimisation agreement is what produces revenue above the floor. Longer duration buys optionality only when something is working the spreads, the balancing products and the intraday market on your behalf, hour by hour. Lenders on these deals were shown both halves: a contracted floor, and a named party responsible for everything above it.

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EU energy ministers pushed back on harmonised network charges

EU energy ministers met in Luxembourg on 29 October and spent the session on the Commission's network-charges regulation, the July proposal to future-proof electricity bills by cutting system costs and pushing electrification and digitalisation. The Irish Presidency's account of the day records that debate alongside exchanges on energy security for the coming winter and on targets for the post-2030 framework, with the Moldovan and Ukrainian energy ministers joining the security discussion.

The contested part is how much Brussels gets to standardise. Agence Europe reported ahead of the Council that member states were not enthusiastic about harmonising network-charge methodologies, enough that the provision could be dropped from the Irish Presidency's third compromise text, due at the energy working party on 10 November. The same briefing carried ACER's assessment of 27 October that EU gas storage stood at 75 per cent and that the bloc would enter winter below its nine-year average. A majority of ministers also challenged the legal basis the Commission chose; Agence Europe clarified on 30 October that the Council Legal Service opinion had not in fact opposed Article 18c, the provision on taxing electricity no more heavily than gas, although many member states still want it removed.

Grid tariffs are the quietest large number in a flexibility business case, and on current form they will keep being written nationally rather than in Brussels. If the harmonisation article falls away, the charge your battery or your C&I site pays stays with your own regulator, and the spread between neighbouring markets keeps widening. For portfolio managers that argues for modelling tariff exposure market by market rather than at portfolio level, and for keeping enough flexibility to move dispatch when one market reprices. Charges change on national timetables; where your energy is sold can respond faster than capital expenditure can.

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What to watch

• Germany: the Bundesnetzagentur said it would announce the dates of the second long-term capacity auction on 10 November, with a further tranche still to be awarded before the end of the year.
• Brussels: the Irish Presidency's third compromise text on network charges goes to the energy working party on 10 November, with the harmonisation provision in doubt.
• Great Britain: Ofgem has still to make final awards in the first cap-and-floor window, with the short-duration campaign asking it to revisit the volume.
• Portugal: two electronic auctions for a combined 1,050 MVA of grid connection capacity, 750 MVA standalone and 300 MVA co-located, are running after orders were published in the official gazette on 22 October; standalone bidders need at least four hours of duration at maximum injection power.
• Belgium: some of the batteries contracted in the Y-2 round are expected to enter operation ahead of the dates their multiyear contracts require, bringing part of the 2028-29 volume forward.