Smaller cheques, a shorter leash, and a storage pioneer in insolvency

Between 17 and 23 October the decisions that moved European flexibility came from ministries and grid operators rather than from prices. Italy cut the capacity credit of a four-hour battery to as little as 21%, Poland gave its grid operators the right to switch a battery off for a day when it ignores instructions, and a German home-storage pioneer filed for insolvency two months after Shell sold it. Spreads did not move on any of it, but each one changes an assumption in a battery business case.

Italy cut the capacity credit of a four-hour battery, and Poland showed the other extreme

Italy has approved revised rules for the capacity auction covering delivery in 2028, and the change that matters is the de-rating factor, which decides how much of a plant's capacity the auction actually pays for. European Current, a weekly digest of European energy regulation, set out the numbers on 23 October. A four-hour battery is now credited at 40% in the North and Centre-North, 51% in the Centre-South and 21% in the South and islands, against a single national 67% in the 2027 auction. A one-hour battery sits between 7% and 13%, an eight-hour battery at up to 71%. Terna, the grid operator, cut the factors in August and again in October with the ministry's approval, because far more storage has been authorised than it had assumed, especially in the South and islands. The hours of highest shortage risk are filling with storage, so each additional battery adds less. Batteries that bid in the 2027 auction, those already under contract and those from Italy's storage auction keep their earlier factors, and the auction is set for 21 December against a national need of roughly 67 GW.

The regulator says plainly what that means for new projects. ESS News reported on 19 Octoberthat ARERA approved Terna's second set of technical operating provisions in Resolution 370/2026/R/eel, dated 14 October and limited to the 2028 auction. Terna recalculated the storage factors on updated deployment estimates, counting capacity already authorised plus an estimate of what will be authorised before the auction, and excluding capacity expected to be awarded in the MACSE storage procurement for 2029. All other things being equal, the resolution finds, the higher factors reduce the remuneration available to new battery projects that win capacity-market contracts. The same package lets winners of new capacity postpone the start of their delivery period to December of the first delivery year if they notify Terna by 30 April of the preceding year, after which Terna has 60 days to run an adjustment auction. On 19 October the auction date itself was still open, with the ministry having asked Terna whether to hold it after the November storage auction.

Poland went the other way in the same week. According to European Current, its energy minister set the parameters for four additional capacity auctions covering 2028, one per quarter, and every battery gets the same de-rating factor of 95% whatever its duration, slightly above gas at about 93% and far above onshore wind at 13% and solar at 2%. The catch is volume and tenor. The transmission operator is buying 500 MW for each of the first and fourth quarters of 2028 and 100 MW for each of the second and third, on one-quarter contracts for existing units, against Italy's roughly 67 GW. The price cap rises to 583 złoty per kW per year, about 137,000 euros per MW, but the equivalent rounds for 2027, held in March, cleared at 186 złoty for the first quarter and 0.12 złoty for each summer quarter. Run both systems at their caps and a new four-hour battery could earn at most about 18,000 to 44,000 euros per MW a year in Italy, and about 25,000 in France, where the regulator proposed its own sharp cut on 8 October.

If you are underwriting a battery on capacity income, watch the de-rating factor as closely as the clearing price. It is being reset while projects are still in development, and duration and location now decide how much of the capacity gets paid.

Check which factor applies to your duration and zone, and when it is next recalculated; Italy has changed its factors twice since August. If the model leans on a capacity contract, build the energy and balancing revenue underneath it now, since no de-rating factor scales those down. And ask whoever bids your assets what they would do if the capacity payment halved.

Fusebox integrates and dispatches BESS, PV, EV chargers, HVAC systems and C&I industrial loads in a single platform, and we operate across 15 European markets and 9 TSOs. A megawatt that earns in one mechanism only is exposed to whoever writes the rules for that mechanism.

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Poland can switch a battery off for a day, and the Nordics stopped flows flipping mid-hour

An amendment to Poland's Energy Law, published on 16 October, lets grid operators curtail or disconnect batteries above 50 kW, and generators from 0.2 MW, for up to 24 hours with no compensation, after a serious breach of their schedules or instructions. European Current summarised the new duties on 23 October. From 31 October, battery owners must follow operators' instructions and submit schedules and real-time data, and the energy regulator can fine them up to 500,000 złoty, about 118,000 euros, per quarter. What counts as a serious breach is not in the law. The transmission operator has three months to define it in the grid code, which is the document to read when it lands.

Finland and Sweden tightened a different screw. Fingrid announced on 16 Octoberthat it and Svenska kraftnät will apply a mechanism called Quarterly Polarity Reversal Elimination to the Fenno-Skan interconnectors from 17 November. In the day-ahead market the transfer level on the two subsea links will be set for a whole hour at a time. Intraday trading can still move that level every 15 minutes, but the direction of flow cannot reverse inside the hour. The reason is physical. Flow-based capacity calculation and the 15-minute day-ahead market have been found to increase reversals significantly, every reversal stresses the cables, and without the change the operators might have had to restrict the capacity of the links instead. The same mechanism already protects the cables between Sweden and Denmark, and Fingrid's modelling does not expect a significant effect on the market.

The two problems are different, but they point the same way. As more of the system responds automatically in quarter-hour steps, operators are writing down what an automated asset has to tell them, what it has to obey, and how fast the network will let it turn around.

For anyone running batteries on a Polish connection, this is now an operational matter. Schedules, telemetry and following instructions have become conditions of earning, and getting them wrong can cost a day off the market plus a fine. Check who inside your setup actually sends the schedule, how fast it updates when a trade changes, and whether your asset answers a dispatch instruction without somebody picking up a phone. If you trade across the Finnish and Swedish border, put the reversal limit into your intraday assumptions before 17 November rather than after.

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Sonnen filed for insolvency while its virtual power plant was still growing

ESS News reported on 22 October that Sonnen GmbH, the home-battery maker based in Wildpoldsried in southern Germany, has filed for insolvency, months after Shell sold the company to the family office Tiven. Around 400 remaining employees were told on the Thursday morning, and the company confirmed the filing to Handelsblatt, which broke the story, although nothing had appeared in the insolvency register at the time of reporting. More than 150,000 existing customers are to keep being served, numerous subsidiaries are expected to be wound up or placed into self-administered proceedings, and only one production site is to remain.

The financial trail behind that is long. IWR reported on 23 October, citing Handelsblatt, that group revenue fell by about 55% in 2024, and that the German company's 2024 accounts show a net loss of around 106.6 million euros. The audited 2023 accounts had already flagged a risk to the company continuing, with the parent committing up to 49.2 million euros of funding to the end of 2025. Sonnen is not alone in that market: RCT Power filed in September, proceedings over Varta Storage opened at the start of October, and Senec, owned by EnBW, said in July it would stop taking new customers. On figures from P3 and RWTH Aachen, the five largest suppliers' share of newly installed German storage capacity fell from just under 55% in 2024 to just over 45% in 2025, with Sonnen at 3.3% and BYD leading on 16.5%.

Meanwhile, the US side of the business was growing. pv magazine Deutschland reported the same day that Sonnen USA announced doubled sales and tripled production in the United States, expects to sell more than 180 MWh of home storage there this year, and named virtual power plants as the main driver of that growth, with more than 6,000 households in Texas already in a model combining solar, storage, energy management and participation in a VPP. The aggregation business was growing, and the hardware company still ran out of money.

If your flexibility sits behind somebody else's software, this is a counterparty risk. When the firm that builds the hardware also runs the platform that bids it, its balance sheet is part of your revenue stack. It is worth confirming who holds the market access and the balance responsibility for your assets, what happens to dispatch if that party stops trading tomorrow, and whether your controller speaks a protocol another operator could take over without a site visit. Continued service on a battery is not the same thing as continued market access for it. If you would rather read around the subject first, our knowledge bot is a reasonable place to start.

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Regulatory and market watch

• Italy: Terna's grid-code consultation on aggregated balancing resources is listed as closing on 30 October.
• Poland: the new duties on battery owners to follow operator instructions and file schedules and real-time data start on 31 October, with the grid-code definition of a serious breach due within three months.
• Estonia: Elering, the climate ministry and the competition authority are consulting on a market-wide capacity mechanism open to power plants, storage and demand response, with responses due by 12 November. The design is a technology-neutral competitive auction, with first rounds possible from 2028 and payments from 2033 at the earliest, funded through the existing security-of-supply fee.
• Finland and Sweden: the Fenno-Skan rule stopping flows from reversing inside the hour takes effect on 17 November.
• Italy: the capacity auction for 2028 delivery is set for 21 December, and will show how much new storage clears in each de-rating band.