That sequence should matter to anyone trading a flexible asset: Capacity awarded in FCR cannot simply be offered again one hour later. A trader therefore has to compare the expected value of bidding into FCR with the uncertain value of waiting for aFRR, mFRR or the energy markets. So the first auction should contain some information about how the market values flexibility.

If you are new to FCR, aFRR, mFRR, … here’s what you need to remember: FCR is symmetric and pay-as-cleared. All accepted capacity receives the marginal price. aFRR and mFRR capacity are directional and pay-as-bid, so accepted offers retain their individual prices. FCR has a single headline price. aFRR has an awarded price ladder rather than one equivalent clearing price.

An aside on the margins of FCR geography

Let’s start with a view of FCR-geography.

Germany buys FCR inside the wider FCR Cooperation. In our sample, a German bid appears at the marginal price-setting rung about 50% of the time. Switzerland is the most frequent alternative candidate at 21.0%, followed by Austria at 10.8%, Belgium at 9.3% and France at 8.8%.

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Let’s start with the most recent news: Alpiq is acquiring 90% of Harmony Energy.

Harmony reports to have developed, built and managed more than 700 MW across Europe and carries a development pipeline of more than 12 GW.

What is Alpiq getting by doubling down on Harmony (it previously acquired some of Harmony’s projects)?

It seems the idea is to acquire a machine for producing more projects: people, country organisations, grid-development capability, construction experience and an established route from site origination to valuable flexibility.

The disclosed consideration is unavailable, so we can’t rank on figures. It is, however, the strongest new entrant in our corporate capability M&A ranking.

Sources:

• https://www.alpiq.com/newsroom/media-releases/alpiq-boosts-flexibility-strategy-through-majority-stake-in-harmony-energy

• Context: https://www.alpiq.com/newsroom/news-stories/why-harmony-energy-is-a-game-changer-for-alpiqs-battery-storage-ambitions

Ultimate harmony around this acquisition will likely turn on the quality of the pipeline. A pipeline is complex to value. You need to be careful with your probabilities… We’ll talk a bit more about the pipeline sensitivity below.

Ranking note

A €43 million optimiser round, a €450 million project-finance facility, a majority platform acquisition and a fifteen-year toll are not directly comparable: different claims on the battery stack. Not to worry, we can set things up the way we want to gain and maintain a picture of the market. Familiarity is the root of knowledge, right? And familiarity builds on structure.

The principal tables cover major publicly disclosed European BESS-related transactions announced or completed between 1 January 2024 and 15 July 2026. Movement is shown against the previous cut-off of 31 March 2026. Where a new entrant enters above an incumbent, the incumbent moves down.

A broader and more institutional transaction market

European BESS transactions have broadened from venture rounds and isolated project acquisitions into non-recourse debt, platform equity, strategic M&A, tolling, public-to-private transactions and supply-chain investment. We saw this last time.

Modo Energy’s transaction counts are one useful indication of that expansion, but the more important change is qualitative: recent deals disclose more about revenue allocation, dispatch rights, grid conditions and the division of risk between owners, lenders, traders and optimisers.

• https://modoenergy.com/research/en/european-bess-capital-markets-report-q2-2026-deals

So, what’s new?

1. Optimiser growth capital

Gigawatts to survive (and thrive)?

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When we picture market action we’re most likely to think of front-office functions. They are, by definition, the most visible, most talked-about, they are most ‘available’ in terms of our exposure to them in media and popular culture. To many, the idea of a trading desk carries a sort of ‘halo.’

So it’s natural that the European battery market has no shortage of well-publicised “front-office ambition.” Optimisers decide when to cycle with their domain expertise and proprietary algos. Flow traders work day-ahead and intraday markets. Structurers design floors, tolls and swaps. “Trading desks” manage to pay fixed and receive floating. Asset owners assemble portfolios. Virtualisers turn physical batteries into accessible capacity.

The “front desks” are developing. The places are filling up in an increasingly crowded market. Yet mature markets are not defined only by the quality of their front offices.

Let’s dig a little deeper.

Finance developed by separating recurring problems into distinct functions: origination, execution, structuring, valuation, financing, collateral, custody, clearing, performance measurement and risk distribution. The sophistication lies not merely in each desk, but in the interfaces between them.

• A portfolio manager need not be a custodian.

• A structurer need not supply the capital.

• A market maker need not originate the underlying asset.

• An index provider need not trade the product.

• A clearing house need not take a directional view.

European energy already has an impressive machinery around established products. Trayport connects traders, brokers and exchanges. Volue and similar providers automate short-term execution. ETRM systems capture trades, positions and risk. Equias supports confirmation and reconciliation. enmacc provides an OTC venue. EEX, EPEX and ECC provide organised markets, clearing and settlement.

This infrastructure grew around relatively familiar objects: a megawatt-hour, a nomination, a forward contract, an exchange order, an EFET transaction.

Flexibility introduces stranger ones:

• degradation budgets,

• slices of battery capacity,

• dispatch rights constrained by warranty terms,

• merchant-revenue floors,

• a virtual toll backed by several assets,

• or a floating return manufactured through thousands of operational decisions.

The plumbing might exist, but the new object does not always fit through it.

That is where opportunity may lie…

The toll is doing too much work

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• Germany’s curve continues its evolution. From 22 June to 7 July, the 13:00-to-20:00 move averaged 232 EUR/MWh, about 103 EUR/MWh wider than the 2023-25 same-date median.

• Negative midday prices and evening scarcity are two sides of the same solar, wind and residual-load regime. That’s the obvious part. The shifts and changes are interesting.

• Czechia gives a basis-risk picture: prices move with Germany until local stack, exports and border conditions make the CZ-DE spread move.

• CAISO gives a crisp view of battery potential: charge the belly, discharge from the neck. Recent peaks!

At the end of a working day in Germany the most important question: where can we get some energy back?

Since May, the German market has been all about the curve geometry. Solar creates the midday trough. Wind levels determine how much residual load is left later. Borders, reserves and intraday settlement bridge the hours.

Forecast errors and aFRR, negative day-ahead and neighbours, low-wind evenings... the plot keeps developing, like your favourite series. (It’s Pantheon at the moment, if you must know. Robert Wright recommends it also.)

But we’re moving beyond our German comfort zone and towards a global view. A global market update is the goal. We get there step by step. Apart from Germany we have some Czech and CAISO data merrily updating in our evolving energy-machine.

Let’s try this: Germany gives the curve, Czechia tests the basis, CAISO shows the storage response: that’s the story we’ll try to sell today.

Germany: Starter-for-Ten or Something to ‘Hate’?

When you’re not sure about your first draft, it helps to qualify it as a work in progress. “Starter-for-Ten” is my favourite (thank you Simon, I will always be grateful), but Something-to-Hate is good too. Channelled well, ‘hate’ of some thing gets the juices flowing nicely.

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Our starting premise is that analysis of the AI hype cycle can be applied to explore the dynamics in BESS development. AI is the story of the day, and it draws the champions league of punditry. Granted there’s some excellent BESS industry analysis out and about, but I’d argue it’s not as deep or rich.

Our programme: we begin with the best talk I’ve seen on the development of AI and its hype cycle and then we connect it to BESS. We end up, perhaps surprisingly, with a connection to the secret sauce in oil trading.

So then, here’s the part of the talk that motivates this post:

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Yes, I think it does matter. If you can’t tell the difference, we’re in trouble.

To salvage such situations, think of them as interactions with our collective unconscious mediated imperfectly through human agents. This makes the experience more interesting or, at least, less sad.

Also, spotting AI-content is an interesting exercise. It’s a bit like a ‘blind tasting’. You don’t know how the content was produced, but you can (or must) experience the results. What conclusions do you draw?

There’s an exploration by Freeman Dyson about whether the brain is digital or analogue. There’s a clear difference, I think, between expressions of our analogue intelligence and expressions of the digital collective unconscious, just like there’s a remarkable difference between good wine and boring wine.

Of course AI is a useful tool. I’ve been using it to explore balancing market data. The classical theory around financial market microstructure is well-developed and rather beautiful. The idea is to emulate the approach in the reserve energy market context, starting in Germany. A time-consuming exercise, but token intelligence speeds it up.

German reserve energy is physical, one-sided, product-specific, rule-bound flexibility so the market microstructure literature does not apply directly. Yet there is enough correspondence to make for an interesting translation exercise.

German balancing energy is often discussed through prices, reforms, activation volumes, and scarcity events. The more revealing object is one layer lower: the pre-activation shape of the submitted reserve-energy book. AI-generated opinion.

All of this is about intuition and familiarity. We need a sense for the shape of the market before thinking about how it might develop. Do you have a sense of shape for the energy markets you care about like the the Regelleistungsarbeitsmarkt (Balancing Energy Market)? Let’s develop our taste for shapes.

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• It turns out that US-based (or linked) subscribers are proportionally the most supportive and interested. Motivation for transatlantic connections.

• Modo is talking about saturation in Germany, ERCOT as one example of the things to come?

• CAISO saw it all coming…

Do you recognise this visionary statement from the European energy market institutions in 2016?

To reliably manage the green grid, the TSO needs flexible resources with the right operational characteristics in the right location. The TSO is actively engaged in policy efforts to build awareness of the new grid needs. Working with the industry and policymakers, the TSO is collaborating on rules and new market mechanisms that support and encourage the development of flexible resources to ensure a reliable future grid.

No?

Quite right. The quote is lifted from the original CAISO Duck Curve paper, I’ve swapped TSO in for ISO.

Worth re-reading.

Does European analysis from around that time (or today) have the same quality and vision? Please send me evidence if you feel strongly that it does.

And how far have we come?

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A solar-heavy power system has moments when the marginal unit of electricity is mistimed against demand, extremely cheap, in the wrong place. What are the options?

• Use locally.

• Store.

• Move.

• Stop (curtail).

To what extent does a system work across these options ‘intentionally’?

Last time we looked at how Germany moves excess PV-generated electricity to its neighbours and how it relies on France in particular during the evening peak.

Free movement of electricity across Europe is crucial for the German power system.

Has this dynamic developed by choice and intention, or evolved accidentally?

Does it matter?

The opposite of sovereignty is not dependency. It is unchosen dependency.

We might ‘rate’ an energy system on a sovereignty scale based on the extent to which surplus power moves through a system of chosen dependencies.

High on Intention

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Next time you see negative electricity prices in Germany, spare a thought for the neighbours.

Excess signal map

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1 June squeezed the evening. Day-ahead reached 422.28 EUR/MWh at 20:45. Reserve prices moved with it: aFRR+ 20-24 cleared at 106.41 EUR/MW/h, mFRR+ at 74.10 EUR/MW/h, and FCR 20-24 at 112.62 EUR/MW/4h.

3 June featured an intraday break. Day-ahead was firm. ID-AEP, the German intraday auction ex-post index, broke loose: 543.92 EUR/MWh at 09:00, against 133.27 EUR/MWh in day-ahead.

Then came two surplus days. On 7 June, day-ahead went negative for 41 quarter-hours. The low was -50.25 EUR/MWh. Renewable output pushed the system deep into surplus; Sunday ranked 29/159 year-to-date on renewable share of load.

Options in reserve

Three cases matter: 1 June evening, 7 June midday, 9 June midday.

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The energy industry spends a great deal of time on offtake agreements. Who contracts for the MWh? Who takes price, shape, imbalance, or volume risk? Who lets the spreadsheet become debt?

Private markets ask another question: who buys the story after this owner has done enough to make it look inevitable?

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SpaceX is valuable because…

• … it dominates launch and satellite infrastructure,

• … because everyone will want it in their portfolio,

• … because post-IPO index inclusion will pump its value.

SpaceX is trying to make frontier exploration investable for institutional and retail investors. It’s about shaping expectations about risk and reward through carefully constructed narrative.

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Why Czechia?

We are each drawn in and led by our own associations and interests. When I think about the beginnings of modern Europe, I am drawn to the 1618 Pražské defenestrace (Prager Fenstersturz, Defenestration of Prague), which led to the thirty-years war.

Sie wollten ihren alten König nicht mehr, der in Personalunion auch der Kaiser war; ihr neuer Herrscher sollte Protestant sein. Um ihren Entschluss zu besiegeln, hatten sie die kaiserlichen Statthalter aus dem Fenster des Prager Schlosses geworfen. Nur waren die in einen Haufen Scheiße gefallen und hatten überlebt.

They no longer wanted their old king who, in personal union, was also the Kaiser; their new ruler should be a Protestant. To seal their decision, they had thrown the imperial governors out the window of Prague Castle. Only they had fallen into a pile of shit and had survived.

Excerpt From Tyll, Daniel Kehlmann (original, and the translation by Ross Benjamin)

Energy is a theme around which to develop new associations and new knowledge.

Czechia’s energy industry is in a period of complex change. Major strengths: nuclear expertise, a large incumbent utility, strong cross-border links, strong domestic engineering capacity, a robust power system that imports and exports electricity, synchronised with its European neighbours. But the old model is narrowing. In particular, coal is declining faster than the replacement system is being built.

The core Czech energy challenge seems to be about the timing of the transition away from coal and about the degree of energy integration with its neighbours.

Timing and transitions

In a 2018 commentary, Jiří Pehe opens with the line: “Češi jsou hluboce rozpolcený národ” (“Czechs are a deeply divided nation.”) He links the memory of 1618 and the Thirty Years’ War to a recurring Czech tension between standing apart and taking a more pan-European orientation.

In the energy context, is sovereignty best protected by self-reliance, or by building resilience through wider European structures?

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长短相形，高下相倾。

Long and short take shape by comparison;
high and low depend on each other.

《道德经》第二章

How many day-ahead spread multiples is flexibility worth?

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On 6 April 2026, Easter Monday, Belgian imbalance prices hit the regulatory floor of -15,000 EUR/MWh for five consecutive quarter-hours, from 13:45 to 15:00 CEST.

Let’s try to trace the chain as far as public data allow: Belgian imbalance settlement, the mFRR scheduled-down component, MARI, German downward mFRR, and the possible French/RTE balancing layer that ordinary border flows do not show.

Then it’s worth reflection on the economic rationale for extremely negative bids. If a downward mFRR bid was accepted at -15,000 EUR/MWh, what kind of asset constraint, portfolio exposure or market-design feature could justify it?

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Start with the domestic generation mix over the last year. Czech nuclear averages about 3.4 GW and lignite about 2.6 GW, against average load around 7.2 GW. Solar matters, but the backbone is still nuclear plus lignite.

Czech and German day-ahead prices sit close to each other, as you’d expect. In May to date, the daily DA average is about EUR 98/MWh in Czechia and inGermany.

Czechia and Germany are, of course, both cleared inside Single Day-Ahead Coupling. EUPHEMIA takes orders from the power exchanges and network constraints from TSOs, matches supply and demand, allocates cross-zonal capacity implicitly, and returns prices, trades, net positions and scheduled exchanges.

Prices converge when the market can move energy across the relevant borders. They diverge when cross-zonal capacity or flow-based constraints bind, when local bid curves are very different, or in operational fallback and decoupling situations.

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Rank 2 of 844 by average price in our sample. Rank 3 by marginal accepted price.

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I wrote last time how this keeps re-occurring to me as a simple motto.

Here’s a consequence:

A long post does not only ask for attention. It asks for a block of attention.

If you can’t find that block, the post becomes a deferred task.

Deferred tasks become backlog.
Backlog becomes guilt or avoidance.
Avoidance makes the subscription feel less valuable.

So we want shorter formats to complement the longer posts.

Heat is in the European news.

Western Europe is moving into the first real warm spell of the summer season. France, Spain and Portugal are the louder story; Germany is not the epicentre.

That makes Germany more interesting, not less.

We are not looking at an emergency weather setup. We are looking at how a warm, bright weekend translates into market shape.

Warm, bright, dry, low wind: open-Meteo has maximum temperatures up to about 30.6 degrees C on Saturday and 31.3 degrees C on Sunday across a sample of German stations.

Shortwave radiation averages about 26.8 kWh/m2 on Saturday and 26.2 kWh/m2 on Sunday. Cloud cover is low on Saturday, about 16% on average.

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Introductory Reflection

The New York Times yesterday had a great piece on Dwarkesh Patel and his podcast. He is a well-connected AI-optimist, each episode is deeply researched, each a starting point for further reference and exploration. Material like this is vital, I think, to help us reflect on the rapid changes.

I worry sometimes about my thinking habits in the age of AI. Where is the boundary between the work that the AI can help with and a sense of ‘artful pursuit’ that provides orientation, meaning, a golden-thread?

The main challenge, I believe, is to train and maintain attention. “Attention is all you need” keeps re-occurring to me as a motto, suitably appropriated out of its original context, as I find myself snapping out of spells of distraction.

Our attention here is focused on exploring the energy industry with the new technology, to build understanding, connection, conversation with increasing momentum. My aim is to share a combination of energy-related content (“the what”) combined with thoughts on the machinery used to develop it (“the how”). The weekly market updates are a litmus test of progress.

Today’s market update is once again Germany focused but includes cross-border analysis. International exploration will develop step-by-step… The content was generated entirely by the ‘Stratnergy Exploration Engine’ but the process involves a number of ‘tuning’ and ‘editing’ passes. (One of the hardest problems for AI is to figure out what problem to solve, and which line of enquiry to pursue.) Improvements in these updates require a significant amount of work, choice, and an increasing budget threshold for token ‘intelligence.’

“The idea becomes a machine that makes the art.” — Sol LeWitt

Stratnergy Market Update

No extreme price event this week. That is the starting point. DA, ID-AEP and SPARX all cooled after the early-May drama, but 15 and 19 May still brought sizeable downward balancing calls. We start with context (the familiar boxplots), then the forecast misses, the aFRR- TSO footprint, frequency, and finally the border clock.

From 13 to 19 May, the day-ahead average was about EUR 106.7/MWh. The average daily high-low range was about EUR 151.6/MWh, down from about EUR 210.8/MWh over 1-12 May. The lowest quarter-hour in the recent window was only EUR -2.33/MWh.

The longer history shows how quiet the price layer became after early May.

ID-AEP and SPARX also calmed. Recent SPARX averaged about EUR 214.2/MWh, versus about EUR 363.4/MWh over 1-12 May. The largest recent SPARX was EUR 360.5/MWh.

Capacity prices came down from the early-May peaks. FCR 12-16 averaged about EUR 160.3/MW/4h, down from about EUR 250.0/MW/4h over 1-12 May. aFRR- 12-16 averaged about EUR 243.1/MW/4h equivalent.

aFRR- activation was high on 2026-05-15: about 2,995 MWh; 2026-05-19: about 2,966 MWh. These were not extreme-price days. The system can still need significant downward correction when the visible price readout looks ordinary.

Since the start of 2025, 15 May ranks 33 of 504 operational aFRR- days by total activation, and 19 May ranks 34. The pair separates two things that are often blended together: balancing activity and realised price stress.

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Memes wrap around grains of truths. Stories spread and mobilise capital, they get entrepreneurs and builders motivated to focus around the next big thing. Momentum needs simplification. It’s how we’re wired.

But simplification becomes problematic as it hardens and as we lose sight and understanding of what is actually going on. Shadow-play in a cave: the customer disappears behind click-thru rate statistics. The borrower is anonymous behind the tranche. The data centre seems unreal, covered in conceptual clouds. The abstraction begins to take the place of the thing it describes; the derivative overshadows the underlying. When’s the last time you thought about Poynting vectors?

Carlota Perez’s work on technological revolutions describes moments when finance and technology reinforce each other: money arrives, expectations overshoot, infrastructure gets built, and it’s only later, after dust settles, that we understand which parts of the new system are here to stay. The overshoot is not simply a mistake. Sometimes it is how a new system gets installed.

Batteries are necessarily somewhere in a pattern of this kind. That’s worth thinking about if you are in any way interested in the future of the energy system.

For a while, grid-scale storage looked like one of the cleanest stories in the energy transition. Solar build-out would deepen the daily price shape. Midday power would become cheap, evening power expensive. The shape of the profile looks a bit like a duck. A perfect meme. Batteries would follow the duck curve: charge when prices were low, discharge when prices were high, add some ancillary revenue. Volatility as a business model, guided by software, by AI, optimising and trading in free markets with the latest technology. The purest possible play on the energy transition.

I’m not being cynical, quite the opposite.

The story was attractive because it was simple, and because it contained truths: renewable generation does change the shape of power markets, volatility does create value for assets that can move energy through time, batteries are one of the few technologies that can respond quickly enough to matter.

Reality has a way of catching up to the first-order abstractions, however. Network location, market rules, local constraints, forecasts, the behaviour of other assets responding to the same signals. The value is in the relationship between the asset and the system. The play is not as clean as many thought. A smell of disappointment is in the air, sometimes. Have you noticed?

What is the way forward? Openness. Not openness as branding or as insider networking, nor as a fantasy that everything should be free and accessible, but openness as a way for complex mechanisms to become exposed for interaction. More participants. More inspection. More shared definitions. More ways for the grid, the asset owner, the operator, the regulator, the customer, and the market to correct one another.

Abstraction works when reality can loop back in to move the concept forward.

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