Flexibility in the Age of Energy Volatility

In the first six months of this year, Spain had almost 600 hours of negative electricity prices, nearly 25 days. Over the same months, German prices went above €600 per megawatt-hour. For Mariana Costa of EDP Ventures, who opened with those numbers, they were no accident. "This is not a bug in the energy transition. This is the energy transition itself." Mariana and Tomas Kemtys of Contrarian Ventures asked who should build the flexibility to absorb them, and who keeps the money they create. One participant's answer to the second question was blunt. Look at the profit statements, they said, and the traders win.

Who builds the batteries

Europe has about 10 GW of large-scale batteries, Tomas said, wants 100 to 140 GW by 2030 and has about 40 GW in the pipeline. Spain showed what moves capital. After the Iberian blackout in April last year, when 15 GW disappeared in seconds, policy came fast and building followed. Tomas asked whether flexibility should be procured like transmission lines or left to price spreads, and called those who did not vote for the state open-market enthusiasts.

One participant said the question mixed up different assets. Batteries are now so cheap that one to four hours of storage works fine on merchant revenue, and state procurement would only slow it down. Storage of 12 to 30 hours is another matter. A project that big cannot be financed on merchant income and has to outlast several governments, so it needs central procurement. Beyond that minimum, they said, price signals must stay, or Europe will end up with assets that add no value.

A battery's income is likely to come in layers, an investor said. First comes a floor, such as a capacity market, that lets lenders go to around 70% gearing. Then merchant trading, which equity investors like, until the revenue falls off a cliff and owners turn to co-location, bilateral contracts and industrial offtake. The investor found it ironic that people call batteries saturated while Europe needs ten times more, and admitted to an itchy feeling at how often gas comes up in Germany's capacity-market debate.

This is not a bug in the energy transition. This is the energy transition itself.

Traders first, optimisers later

A German battery can trade on the day-ahead and intraday markets and sell ancillary services, Mariana said. It is the same steel and the same chemistry, and the difference in value comes from software, weather models and traders. The participant who pointed to the profit statements ranked the winners so far. Traders make the most money. Asset owners earn more than their cost of capital. Optimisers are trying to survive, and consumers gain little unless they moved early. In theory optimisers should earn most, because they own the customer, but utilities that trade their own power make optimisers hard or even illegal to use.

An optimiser at the session said its site data on industrial customers is a durable moat, with no churn since it began, though optimisers of standalone batteries will be squeezed on price. In the Nordics, large utilities that refused to work with optimisers are opening up now that industrial customers, such as pulp and paper plants, threaten to leave. The investor with the itchy feeling thought the best time for optimisers is still to come, as trading spreads across a fragmented jungle of local and bilateral contracts.

A data centre that switches off

One of the hosts asked whether AI data centres are the best flexible load yet, or loads that will pay any price never to be curtailed. Data centres can pay almost any price for power, one participant said. They offer flexibility only because grid operators in Denmark, and to a degree in Finland and Ireland, will not connect them otherwise. Another agreed, saying that reaching the market a year or two early is worth far more than any saving on electricity. A third said Google already runs upwards of 1 GW of flexible data-centre load in the US, and that flexibility can mean switching to backup generators and batteries while the servers keep running.

An investor turned the question round. Hyperscalers will not switch off their racks for a grid payment, they said, because it would have to be insanely large, and "if we were to see data centres voluntarily switching off, this would be the first sign of that bubble popping." Someone else recalled that Bitcoin miners, first in Texas, started selling flexibility once mining stopped paying enough, and called that the signal of a top.

The last question was security. About three terawatts of the world's solar sits behind inverters, one of the hosts said, and 80% of inverter makers are in China. One participant said that if you switch off the inverters, you get a blackout, one of three things that bring down governments. Another said the US now bars Chinese inverters from its grid, while the EU took the cheap energy and ignored the cybersecurity for years. One idea was to leave the inverters in place and make the site's energy-management system European, with privileged access to the inverters through it. Europe has built a fleet to absorb volatility. Who can switch it off is a question it has barely started to ask.

This Ripple was hosted by Mariana Costa (EDP Ventures) and Tomas Kemtys (Contrarian Ventures) at The Drop 2026 on 16 September.