Finland’s new 2‑hour, grid-forming batteries show how serious investors are future-proofing storage assets—and what that means for your next BESS project.
Most companies still size batteries just big enough to chase the easiest revenue stream. Finland is quietly proving that strategy has a short shelf life.
Over the past year, investors in the Finnish power market have started ordering 2‑hour grid-scale battery energy storage systems (BESS) with grid-forming capabilities. That’s a shift from the 1‑hour systems that dominated early projects focused on fast frequency response. Now, players like Exilion and Nala Renewables are betting on longer-duration, smarter batteries that can behave more like traditional power plants.
This might sound like a niche Nordic story. It isn’t. It’s a preview of where green technology, flexible grids, and storage economics are heading across Europe—and a useful case study if you’re planning or financing battery assets in 2026 and beyond.
In this post, I’ll break down what’s happening in Finland’s BESS market, why 2‑hour grid-forming batteries are suddenly in favor, and what this means for developers, IPPs, and investors trying to build profitable, future-proof clean energy portfolios.
Finland’s New Battery Wave: 2-Hour, Grid-Forming, Investor-Driven
Finland’s latest projects show a clear pattern: larger, smarter, longer-duration batteries are becoming the default for serious investors.
Two recent projects tell the story:
- Exilion + Merus Power: a 30MW / 66MWh BESS in Kuortti, Eastern Finland, targeting completion in 2026. That’s just over 2 hours of storage.
- Nala Renewables + Sungrow: a 50MW / 100MWh system in Kauhava, also a 2‑hour asset, scheduled online by the end of 2026.
The Exilion project matters for another reason: it’s Merus Power’s first 2‑hour system in Finland, and according to their sales director, almost their entire offer book is now 2‑hour projects. That’s a decisive market shift.
What’s driving this change?
- The early Finnish BESS projects focused on frequency regulation (fast, short-duration services).
- Over the last two years, capacity market prices have climbed, increasing the value of sustained output.
- Meanwhile, there’s growing concern that frequency regulation markets will saturate as BESS capacity outpaces the grid operator’s reserve needs.
Investors are reading the same public data and drawing the same conclusion: 1‑hour systems tied to a single revenue stream are increasingly risky. Two-hour, multi-service assets are simply better aligned with where power markets are heading.
Why the Market Is Moving from 1-Hour to 2-Hour BESS
The shift from 1‑hour to 2‑hour storage in Finland is a rational response to market signals, not a tech fad.
1. Ancillary Services Alone Won’t Pay the Bills Forever
Finland’s TSO, Fingrid, only needs a finite amount of reserves for frequency response. As more BESS projects come online, the same pot of ancillary revenues gets split across more capacity.
We’ve seen this story in other markets:
- Early movers earn high returns from fast frequency response.
- More batteries connect.
- Prices compress as competition increases.
Merus Power points out that while ancillary prices haven’t crashed yet, capacity in the pipeline suggests saturation isn’t far away. If you’re building an asset with a 10–15 year life, you can’t model it as if year 1 pricing lasts forever. Two-hour systems hedge that risk.
2. Capacity Markets and Arbitrage Favor Longer Duration
In parallel, capacity market prices in Finland have risen in the last two years. Capacity markets reward assets that can reliably deliver power for a defined period. A 1‑hour battery is less valuable than a 2‑hour battery in that context.
Two-hour BESS can:
- Bid more confidently into capacity products.
- Run energy arbitrage (buy low, sell high) with enough duration to catch longer price events.
- Stack services: frequency support + capacity + arbitrage, instead of being pigeonholed into one.
From a green technology and grid resilience perspective, this is exactly what you want: storage that doesn’t just react for a few minutes, but can actively support the system for hours.
3. Portfolio Risk, Not Just Project IRR
I’ve seen more investors shift from “What’s the IRR of this single project?” to “How does this storage asset behave across many different future market scenarios?”
Two-hour, flexible BESS:
- Perform better under price volatility scenarios.
- Stay relevant if one revenue stream weakens.
- Are easier to refinance or sell because they’re future-proofed against regulatory and market shifts.
The short version: 1‑hour storage is a tactical trade. 2‑hour storage is a strategic asset.
Grid-Forming Batteries: From Nice-to-Have to Essential Infrastructure
The other big trend in Finland is that these new batteries aren’t just bigger—they’re grid-forming.
A grid-forming BESS can:
- Maintain voltage and frequency on its own.
- Support grid inertia, like a spinning turbine in a traditional power plant.
- Black-start parts of the grid after a blackout.
A non-grid-forming, or grid-following, battery can only respond to a voltage and frequency signal that’s already there.
Why Grid-Forming Matters for a Renewable Grid
As wind and solar increase, conventional synchronous generators (which provide inertia and stability) run less often. That’s great for emissions, but it leaves the system:
- More sensitive to disturbances.
- More at risk of frequency deviations.
- Harder to restart after major outages.
Grid-forming BESS directly solve that problem by acting like virtual synchronous machines. In Finland’s case, projects from Merus Power and Sungrow are being built specifically to:
- Participate in reserve markets.
- Enhance overall network stability.
- Support a higher share of variable renewable energy.
This is where green technology, AI, and power electronics intersect. Modern grid-forming inverters rely heavily on advanced control algorithms, model-based control, and increasingly AI-driven tuning to maintain stability across changing system conditions.
Why Investors Should Care About Grid-Forming
From a pure finance angle, grid-forming capability:
- Future-proofs assets as system operators start to mandate or reward stability services.
- Opens up premium ancillary products that may only be available to grid-forming resources.
- Positions the asset as critical infrastructure, not just a trading tool.
If you’re underwriting BESS today, you want to know whether the asset can still be grid-code compliant and revenue-relevant in 2035. Grid-forming capabilities are quickly becoming part of that answer.
Case Studies: Exilion–Merus and Nala–Sungrow in Finland
Two concrete projects show how these trends are playing out in practice.
Exilion’s 30MW / 66MWh Grid-Forming BESS with Merus Power
- Size: 30MW / 66MWh (roughly 2.2 hours duration).
- Location: Kuortti, Mäntyharju, Eastern Finland.
- Developer / Integrator: Merus Power.
- Investment: ~€17 million.
- Timeline: Completion targeted for 2026.
Merus operates as a system integrator, sourcing containerised BESS units from OEMs and pairing them with its in-house power conversion system (PCS) and grid-forming controls.
What stands out:
- It’s their first 2‑hour system in Finland, and aligned with a pipeline now “pretty much 2‑hour projects.”
- It follows earlier Finnish builds: 30MW / 36MWh and 38MW / 43MWh grid-forming projects, which were closer to 1‑hour duration.
This progression—1‑hour, then slightly longer, then fully 2‑hour—is almost a playbook for maturing storage markets.
Nala Renewables’ 50MW / 100MWh BESS with Sungrow
- Size: 50MW / 100MWh (2‑hour duration).
- Location: Kauhava, Finland.
- Technology: 22 units of Sungrow’s PowerTitan 2.0 BESS.
- Construction: KSBR as EPC.
- Finance: Long-term project finance from Société Générale.
- Commercial: Trafigura to trade the BESS; Nala is a JV between Trafigura and IFM Investors.
A few things make this project especially interesting from a green technology and investment perspective:
- It’s Nala’s first Finnish project, and they call Finland a strategic BESS market in Europe.
- It combines bankable OEM tech (Sungrow) with institutional finance (SocGen) and global trading expertise (Trafigura).
- It explicitly targets both reserve markets and grid-forming stability services.
This is the template we’re going to see more often: specialist OEM + local EPC + global investor + sophisticated trader, all building around the assumption that batteries are central to the clean energy system, not a side hustle.
What This Means for Developers, IPPs, and Investors
Here’s the thing about Finland’s BESS shift: it’s a preview, not an exception. If you develop, own, or finance storage assets in Europe, the same logic will reach your market.
1. Design Assets Around Future Markets, Not Today’s Hottest Product
If your business case still assumes “frequency response forever,” you’re behind. The smarter path is to:
- Model scenarios where ancillary prices fall and capacity markets strengthen.
- Evaluate 1‑hour vs 2‑hour vs 4‑hour designs against those future states.
- Consider grid-forming as a strategic option, not just an add-on.
Many portfolios will end up with a mix: 1‑hour systems in very specific, short-duration products, and 2‑hour+ assets positioned as multi-service workhorses.
2. Build for Revenue Stacking from Day One
The most resilient BESS assets in a green technology future will:
- Provide fast frequency response.
- Bid into capacity markets.
- Run energy arbitrage when spreads make sense.
- Deliver grid-support functions (voltage, inertia, black-start).
Grid-forming controls, smarter optimization software (increasingly AI-driven), and robust hardware are all part of making that possible.
If your business model only monetizes one or two of those, you’re leaving money—and risk mitigation—on the table.
3. Take Grid-Forming Seriously in Technical DD
Technical due diligence in 2026 should include very specific questions:
- Is the PCS grid-forming capable today, or “grid-forming ready” in marketing only?
- Has the vendor demonstrated black-start and islanded operation at scale?
- How is control logic validated and updated over time (including AI or advanced control algorithms)?
- What’s the vendor’s track record with TSO grid code compliance?
The Finnish projects with Merus and Sungrow are strong examples of where the bar is heading.
4. Use Finland as a Benchmark for Other Markets
If you operate in Germany, Italy, the UK, or the Nordics more broadly, Finland gives you a lens on:
- How quickly ancillary markets can saturate when storage pipelines accelerate.
- The point at which TSOs start valuing grid-forming capabilities.
- How banks and institutional investors become comfortable backing merchant-exposed but technically advanced BESS.
I’ve found that referencing real projects—MW, MWh, commissioning dates, financing structures—helps internal stakeholders move from abstract talk about “storage” to concrete, bankable strategies.
Where Green Technology and AI Fit into This Story
These Finnish BESS projects aren’t just big batteries; they’re digital assets. Control systems, trading strategies, and performance optimization are all increasingly enabled by AI and advanced software.
In the context of our broader Green Technology series, grid-scale batteries sit at the intersection of:
- Clean energy: enabling higher shares of wind and solar.
- Smart grids: using intelligent inverters and real-time control.
- AI and optimization: forecasting prices, managing degradation, and automating dispatch.
The reality? The hardware (MW, MWh) is increasingly commoditized. The long-term edge will come from:
- How well you integrate grid-forming controls.
- How smart your trading and optimization algorithms are.
- How effectively you manage lifecycle performance, from degradation to repowering.
If you’re planning BESS investments for 2026–2035, Finland is essentially telling you: build for intelligence and flexibility, not just nameplate power.
What You Should Do Next
If you’re a developer, IPP, or investor looking at storage:
- Revisit your standard design: Challenge any default assumption that 1‑hour is “enough.” Model 2‑hour options against future market scenarios.
- Ask explicitly about grid-forming: In RFPs and vendor meetings, treat grid-forming as a core requirement, not an optional extra.
- Plan for multi-service revenue: Design commercial structures that allow your BESS to earn from reserves, capacity, arbitrage, and grid support.
- Build your digital stack: Whether in-house or via partners, invest in optimization, forecasting, and AI tools that can make full use of these capabilities.
Finland’s 2‑hour grid-forming batteries are a clear signal of where serious capital is moving. The next wave of profitable green technology assets won’t just store energy—they’ll stabilize the grid, support renewables, and earn across multiple markets for years to come.