Axpo interview: the rise of flexibility contracts in European power
Axpo’s Domenico Franceschino talks to Energy Risk about flexibility contracts, battery optimisation and the role of risk management in valuing these bespoke products
The battery energy storage system (Bess) market has become a huge focus for energy market participants grappling with ever-growing intermittent renewable energy production. Bess is projected to grow by around 21% annually to 2030, with utility-scale capacity potentially increasing more than 15-fold between 2023 and 2030, according to the International Energy Agency.
To facilitate battery project financing and its continued utilisation, some large power market participants are structuring bespoke contracts around Bess and flexibility, facilitating new ways of managing and sharing risk in this nascent market.
“What we are seeing now … due to renewables and stress on the grid, [is that] flexibility is becoming more and more important [and that] battery and Bess is becoming a very important topic of discussion,” said Domenico Franceschino, head of origination for West and Eastern Europe and member of the management board of Axpo Solutions, talking to Energy Risk at E-World in February.
In this interview, Franceschino talks about the types of battery and flexibility contracts Axpo has structured. These include physical contracts involving scheduling and supply as well as financial products that provide, for example, a fixed spread between the top and bottom two, or four hours of the market depending on a variety of factors.
Key discussion points
00:14 What are people most excited about in terms of energy projects and transactions for 2026?
02:23 What types of flexibility transactions are you closing?
03:26 What needs to be considered when structuring physical contracts?
04:03 When it comes to discussing battery and flexibility transactions with the risk team, how much standardisation is there and how much does the risk manager have to start from scratch with each transaction?
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