Axpo and Zelestra closed a ten-year physical toll contract to support the development of a 207 MW and 830 MWh battery energy storage system in northern Italy.
The plant will be located in Friuli-Venezia Giulia, one of the country's most industrialized regions. Construction is scheduled to begin in 2027, while commercial operation is projected to commence in 2028.
The agreement will allow Zelestra to have long-term revenue visibility to move forward with the investment. Axpo, for its part, will provide the optimization services necessary for BESS to participate in the market and bring flexibility to the Italian electricity system.
“Flexible generation is a fundamental pillar of Italy’s energy transition. As renewable capacity increases, solutions like BESS are essential to ensure grid stability and maximize the value of clean generation,” said Simone Rodolfi , Head of Origination and Structured Products at Axpo Italia.
The project will be built, operated, and owned by Zelestra. With a four-hour lifespan, it will be able to store electricity during peak production periods and shift it to times when demand or prices are higher.
The facility will also be able to provide services aimed at balancing the system, responding to frequency variations and reducing imbalances caused by a greater participation of solar and wind sources.
The toll contract stipulates that Axpo will assume commercial management and optimization of the asset. This structure partially decouples project revenues from the volatility of electricity markets and provides the developer with a more stable financing basis.
For Axpo, this is its first agreement of this kind in the Italian energy storage market. The company seeks to expand its origination and risk management business into a segment that is gaining prominence as renewable energy generation grows.
“This historic alliance demonstrates Axpo’s commitment to innovative energy solutions and reinforces our position in the Italian market as a trusted partner in origination and risk management,” said Rodolfi.
The executive believed the agreement could also open new opportunities in Italian storage, where projects need to combine different revenue streams to achieve financial closure.
Toll contracts are beginning to play a strategic role in this process. By providing certainty over extended periods, they can reduce the owner's exposure to market risk and facilitate access to financing for capital-intensive projects.
The transaction also strengthens Zelestra's position in Italy. The company stated that, with this project and the contract signed with Axpo, it becomes the second largest owner of authorized storage capacity in the country, with a portfolio of 970 MW .
“Our agreement with Axpo demonstrates how long-term partnerships with key players in the energy market can accelerate investment in the flexible infrastructure that the country needs,” said Eliano Russo , CEO of Zelestra Italia.
The project will be Zelestra's first BESS in Friuli-Venezia Giulia and combines a location close to major consumer centers with an advanced stage of development and a defined commercial structure before the start of construction.
Its location will allow for responsiveness in an area with high industrial activity and a growing need to integrate new renewable generation without compromising security of supply.
The battery will be able to absorb surplus energy during periods of low demand, prevent some of the grid outflows, and return electricity to the system when it is most needed. The strategy aims to improve the utilization of existing generation infrastructure and networks.
Long-term contracts gain ground in Italian storage
The advancement of BESS in Italy no longer depends solely on technological availability or permits. Revenue structuring has become a key factor in unlocking investments and ensuring that assets remain operational throughout their useful life.
Battery systems can participate in different markets and provide balancing, arbitrage, and reserve services. However, the revenues associated with these activities can vary considerably, making it difficult to project the future profitability of each installation.
The contract between Axpo and Zelestra aims to reduce that uncertainty through a ten-year commitment. While Zelestra retains ownership and operation of the asset, Axpo manages its commercial stake and optimizes its performance according to system conditions.
This type of agreement allows risks to be distributed between companies with complementary capabilities: the developer focuses on construction and technical management, while the optimizer assumes a significant portion of the exposure to electricity markets.
For Italy, battery deployment will be necessary to support the gradual replacement of conventional generation with variable sources. Without flexible assets, an increase in solar and wind capacity could intensify price volatility, congestion, and supply-demand imbalances.
The 207 MW BESS will provide storage capacity equivalent to four hours at maximum power. This duration will allow it to be used both for daily energy transfers and for providing flexibility services.
The alliance between Axpo and Zelestra thus shows how long-term private contracts are beginning to complement regulatory mechanisms and auctions in the development of European storage.
The planned construction, slated for 2027, will be the next step for a project that already has a location, authorized capacity, and commercial backing. Its commissioning in 2028 will add 830 MWh to an Italian system that will increasingly require batteries to integrate renewables, strengthen grid resilience, and respond to new electricity consumption patterns.