Valuation & Regulatory Stress Testing for Battery Storage Investments

Regulation as a weighted scenario timeline

Grandfathering under §118 EnWG is a state commitment — and capital is locked in before it is clear whether the commitment holds. If it is breached, the breach applies from the cut-off onwards and acts permanently on cash flows: a lasting charge on grid offtake. We treat this breach not as a forecast but as a stress test weighted at 25% on a scenario timeline — exemption, political branching, a zonal price level as a further layer.

In figures: if the commitment is breached, this costs ~€29m in project value relative to continuation — calculated path-paired, largely independent of your base case. In the likely case, it stays at the mild capacity charge (~€7/kW/a). MEAG (asset manager of Munich Re/ERGO) shows the magnitude: Spain guaranteed solar feed-in tariffs and cut them years later — investors such as MEAG suffered substantial losses on previously profitable portfolios. A state-granted benefit, later withdrawn — the same mechanism our stress test quantifies.

This edition is deliberately conservative, based on day-ahead prices (licensing): the reference asset's P50 is close to zero — 44.1% of 1,000 paths positive (TRC upper bound; see one-pager). A basis for decisions, not a point estimate: both branches quantified separately, downside stated as VaR — board-ready before FID. The intraday analysis (ID3) is available in print only for licensing reasons — talk to us.

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Updated (14 July 2026): replaces the 9 July edition — correction of the FCR remuneration calculation, 12 July 2026.

FID Cutoff: §118 Grandfathering and the Investment Decision

Grandfathering under §118 EnWG applies only with a final investment decision (FID) before the AgNes determination takes effect. The bottleneck isn't revenue — it's FID readiness before the window. Instead of a single number, the analysis delivers a distribution (P5/P50/P95 from 1,000 Monte Carlo paths) — the de-risking evidence a bank needs.

Methodologically, regulation (and, in future, further drivers) is modelled as a sequence of scenarios along the time axis: the switch dates are fixed (three scenarios mean two switches). Per phase there is either a single fixed scenario — a deterministic sequence is the standard case — or, where the future is uncertain, several scenarios drawn according to assigned occurrence probabilities (stress test). Regulatory scenarios are implemented today; economic ones (e.g. a multi-year inflation shock) will follow.

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