Why we invested in Scale Energy - establishing the largest decentralized battery storage network in Europe

Europe’s industrial backbone is feeling the heat. Soaring electricity prices, grid volatility, and mounting decarbonization pressures are putting unprecedented strain on Europe’s industrial sector. As energy markets tighten and renewables expand, the limitations of the current system become increasingly apparent. In Germany, electricity costs are currently 2-3x higher than in the US, with commercial and industrial (C&I) users carrying a disproportionate share of the burden. The sector accounts for around 70% of the country’s total electricity consumption and often pays additional charges tied to peak demand, grid usage, and volatility premiums. 

At the same time, the industrial sector holds a largely underutilized asset that could play a pivotal role in stabilizing the energy system: its grid connections.

The role of industrial grid connections in energy storage deployment

Each industrial site is connected to the electricity grid through infrastructure designed to meet high peak demand. For energy-intensive users, such as aluminum producers, chemical facilities, or paper manufacturers, these grid connections typically support loads of 1 MW or more.

However, operational data shows that these connections are often significantly underused. Average utilization typically ranges between 15-25% of total capacity. As a result, a large share of the grid infrastructure in the industrial sector remains idle - despite being technically ready and already permitted for high-capacity use.

This underutilization creates a unique opportunity for energy storage deployment. Industrial grid connections offer several advantages:

• They are already built and permitted, reducing time to deployment

• They are technically underutilized, allowing storage systems to operate without major upgrades

• They are located close to demand centers and local grid nodes, providing both system-level and site-level benefits

• They enable responsive load management, supporting participation in flexibility and balancing markets

In a market where centralized storage requires long development timelines and significant capital, this makes industrial grid connections a highly attractive platform for decentralized battery storage.

From passive infrastructure to active flexibility

By colocating battery systems with industrial grid connections, companies like Scale Energy are unlocking a previously dormant layer of flexibility. These batteries serve multiple functions:

• Charging when the grid is oversupplied, helping integrate renewables

• Discharging during peak demand, easing system stress and reducing peak charges

• Providing energy resilience and cost optimization for the industrial site

In this model, each industrial facility becomes more than a passive energy consumer: it becomes an active node in a more dynamic, decentralized grid. And critically, it does so without requiring new land, long permitting processes, or grid expansion.

The market potential: decentralized storage at industrial scale

Germany is home to around 400,000 C&I companies. Of these, an estimated 40,000-60,000 are energy-intensive operations with grid connections of 1 MW or more. These include aluminum smelters, paper mills, and automotive suppliers: companies with stable energy demand and strong incentives to reduce costs and decarbonize.

This segment forms the core addressable market for grid-scale storage in the industrial sector. It represents:

• A large pool of pre-built, underutilized grid infrastructure

• Tens of gigawatts of potential flexibility

• A customer base with a clear economic and operational case for adopting battery storage

Battery systems at these sites can help stabilize the power grid through demand-side flexibility, reduce electricity costs via peak shaving and load shifting, lower CO₂ emissions in hard-to-abate sectors, and accelerate the integration of renewables at the grid edge.

Despite the size of this opportunity, the market has lacked a deployment model that combines scalability, speed, and financing in a way that works for both industrial users and infrastructure investors.

Enter Scale Energy - turning idle grid capacity into active climate assets

Scale Energy approaches the challenge of industrial decarbonization by focusing on the specific constraints and opportunities within the sector. Instead of relying on centralized storage parks, which can be costly and slow to develop, the company deploys battery systems directly at industrial sites. This approach utilizes existing, underused grid connections, offering a more rapid and capital-efficient pathway to deployment.

By embedding storage at the site level, development timelines are reduced by up to four years, and capital expenditures can be lowered by approximately 30%, according to internal analyses. The solution integrates several components designed to meet industrial needs:

• Pre-engineered battery units, configured to align with industrial site specifications

• A proprietary Industrial Data Engine, which evaluates on-site grid usage patterns and informs optimal system sizing

• A fully financed delivery structure, minimizing upfront investment requirements for industrial operators

• Grid integration and commercialization capabilities, allowing for both local energy optimization and participation in broader grid services

This model addresses key structural barriers that have historically limited industrial adoption of storage technologies. It also introduces a new infrastructure asset category: distributed, site-embedded storage systems, which offers a more stable and geographically diversified alternative to greenfield storage projects.

With over 100 sites under evaluation and 500 MW currently in development, Scale Energy is rapidly expanding its presence in the German market for distributed energy storage.

Pioneering Europe’s largest decentralized energy storage network

We believe the future of grid storage lies in distributed, demand-side flexibility. Scale Energy is building exactly that. The company’s model strengthens the grid rather than burdening it. It creates cost savings for customers rather than new expenses. And it accelerates decarbonization, rather than delaying it. Putting it in the words of our General Partner Dörte Hirschberg: “Scale Energy is not only addressing an immense problem in the energy transition, but the team is also solving financial scaling challenges. Few companies manage early on to bundle venture and infrastructure CapEx financing into a convincing structure that enables attractive offerings for industrial customers.”

This is climate infrastructure done right: lean, integrated, and scalable.