Merus Power: Significant order keeps good growth outlook on track

Translation: Original published in Finnish on 11/03/2025 at 09:21 am EET

The rather large energy storage order is of the same magnitude (17 MEUR) as the company's previously won largest energy storage orders. The order supports the outlook for our 2026 revenue estimate. Our estimate requires one more large order or several smaller ones, but these typically occur around the turn of the year or early in the year. The order does not imply the need for estimate changes, but it confirms the company's competitiveness in a changing market.

Significant energy storage order

Merus Power announced on Friday, after the stock market closed, a significant energy storage delivery contract. The company will supply an energy storage system with a total value of approximately 17 MEUR, which is expected to be completed in 2026 in Mäntyharju. The client is Finnish Exilion, whose operations include investing in real estate and renewable energy. The power of the energy storage is 30 MW and the capacity is 66 MWh. The value of the order is significant for the company, although not record-breaking. This is now the fifth energy storage order in the 10-20 MEUR range, all of which have been received during 2023-2025. Merus Power acts as the main project developer for the project, which is familiar to the company from several previous energy storage deliveries.

The energy storage system utilizes grid-forming technology that supports the grid, in which Merus Power has been a pioneer, having recently opened the Nordic region's first energy storage facility utilizing this technology in Valkeakoski. This technology, which prevents disturbances in the power system, will become a mandatory requirement for large energy storage systems. We believe Merus Power has a strong ability to meet Fingrid's technical requirements with its rather large expert organization.

The first large 2-hour energy storage delivery for the company

This is the first large-scale energy storage facility delivered by Merus Power with a capacity of around 2 hours at maximum power. Previously, the company has mainly supplied 1-hour energy storage systems, which have been popular for Fingrid's frequency regulation market. A 2-hour energy storage provides better conditions for trading in the wholesale electricity markets, which diversifies the storage's earning potential. The market trend in Finland over the last year has clearly moved towards "longer duration" energy storage, which has likely been influenced by concerns about the saturation of the frequency regulation market. Merus Power manufactures the power electronics used in the storage systems, but the batteries are sourced externally. Thus, in “longer” energy storage systems, the share of the company’s own manufacturing is lower. On the other hand, battery prices have decreased sharply in recent years, so the euro-denominated revision in the value of pass-through components remains low overall. We also see the order in a positive light because it demonstrates the competitiveness of Merus Power's offering in 2-hour energy storage projects.

Order backlog on track for 2026

With the now announced order, the order book for energy storage systems until 2026 is starting to look quite good, considering our estimates. We estimate that deliveries from the order book will be scheduled for 2026 for around 28 MEUR, from which the distance to our revenue estimate (37 MEUR from electricity storage) is no longer particularly long. Materialization of the growth estimate still requires more orders, but in previous years, the company has often received orders around the turn of the year and in early Q1, allowing significant revenue from these deliveries to be recognized in the upcoming year. However, we note that estimating revenue on an annual basis is challenging, as individual orders account for a significant portion of the total.

Source: Inderes' estimate (MEUR)