The Institutional Infrastructure Battery Fund (IIBF) is launching as an infrastructure investment fund for institutional investors, specifically focused on large-scale battery energy storage systems (BESS) in Germany. At launch, the fund has already secured its first two storage projects in central Germany under purchase agreements and has an identified project pipeline representing an investment volume of more than €300 million.
As renewable energy deployment progresses, large-scale battery storage systems are becoming an important component in stabilizing the German electricity grid and balancing volatile generation peaks. The IIBF translates this structural infrastructure need into an investment profile tailored to regulated institutional investors: the fund invests in a diversified portfolio of large-scale battery storage projects in Germany that are ready to build or close to their commercial operation date (COD) and holds them for the long term following acquisition. Early-stage project development and permitting risks therefore remain outside the fund.
Clearly defined responsibilities: institutional investment management and European energy trading expertise
The IIBF is built on a clearly defined division of responsibilities between two established specialists in their respective markets:
- Investment management, underwriting and structuring by 2IP: Institutional Investment Partners (2IP) is responsible for investment management, transaction underwriting and institutional fund structuring. As the storage facilities are held throughout the fund's term, pre-acquisition due diligence is particularly important: 2IP assesses each transaction against clearly defined risk, financial viability and cash flow criteria, incorporates contractual security mechanisms and provides ongoing oversight through its portfolio and investment management.
- Market access, asset management, software and energy trading by Second Foundation: As one of Europe's major technology-driven energy traders, the Second Foundation Group manages the energy-related and technological value chain surrounding the storage facilities. This ranges from direct project access and commercial and technical asset management of the facilities, through proprietary control and monitoring software, to high-frequency trading of capacity in the European electricity and balancing markets.
Contractually underpinned base distributions with additional market upside
The IIBF's income model is designed to cushion downside exposure to the volatility typical of electricity markets while also harnessing it for the portfolio. The core of the fund's income consists of long-term contractual usage fees (lease payments) for making the storage facilities available. Contractual advance payments and additional security mechanisms support the predictability of regular distributions to investors.
In addition, performance-linked remuneration components allow investors to participate directly in Second Foundation's trading performance in the electricity and balancing markets. As the majority of projected total income is generated continuously from ongoing operations during the holding period, the overall return depends only to a limited extent on eventual disposal proceeds at the end of the fund's term – significantly reducing terminal value risk.
First transactions totalling 55 MWh secured – focus on high system security
Portfolio construction begins immediately with two projects secured under purchase agreements:
- Radis project (Saxony-Anhalt):8 MW of power and 30 MWh of storage capacity; planned commercial operation date (COD) in October 2027.
- Gößnitz project (Thuringia):35 MW of power and 25 MWh of storage capacity; planned commercial operation date (COD) in November 2027.
Two further battery storage projects are already undergoing due diligence. During operation, all facilities are controlled and monitored in real time via Second Foundation's proprietary software platform. Secure system access and clearly defined control processes ensure a high level of operational security and protect the facilities against unauthorized access.
“With the IIBF, we are giving institutional investors structured access to an infrastructure asset class that is becoming increasingly important to the German electricity system. Under a long-term holding strategy, the stability of an infrastructure investment is largely determined at acquisition and through the design of its contracts. That is why, at 2IP, we combine institutional fund structuring with independent, rigorous transaction underwriting and ongoing investment management: by investing only from the ready-to-build stage onwards, insisting on robust security mechanisms and establishing a contractually fixed cash flow floor, we create a balanced relationship between the security of ongoing income and the opportunities offered by the German flexibility market,” says Jörg Homann, Managing Partner at Institutional Investment Partners (2IP).
“The economic success of a large-scale battery storage system is determined not by the physical asset alone, but by high-frequency trading, technology and intelligent control on a second-by-second basis. As an energy trader and software developer operating across Europe, we bring our proprietary control technology, asset management of the storage facilities and direct trading presence in the electricity and balancing markets together in a fully integrated operating model,” says Stephan Lehrke, Head of Second Foundation Germany.
The IIBF is intended exclusively for institutional or professional investors. Communications relating to the fund are conducted in accordance with applicable legal and regulatory requirements.
Disclaimer This release is for information purposes only. It constitutes neither a public offer nor an invitation to submit an offer to acquire units in the fund. Any investment decision should be made solely on the basis of the relevant fund documentation and following an independent legal, tax and financial assessment.
