Merus Power’s H1 was clearly stronger than our expectations in terms of revenue and earnings, although this was also due to timing factors. Order intake was 14% above our forecast. The company kept its 2025 guidance unchanged. Our own interpretation is also that the significance of strong H1 revenue for the full year outlook is limited. The company has grown rapidly and recently secured its first international electricity storage project, but at the same time, the rapid change in the domestic electricity storage market and the saturation of the frequency regulation market may also hinder continued growth during 2026. The company is organizing a briefing at 10:30 AM.
Pauli interviewed Merus CEO Kari Tuomala regarding H1.
Topics:
00:00 Introduction
00:31 H1 Summary
01:21 Profitability
02:37 Order book and growth prospects
03:40 Power quality solutions market
05:54 Energy storage market
07:46 Energy storage delivery to Poland
10:42 International competition
Here is a new company report from Pauli after the H1 releases.
The beginning of the year for Merus Power was characterized by high production volume, but the full-year guidance remained unchanged. The development of the gross margin did not meet our expectations, but fixed costs scaled well even with high production volume. The company continues to focus on improving production efficiency and expanding its customer base, for example, into new markets, so that growth is not solely dependent on the demand for domestic energy storage. Visibility into a significant improvement in profitability remains uncertain, against which the valuation is high. We reiterate our reduce recommendation and raise the target price to 5.0 euros (previously 4.8 €).
Merus Power has signed a second electricity storage deal in Poland, strengthening its strategy for international growth in the electricity storage market. The new project will be implemented in cooperation with the Polish company EPQS, and it involves a 2 MW / 9 MWh electricity storage system to be delivered to a private sector investor-customer.
The electricity storage system will be delivered and commissioned during 2026. A maintenance agreement will also be signed with the customer, supporting the long lifespan of the equipment and customer satisfaction. The total value of the deal is just under 2 million euros, of which Merus Power’s share is significant.
The project will be implemented in cooperation with EPQS. The local partner ensures knowledge of the Polish market and local implementation capability. Merus Power is responsible for the delivery of the electricity storage equipment, commissioning, and lifecycle services. This cooperation model enables the offering of cost-effective and scalable energy solutions in new markets.
The first electricity storage project in Poland was announced in summer 2025, and this second deal now signed strengthens Merus Power’s foothold in the developing energy markets of Central Europe.
Merus Power has implemented the first grid-forming energy storage in the Nordics. The 30 MW/36 MWh energy storage commissioned in Valkeakoski meets Fingrid’s requirements for large grid-forming energy storage systems. The functionality of the technology has been approved and verified through simulations and demanding field tests by Fingrid. Grid-forming energy storage systems are capable of independently supporting the grid during disturbances and fault situations. The energy storage strengthens the stability of the electricity grid and enables the addition of renewable energy to the grid.
Merus Power acted as the developer, seller, and EPC contractor for the project, responsible for the entire project from permitting and design to equipment manufacturing, delivery, and commissioning. The company’s energy storage systems are based on its own technology developed in Finland. The investment in grid-forming development complements Merus Power’s equipment solutions and promotes technological leadership. The client for the project is the Swiss energy company Alpiq, for whom this project is also their first grid-forming energy storage. The project strengthens Alpiq’s position as a provider of flexibility solutions in the European electricity markets and supports the growth of renewable energy.
Merus Power and Exilion have signed an agreement for a 30 MW/66 MWh energy storage system. The total value of the project is approximately 17 million euros. The energy storage system will be completed during 2026 in Kuortti, Mäntyharju, bringing a significant energy investment to Eastern Finland. The order is an important step in the company’s energy storage strategy and a demonstration of Merus Power’s own domestic technology’s competitiveness.
Merus Power acts as the overall responsible project developer for the Mäntyharju energy storage system. The company’s fast delivery capability and commissioning enable significant regulation capacity for the domestic Exilion in the electricity markets. Merus Power recently announced the first grid-forming energy storage system commissioned in the Nordics. This delivery also utilizes the same technology, which supports the grid’s natural inertia and improves the stability of the electricity system. This enables a stronger transmission grid even in situations where wind and solar energy amounts are high. South Savo is an attractive destination for several renewable energy investments.
Here are Pauli’s comments on Merus’s €17 million order.
The rather large energy storage order is on the same scale (€17 million) as the company’s previously won largest energy storage orders. With this order, the visibility into our forecasted revenue for 2026 is better than before. Our forecast still requires one large or several smaller orders, but these have typically occurred around the turn of the year or early in the year. The order does not necessitate forecast changes, but it provides confirmation of the company’s competitiveness in a changing market.
Apparently, there’s a lot of selling pressure from small shareholders in a thinly traded stock that reports infrequently. Nevertheless, the low valuation is puzzling, especially when all the news points to growth faster than the base scenario!
I have also noticed that there has been a lot of stock on the sell side in recent weeks. Piles of a couple of thousand shares at different price levels, with the average daily turnover typically only a few thousand. Of the largest owners, only one, Turret Oy Ab, has significantly reduced its ownership in the last month (58k, ~15%), so perhaps that explains the selling pressure. Once it reaches its target, it will probably ease off.
It’s not directly related to the company in any way, but it caught my attention in the spring. Namely, Nordnet somewhat unexpectedly dropped Merus Power’s collateral value to 0%. It used to be 10%. This is likely related to the increase in net debt in the annual figures. This might scare some small investors (even if they don’t use credit).
I don’t believe net debt is the factor, but rather the non-existent trading volume. In a situation where collateral would need to be quickly liquidated, a small company might not fetch a good price. The company could improve liquidity by acquiring a market maker, by increasing the free float, and in my opinion also by switching to quarterly reporting.
I see it the same way. At some point, Ahlstrom has been buying, it will be interesting to see if that continues. There is a very big need for electricity storage, and it will only grow as more wind power is built. This is also a security of supply measure. The company itself seemed to estimate the market to grow by 7% annually.
Merus Power and Nefco, the Nordic green bank, have agreed on a 5 million euro loan to support Merus Power’s internationalization and its capabilities to participate in increasingly larger energy sector projects. The financing package supports Merus Power’s position as one of the leading providers of energy storage and power quality solutions in the Nordics.
Nefco’s financing covers a five-year period and is partly guaranteed by the European Investment Fund (EIF). As part of the InvestEU Programme, EIF guarantees enable more favorable loan terms, aiming to accelerate the green transition while improving companies’ competitiveness.
Here are Paul’s comments on Merus’s loan agreement.
The announced EUR 5 million loan agreement provides the company with significantly increased liquidity to finance the working capital required for battery storage-driven growth in the coming years. We estimate that the company is currently on the verge of a profitability turnaround, whereby future growth could increasingly be financed by internal cash flow. In the short term, the loan agreement will have a moderate upward effect on financing costs, but at this point, we do not see a need for significant forecast changes.
In just one year, prices in the reserve capacity markets have fallen to about one-third. Comparing Q4/2024 to Q4/2025. A few hundred MW of batteries have entered the market. What happens when the pace only accelerates and another couple of thousand MW of batteries enter the market?
Hopefully, those who made investment decisions did not look at peak year prices and think that even if prices halved, the investment would still be very profitable. Because the reality might be that halving is just a dream, and the reality is -90%. That’s what it really looks like now.
Oh, and spot arbitrage revenues. But even from there, it’s hard to get nearly enough to cover costs. Good if one gets 30 k€/1 MWh per year. We are far from break-even when all costs on top of the investment are considered.
Multi-market optimization? Optimization cannot raise saturated prices. No reserve capacity market is safe from saturation. All will fall to average prices below 5 €/MW; even 2 €/MW is a very possible long-term average price level. That’s not enough to break even, even with spot arbitrage.
The outcome? No more investments will be made in batteries unless their prices come down significantly. The ready batteries already on the market might manage to recover their costs. Perhaps. The first batteries that have been on the market for years are highly profitable.
The Merus (Meruksen) battery market is threatening to disappear. I’d be happy to be wrong, but this is my view.
Finland’s reserve market is indeed saturating, but the challenges of the electricity grid have not disappeared. Emission prices are also quite high in Europe, even though the economy is not doing very well.
At least Poland’s electricity market, which relies on coal power, will change strongly in the coming years, and in my opinion, Merus’s initial entry into Poland feels like an attractive and sensible strategic choice, at least to me. There, BESS+Solar and BESS+Wind will certainly displace coal power. If Merus gets involved in these projects, there will be significant market opportunities.
Also, the focus on lower-risk technology sales (EPS), combined with fleet growth and the launch of a higher-margin service business, keeps me as an owner, at least for now.
And indeed, the electrification of industry is a megatrend that will not disappear, meaning there will certainly be growing demand for STATCOMs. In this regard, Merus already has strong evidence of global EPS business, meaning global conquest is quite credibly achievable. And the removal of free allocations of industrial emission allowances will certainly not slow down this conquest work.
