Supplier to Australia’s biggest battery hives off its storage business due to low sales and margins

Battery storage costs have plunged spectacularly over the last few years – down 70 per cent according to one leading supplier – but that means that it remains a highly competitive and a even cut-throat business.

The supplier of the most powerful battery to be built in Australia – US-based Powin – filed for bankruptcy protection even before the 850 MW, 1680 MWh Waratah Super Battery on the central coast of NSW was built.

That battery still has not reached its full capacity, but that is because of a fault in the Australian-supplied transformers, one of which has to be rebuilt and won’t be delivered to the site until later this year.

Just up the road, the 700 MW, 3,170 MWh Eraring battery will be the biggest in Australia in terms of storage capacity – at least for a while – and the first stages of the project have already been completed.

Its supplier, the Finnish-based Wärtsilä, has decided to hive off its relatively small battery business into a new joint venture, largely because of low orders and low margins, and because it seems more interested in its “engine” business that is doing very well out of soaring data centre demand in recent months.

Australia has been the strongest market for Wärtsilä, which launched its battery business with the purchase of Greensmith in 2017, and apart from its contracts to supply the Eraring and Torrens Island batteries, also has contracts for the Bennett Creek, Blind Creek and Bungama batteries.

But the new order intake has been low, particularly in the US thanks to Donald Trump’s “Independence Day” tariffs, and its margins also running at just 3.3 per cent according to the company, which is diluting the company’s overall profit margins.

So, less than a fortnight after releasing its new strategic vision that included battery storage, it has decided to put the business into a new joint venture with German solar and storage company RCT Solutions, which will run the business.

CEO Håkan Agnevall said the storage business is challenging, thanks to the US tariffs and the over-capacity in the battery market -driven in part by the lower than expected growth in EVs.

“It started with increased U.S. tariffs, also regulatory changes and also downstream expansion or upstream expansion of battery cell manufacturers, which now starts to compete directly with us as a system integrator,” Agnevall said in a call with analysts last week.

“The competitive dynamics, and we’ve talked consistently about this now for a time, the competitive dynamics have put significant pressures on profitability and order intake.”

The Wärtsilä storage business has 480 employees globally, and last year had net sales of €694 million, about 10 per cent of the company’s overall sales, and operating results of €23 million, which is 2.8 per cent of Wärtsilä’s total operating results for 2025. 

“It’s clearly the smallest or the smaller piece of Wärtsilä overall we’re talking about here,” Agnevall said. The joint venture will make a loss in it first year, due to write downs, but “the plan is that the JV will generate positive operating results towards of 2027,” he said.

“There is a lot of capacity for battery cell manufacturing on the market, and they are looking into new industries and clearly identifying energy as one, and where you basically have suppliers, battery cell suppliers starting to compete. 

Peter Fath, the head of RCT Solutions and who will be CEO of the joint venture, says the energy storage market is evolving rapidly.

“Our focus will be on strengthening competitiveness, accelerating profitable growth, and positioning the joint venture as a leading player in battery energy storage worldwide,” he said in a statement.

The transaction is expected to close in the third quarter of 2026 subject to regulatory and other customary conditions and approvals as well as arrangement of a financing package.

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