Wärtsilä and RCT create new joint storage integrator Valo

Solmar Insights

Wärtsilä has spun off its battery energy storage system (BESS) business into Valo, a newly formed joint venture with RCT Solutions, holding equal ownership stakes. Valo launches with over 20 GWh of projects in its portfolio and is projected to remain unprofitable through late 2027, according to both companies.

Joint venture structure and leadership

Valo was formally established on October 1, 2026, following regulatory approvals and the close of the 50/50 joint venture deal between Wärtsilä, the Finnish technology company, and German engineering firm RCT Solutions. Peter Fath, formerly the CEO of RCT Solutions, takes the helm as CEO of Valo. Luke Witmer was named chief technology officer.

The venture absorbs Wärtsilä’s global energy storage activities, including its portfolio of more than 130 active utility-scale BESS projects worldwide. While the companies may invite additional investors over time, any new equity could dilute the founding stakes currently held by Wärtsilä and RCT Solutions.

Wärtsilä’s warranty guarantees on ongoing projects remain in place, reducing transition risks for developers and investors working with the former Wärtsilä pipeline. All told, 480 employees were transferred from Wärtsilä’s energy storage segment to the new entity.

Financial transition and loss forecast

Wärtsilä expects the joint venture to incur operating losses through at least late 2027. For the full year 2026, the company has guided an operating loss between €40 million and €50 million, driven by a low volume of new orders and costs associated with restructuring, notably including a write-down of capitalized research and development spending.

In 2025, Wärtsilä’s energy storage business posted net sales of €694 million with a reported operating margin of 3.3%. The closing order book stood at €719 million, marking the sector as Wärtsilä’s smallest by revenue. Following the transition, the storage business will now appear as a share of results in associates on Wärtsilä’s financial statements, rather than as a direct operating segment.

The anticipated transformation costs and lower order activity highlight the sector’s cyclical risk profile, underscoring the long lead times and dynamic contract environment faced by utility-scale storage integrators.

Portfolio composition and operational implications

At launch, Valo claims control of more than 20 GWh of utility-scale BESS capacity, spanning over 130 projects across global markets. The integration of former Wärtsilä projects under the Valo brand gives the new company a broad operational footprint, with continuity for clients and partners already engaged in contracted works.

Wärtsilä stated that RCT Solutions has previously been a key supplier to its energy storage business, positioning the joint venture for improved vertical integration. The companies noted RCT’s background in engineering battery and solar manufacturing facilities internationally as a potential operational advantage.

One notable forward-looking detail is mention of a possible integrated BESS manufacturing initiative in the United States led by RCT; neither firm has provided concrete project names or models yet, but this could alter domestic supply chain dynamics if executed.

Strategic context and market impact

Wärtsilä’s decision to divest its BESS business emerged after a strategic review that began in October 2023 and concluded in March 2025, with the unit eventually listed as discontinued operations. This move aligns Wärtsilä’s portfolio with its core businesses and provides a clearer focus on higher-margin segments.

For project developers and institutional buyers in the US, Valo’s joint venture structure provides continuity in delivery for active contracts and potentially deeper supply chain integration if the cited US-based BESS manufacturing plan materializes. Project guarantees issued by Wärtsilä will help assure counterparties during the transition period.

The launch of Valo comes as the storage sector faces competitive pressures, long order cycles, and evolving cost structures globally. The merged platform is likely to focus on achieving scale and operational efficiency to offset short-term loss forecasts, a common challenge in utility-scale BESS markets, especially as the sector shifts to standardized solutions and greater vertical control.

Reporting via the original publisher