Why securing project finance for energy storage projects is challenging It has traditionally been difficult to secure project finance for energy storage for two key reasons. Firstly, the nascent
1. Project Financing (The Classic Hustle) Think of this as the mortgage of the energy world. Banks like Goldman Sachs and HSBC are now offering non-recourse loans specifically for BESS
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It has traditionally been difficult to secure project finance for energy storage for two key reasons. Firstly, the nascent nature of energy storage technology means that fixed income lenders and senior debt providers are naturally risk averse.
The traditional approach to energy storage projects has restricted investment because it requires financiers to carry out significant due diligence whenever they fund a scheme – because of this, most energy storage investment has historically been off balance sheet or via specialist funds.
Lenders have been willing to lend to renewable assets against a guaranteed fixed revenue stream. This may take the form of a contract for difference, or some other sort of government-backed incentive, or a power purchase agreement with a bankable and creditworthy counterparty.
However, with early battery storage projects now able to point to a proven track record of successful operation, and with the scale of projects now coming through markedly larger, project finance providers are growing in confidence. Lloyd says there are more lenders in the BESS space than there were three or four years ago.
