Energy storage financing options

Should the energy storage industry evaluate policies and financing models?

The next consideration is for the energy storage industry to evaluate the policies and financing models that have allowed the renewable energy industry to expand over the last decade and to replicate what worked well and improve on the identified shortcomings.

Is energy storage a good investment?

The primary benefit of distributed storage systems, so-called “value-stacking,” also presents a risk if competing uses of the battery are not properly managed. Unlike traditional project financings where assets are limited in their application, an energy storage system must be given the flexibility to operate in a variety of service roles.

How are energy installations financed?

Most such installations are financed from the balance sheets of consumers and companies, often supplemented by loans, or through equipment leases and PPAs, where third parties (e.g. energy service companies [ESCOs], see below) install and retain ownership of the asset.

How are energy investments financed?

Past editions of WEI have noted that 90% of energy investments are financed on a primary basis from the balance sheets of companies and consumers, with a smaller role for project finance (mostly loans from banks).

Do energy storage systems provide value to the grid?

It is now clear that energy storage systems (ESSs) can provide valuable services to the grid. For systems to be deployed, however, the value of the services that they provide must exceed the costs of the system over its lifetime. This introduces the first challenge surrounding energy storage financing – quantifying the benefits of an ESS.

Are energy storage projects a project finance transaction?

In many ways, energy storage projects are no different than a typical project finance transaction. Project finance is an exercise in risk allocation. Financings will not close until all risks have been catalogued and covered. However, there are some unique features to energy storage with which investors and lenders will have to become familiar.