Battery borrowing

How does battery storage financing work?

Battery storage financing structures usually involve a greater proportion of equity funding than would be typically seen on a renewables project and a shorter tenor of facility. Cash sweep mechanisms are often seen, to ensure that free cash is used to repay debt.

Can you finance a battery storage project?

Energy can be stored in a number of ways, depending on the source, but the most common is in chemical batteries. In this briefing, we look at some of the considerations for financing battery storage projects. Why chemical batteries? Chemical batteries are ideal for energy storage for a number of reasons: They are easily scalable.

Are government subsidies for battery storage a viable revenue stream?

The available government subsidies for battery storage in the UK do not currently form a sufficiently significant and stable revenue stream to ensure battery storage project financings are fundable on the basis of capacity market or ancillary services alone.

How do we finance the storage of electricity?

While financing the storage of electricity has often been carried out on a low-leveraged, corporate or portfolio basis, as the size of battery projects increases, we are now seeing more typical SPV non-recourse project finance structures, with a full security package.

How much does the UK government invest in battery technology?

It represents a UK Government investment of £610 million between 2017 and 2025. It supports the UK’s world-class battery facilities along with growing innovative businesses that are developing the battery supply chain for our future prosperity.

How are battery storage revenues derived?

Battery storage revenues are typically derived from a combination (or "stack") of revenue streams, including from wholesale market revenues, revenues from supplying services to National Grid Electricity System Operator (which may be under long-term contracts) and capacity market revenues (which can be for up to 15 years).