NMC battery storage project financing options in Guernsey 2026

Can a borrower finance an energy storage project?

However, given some of the hurdles facing these projects (such as unproven technology risk and the lack of long-term committed offtake arrangements), a number of factors need to align in a borrower’s favour for it to secure limited or non-recourse project financing to develop an energy storage project.

Does project finance apply to energy storage projects?

The general principles of project finance that apply to the financing of solar and wind projects also apply to energy storage projects. Since the majority of solar projects currently under construction include a storage system, lenders in the project finance markets are willing to finance the construction and cashflows of an energy storage project.

Do European and UK regulators support battery energy storage systems?

The success in recent capacity market auctions in Italy and the UK, as well as other European countries that are building large-scale battery energy storage systems (BESS) projects, signals that the European and UK regulatory environment is providing a degree of limited support to the technology.

How are energy storage solutions financed?

Although energy storage solutions are often financed on a limited recourse project finance basis, the lending facilities used to finance energy storage solutions can take a variety of forms. Some of the more common facility types include: • Borrowing base facilities. • Asset finance facilities. • Expansion facilities.

How are battery storage transactions funded?

Funding techniques vary, but most battery storage transactions are funded on a short-term basis, taking into account corporate risk rather than on a pure stand-alone, nonrecourse basis. Regulation has a role in bridging the gap between inherent merchant exposure and long-term lenders’ needs for predictable cash flows.

How do Lenders look at energy storage projects?

In addition to looking at the projected revenue stream of the project, as is the case in a traditional project finance structure, lenders may look to the value of the underlying assets in an energy storage project in order to maximise the amounts available to the borrower.