BBDF 2025: Understanding BESS project bankability

While a quick poll at the opening session of the Battery Business & Development Forum 2025 suggested that financing is no longer seen as the biggest hurdle for battery storage deployment, the session “Bankability and Financing in the Context of BESS” drew significant interest. The room was overfull, with attendees lining the walls to hear pitches from speakers and a panel.

Despite the market’s growing maturity, securing financing remains a key step for developers. Whether through equity or debt, investors and banks are prepared to support projects, provided key risks are addressed.

Understanding bankability

Bankability typically refers to the extent to which both technical and market-related risks are mitigated. On the technical side, much depends on the choice of components and suppliers. For instance, if a European battery system is based on Chinese cells, developers should ensure that the European system provider fully backs the performance guarantees. Relying on a warranty from an overseas supplier with no European presence can increase perceived risk and complicate financing.

During the session, representatives from Commerzbank, Nord LB, ABN AMRO, Santander CIB, and DAL shared insights into their current approaches to structuring BESS project financing. While power purchase agreement (PPA) models remain important, there is growing interest in merchant-based projects, albeit with stricter conditions.

Lenders emphasized that projects must demonstrate sufficient income potential to cover debt obligations. Tolling agreements can help de-risk revenue streams, although they often reduce the developer’s direct control over the asset, which in turn can increase its technical risk. Some view this as a zero-sum game. Investors also closely examine a project’s intent; long-term ownership models are generally preferred over short-term, opportunistic approaches that aim for the highest revenues in a short period.

Mitigating technical risk through insurance and transparency

Insurance can play a key role in securing investment-grade ratings. Munich Re presented examples where performance insurance helped raise a project’s credit rating from non-investment grade to BBB, significantly lowering financing costs. Such policies can also step in if a manufacturer fails to honor warranty claims or goes out of business, providing added certainty for lenders.

From a technical standpoint, transparency is crucial. Speakers emphasized the value of robust monitoring systems, which can detect underperforming battery modules and help maintain operational availability. This is essential not only for maintaining expected revenues but also for securing long-term investor confidence.

What makes a project bankable today?

According to financing experts, key factors include credible supply chains, strong counterparties during construction and operation, and clearly defined optimization strategies for market participation. Financial buffers are also standard, though their size depends on the perceived overall risk of the project.

Technical advisors noted that smaller developers, especially with projects in the 50 MWh range, may struggle to afford full due diligence reports. In these cases, simplified but reliable structures and high-quality components can help reduce risk perception.