Predictable revenues key to battery storage finance, says report

Financial advisory Capcora and AI trading specialist Suena Energy have published a white paper examining the factors banks and institutional investors consider when financing battery storage projects, concluding that predictable revenue streams play a central role in determining access to debt financing.

The “Bankability by Design” report argues that the bankability of a battery storage project depends on the interaction of technical design, regulation, project economics, and revenue models.

The researchers said that lenders assess projects across four main areas: technical fundamentals, the regulatory and market framework, project economics, and commercial revenue models. They added that revenue models also determine how risks are allocated between project stakeholders, with hybrid structures potentially balancing financing certainty and market upside.

Capcora and Suena compared three financing structures using a hypothetical battery storage project. A fully merchant project relying entirely on market revenues would require full equity financing, with an estimated equity requirement of €550 ($630)/kW. Introducing debt financing under a merchant model reduces the equity requirement to €250/kW and increases the debt share to 60%.

Under a five-year full tolling agreement, the equity requirement falls further to €150/kW while the debt share rises to 70%, reflecting lenders’ preference for predictable cash flows. The report notes that tolling agreements provide contracted revenues, whereas merchant projects depend on volatile electricity markets.

The analysis also concludes that greater bankability does not necessarily deliver the highest returns on equity, arguing that developers must balance revenue potential with risk allocation.

Suena Energy CEO Lennard Wilkening said project finance increasingly depends on how revenue models are incorporated into project design rather than on the underlying storage technology alone. Capcora Managing Partner Alexander Kuhn said banks and other financiers prioritize the predictability of future project cash flows over theoretical revenue potential.

From pv magazine Deutschland