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Battery storage investment model still a work in progress

By Cameron Murray
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Experts from the industry discuss the investment landscape for energy storage. Image: Solar Media Events via Twitter.

Although huge amounts of capital are being deployed into storage, some investors speaking at the Energy Storage Summit 2022 made it clear that the investment model is still set to evolve hugely. 

Jan Libicek, Investment Director at Bluefield Partners and Thomas McNicholas, Director at Greencoat Capital, both said they expected higher returns from storage than for other renewables, at a panel discussion on the second day of the sold-out event, hosted in London by our publisher Solar Media. 

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Conrad Purcell, Partner at Haynes Boone said that the investment landscape for storage has become highly diversified and that he is seeing some really novel investment structures. 

“People are also looking for much higher levels of control over their investments, even with those developers who have long track records,” he added. “The market fundamentals are very different from renewable projects historically and there is also a much greater range of opportunities for sourcing capital, with so many pots of money available.” 

Karl Byrne, Vice President, BlackRock, similarly said: “There is no one size fits all approach to financing. We might build three robust models for a project and come up with different return forecasts. We consider things like: how wrapped is the engineering, procurement, and construction (EPC)? What is the construction risk?” 

Echoing what Purcell said about control, Byrne added: “We look at battery storage on an equity-only basis. We’d need more contracted revenues to bring in debt.” 

Gauri Kasbekar-Shah, MD, Head of Energy, Edmond de Rothschild, expanded on the additional value that large investment firms can bring: “We see ourselves as providing the flexibility in financial structure to allow the developer to capture all possible revenues with the storage asset. We are coming from a much better understanding of the asset class.” 

Battery storage at the frontier of investability

Jan Libicek, Investment Director, Bluefield Partners LLP, echoed what was said in other panel sessions at the Summit about the move from colocation to standalone storage assets: ”Two years ago it was a clear win for colocation but the focus is clearly now shifting to standalone storage, although colocation means you can save on the capex side.” 

In response to an audience question about aggregating multiple storage assets into one asset, he said it would be ‘fiddly’ for the investor but recent examples of this in solar meant it was feasible and, if done right, could actually be more attractive than a single asset of the same capacity. 

Another audience question related to earlier-stage storage technologies, to which Libicek said: “We’re looking at a few hydrogen projects in Europe but that’s a year or a few years away from being investable. Battery storage is for now the limit to where we’ll go.” 

Whie Purcell added: “What we find is that, where there is no track record which you can point to, there is an alternative approach. It works in other areas and involves having a large technology provider which can acquire or develop a new technology and can warrant that product to the buyer. That is bankable.”

18 June 2024
Messe Stuttgart Stuttgart, Germany
19 June 2024
Messe München
27 June 2024
8am (PDT) / 11am (EDT) / 5pm (CEST)
Join us to discover some successful battery analytics-powered asset management strategies, decoding both real-life examples and replicable best practices in leveraging battery field data. Bringing together expert voices from battery analytics and asset management, this webinar will deliver actionable insights to build a strong operating system and take control over your full asset. No more blind principle or educated guesses: uncover the value of battery data and learn how to capture its weak signals to stay ahead of the curve!
9 July 2024
Sands Expo and Convention Centre, Singapore
Now in its second year, the Summit gathers independent generators, policymakers, banks, funds, offtakers, and cutting-edge technology providers and clarifies what successful energy storage procurement and deployment strategies look like. Topics covered include macro-level policy, supply chain dynamics, financing strategies, co-location considerations, safety measures, microgrid insights and more.
18 July 2024
Philadelphia, Pennsylvania

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