Energy storage investors need to be ready for risks that come with merchant opportunities

LinkedIn
Twitter
Reddit
Facebook
Email
Energy-Storage.news editor Andy Colthorpe moderated the finance panel session on day two of Solar & Storage Live 2018 with Alex O’Cinneid, Gore Street Capital, Stephan Marty, Kiwi Power, Roberto Castiglioni, Argonaut Power. Image: Solar Media.

The renewables investment community “needs to come to grips” with merchant risk after a decade of being “spoiled” by government-backed subsidies for wind and solar.

That was the view from the opening session of day two of Solar & Storage Live, which welcomed a panel of energy storage and finance representatives to discuss the availability of finance in the energy storage sector.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Following a decade of subsidy-backed development in the renewables sector, Roberto Castiglioni, managing director of Argonaut Power, said investors had “got lazy”.

“In my opinion they have been spoiled for the last ten years with government subsidies for solar and wind. It was normal to get 70% of your total revenue backed by the government through Renewables Obligation or feed-in tariffs – those were the good old days. But now it’s time to get back to merchant risk,” he said.

Stephan Marty, general manager storage & international DSR at Kiwi Power, a services aggregator with a background in demand side response (DSR), agreed that the investment community, including banks, had become used to long term returns offered by subsidies and that it now needed to change its expectations for what was on offer.

“We don’t really see the banks coming through, at last from our point of view, which is a lot to do with merchant risk. It’s understandable if you think where the industry has come from as a lot of people in this space come from solar and are used to long term government backed contracts; quite safe and bankable,” he said.

“The industry now needs to come to grips with much more merchant risk and shortness of contracts.”

Read Next

Premium
April 30, 2025
Leading BESS owner-operators in the UK have signalled their opposition to the government’s cap and floor support scheme for long-duration energy storage (LDES) in an open letter. We spoke to one its signatories James Basden, founder of Zenobē, about why.
April 29, 2025
Energy-Storage.news proudly presents our sponsored webinar with Clean Horizon on the economics of renewables-plus-storage in Europe.
April 22, 2025
Progress on BESS projects in Saudi Arabia and Chile totalling a combined 16GWh of energy storage capacity using Sungrow and BYD batteries has been revealed by the projects’ owners.
April 17, 2025
US non-lithium battery technology companies Eos Energy Enterprises and Unigrid have announced partnerships to deploy their tech abroad, striking deals in the UK and India respectively.
Premium
April 17, 2025
Owner-operator BW ESS’ 100MW/331MWh UK Bramley BESS was unique in numerous ways when it came online last year, the first outside China to use Sungrow’s AC block technology.

Most Popular

Email Newsletter