The Energy Storage Report 2024

Now available to download, covering deployments, technology, policy and finance in the energy storage market

Fully merchant battery storage project in California raises US$78m debt financing

LinkedIn
Twitter
Reddit
Facebook
Email

Siemens’ international financing arm, US development bank NADBank and energy storage developer EnerSmart Storage have signed a US$78.2 million loan facility to finance a fully merchant battery storage project in California totalling 165MW.

The debt facility from NADBank (North American Development Bank) and Siemens Financial Services will finance the design, construction and operation of a portfolio of utility-scale energy storage projects totalling 165MW/330MWh at nine sites in San Diego county. EnerSmart Storage is the developer, owner and operator of the projects, which are in the service territory of utility SDG&E.

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

The deal is thought to be the first reported project debt financing of fully merchant battery energy storage system (BESS) projects in the US, which means the BESS project does not have any long-term resource adequacy agreements with utilities in place, yet. The press release did say that the projects may provide energy through resource adequacy agreements in the future.

Resource adequacy is the California independent system operator’s (CAISO) way of ensuring load-bearing entities like utilities have enough power to meet demand, and provides a framework for utilities to procure power over 10-20-year agreements from BESS projects.

The vast majority of BESS projects have these agreements before being launched, which provides long-term revenue guarantees required by debt financing providers. For example, the state regulator just approved five projects, which have long-term resource adequacy agreements with utility Southern California Edison, reported on Energy-Storage.news.

NADBank, which focuses on investments along and near the US-Mexico border, said the BESS will provide energy and ancillary services through CAISO’s wholesale energy and ancillary services markets.

The bank’s MD Calixto Mateos-Hanel commented: “As a development bank, NADBank has proven time and again that innovative financing of environmental projects in promising sectors is one of its core strengths. This energy storage project portfolio confirms the Bank continues to play a critical role in the development of sustainable infrastructure while tackling climate change and meeting the needs of the US-Mexico border.”  

Speaking on a panel at the Solar and Storage Finance USA conference in November 2021, hosted by our publisher Solar Media, several investment figures explained why merchant BESS projects might struggle to get debt financing.

“Lenders like revenue certainty, so contractual revenue is great,” Louise Pesce of Japanese-based global bank MUFG said. Merchant “doesn’t give the lender much certainty”, she added, explaining that forecasting revenues over 15 or 20-year battery lifetimes is difficult.

But Lance Jordan, senior vice president for energy and infrastructure investments at Pacolet Milliken, a family-owned investment group said that merchant battery storage projects were starting to get more debt financing opportunities, especially after events like Texas’ devastating February 2021 winter storm.

22 October 2024
New York, USA
Returning for its 11th edition, Solar and Storage Finance USA Summit remains the annual event where decision-makers at the forefront of solar and storage projects across the United States and capital converge. Featuring the most active solar and storage transactors, join us for a packed two-days of deal-making, learning and networking.

Read Next

March 27, 2024
The energy storage arm of EV supercar technology firm Rimac has opened its UK innovation and manufacturing facility, where it will build the first units of its SineStack BESS platform.
Premium
March 26, 2024
The issue of ensuring reliability of BESS resources in the Texas electricity market has not gone away for grid operator ERCOT, despite the state regulator’s recent quashing of proposed minimum state-of-charge (SOC) rules.
March 26, 2024
Canada utility Hydro-Quebec’s BESS technology arm EVLO Energy Storage has prioritised safety and quality while compromising on energy density, executives told Energy-Storage.news.
March 25, 2024
The Australian Renewable Energy Agency (ARENA) is funding trial deployments of two different non-lithium battery technologies at microgrids in Western Australia.
March 22, 2024
Harmony Energy and Fotowatio Renewable Ventures (FRV) have energised a 99MW/198MWh battery energy storage system (BESS) in Essex.

Most Popular

Email Newsletter