In the cleantech sector, financing innovation has historically been a key driver for technology adoption, as evidenced by the advent of the solar power purchase agreement (PPA) and the recent expansion of energy efficiency financing. Battery energy storage systems (BESSs) for grid-tied stationary applications are delivering customer and grid value in a more financially predicable way. In turn, these more predictable revenue flows to BESS projects are creating new energy storage financing asset classes that will speed the adoption of stationary energy storage technology.
Given these developments, the key questions today are: What types of project finance instruments will support distributed, behind-the-meter (BTM) and utility-scale, front-of-the-meter (FTM) battery energy storage projects? And what are the key financial risks that need to be mitigated? The evolution of project finance in the energy sector has been instrumental in the development and construction of coal, combined cycle natural gas, and renewable energy generation assets. For energy project finance investors to move into the grid-tied stationary battery energy storage sector, the unique risks associated with the operation of BESSs and potential revenue and operating costs need to be understood and quantified.
This Navigant Research report explores the types of project financing instruments that are emerging in the grid-tied stationary energy storage market for batteries. The study examines the issues, including market drivers and challenges, key risks, and technology requirements, related to battery energy storage project financing. Navigant Research focuses on three battery energy storage financing asset classes: BTM host-controlled projects, BTM utility-controlled projects, and FTM utility-scale projects. Global forecasts for the size of the grid-tied stationary energy storage market for residential, commercial and industrial, and utility-scale installations are also provided.
Key Questions Addressed:
- What types of project finance instruments will support residential and commercial and industrial behind-the-meter (BTM) energy storage projects?
- What types of project finance instruments will support utility-scale, front-of-the-meter (FTM) battery energy storage projects?
- What are the key risks associated with these classes of battery energy storage project financing?
- What key drivers and hurdles will affect these energy storage financing asset classes?
- What is the likely size of the market for financed energy storage projects?
Who needs this report?
- Advanced battery manufacturers
- Stationary energy storage system (ESS) project developers and systems integrators
- Battery energy storage software providers
- Distributed energy resources (DER) project developers and aggregators
- Energy sector project finance investors
- Electric utilities
- Government agencies and policymakers
- Investor community
Table of Contents
1. Executive Summary
2. Battery Energy Storage Financing Markets
2.1 Overview of Energy Storage Market Segments
2.2 Types of Battery Energy Storage Project Financing Instruments
2.2.1 BTM Host-Controlled Projects
2.2.2 BTM Utility-Controlled Projects
2.2.3 FTM Utility-Scale Projects
2.3 Summary of Energy Storage Financing Drivers and Hurdles
3. Conclusions and Recommendations
List of Charts and Figures
- Distributed and Utility-Scale Energy Storage Power Capacity and Revenue by Technology, World Markets: 2016-2025
- Stationary Energy Storage Grid Services
- BESS Project Delivery Value Chain
- Energy Storage Equipment Lease Project Costs and Revenue
- DCSSA Project Costs and Revenue
- US BTM Solar + Energy Storage PPA Project Costs and Revenue
- DRESA Project Costs and Revenue
- UESSA Project Costs and Revenue
- Utility Solar + Energy Storage PPA Project Costs and Revenue
- MESSA Project Costs and Revenue
List of Tables
- Overview of Energy Storage Project Finance Risks
- Summary of Energy Storage Financing Drivers and Hurdles