BESS product model for energy storage financing

What is a Bess (battery energy storage system) use case?

These revenue strategies determine the bankability and economic feasibility of a BESS (battery energy storage system) use case and range from high-risk, high-reward fully merchant setups to variable floor pricing arrangements to reliable tolling agreements. In special circumstances, hybrid options exist as well.

What revenue strategies does Bess use?

A rundown of different revenue strategies for BESS that help secure financing, including fully merchant, floor pricing, tolling, and hybrid models. As the buildout of renewable energy sources progresses, more battery systems are commissioned to capture their flexibility.

How much does a Bess battery cost?

Although battery costs have dropped significantly to USD100-150/kWh from USD730/kWh in 2013, they can vary significantly by system specifications and market conditions. Fitch expects that, as BESS production volume increases, the equipment costs should decrease.

How complex are Bess assets?

BESS assets are more technically complex than many of the assets that come across the average UK project finance lender’s desk. This nascent market is rapidly adapting to several somewhat unpredictable factors and its impact on both senior debt cover ratios and equity IRRs.

How big is Bess capacity?

However, the Stated Policies Scenario (STEPS) estimates that BESS capacity will be only about 760 GW, which is significantly less than the requirements. There are several challenges to the adoption of BESS, one of the prominent ones being financial risks attributed to novel technology and the absence of a secured financial model.

Why should a private financer invest in a Bess project?

This offers comfort to private financers to provide capital at a competitive rate. Independent BESS projects, only supporting renewable energy projects, can be bundled together, and issued as green bonds to potential large investors.