Battery project owners should focus on long-term contracts, guaranteed revenue streams: report

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Owners of large-scale battery energy storage projects should prioritize long-term contracts and guaranteed revenue streams when considering financing strategies, according to a report from Guidehouse Insights. The report highlights that stable financing options and government incentives are crucial for advancing energy storage projects worldwide. Developers and owners need to understand different deal structures and associated risks in order to select appropriate project development and revenue contracts for their battery projects. Most utility-scale battery storage systems use third-party debt financing, and project owners must understand various financing models and deal structures in order to secure revenue and build successful energy storage projects.

The report also analyzes the major use cases for battery energy storage systems, project development and off-taker contracts, revenue contracts, deal structures, financing risks, and regulatory landscapes for battery storage systems globally. It notes that utility-scale and commercial and industrial projects can provide capacity and ancillary services to utilities and wholesale markets. The authors of the report conclude that large-scale project owners should focus on long-term contracts and guaranteed revenue streams, while developers can reduce ambiguity and subjectivity in contracts to minimize construction risks, and equipment manufacturers can limit technology and operating risks through insurance warranties.