KBRA Europe Releases Research – Battery Storage Funding Critical to Europe’s Energy Transition

KBRA Europe (KBRA) releases a report on current funding methods for battery storage in mainland Europe and the UK, as well as the revenue streams and regulatory environment that underpin the sector’s transactions. While there is an emerging opportunity for battery storage to become an important technology in Europe’s renewable energy transition, the financial community faces challenges in funding the sector, and there are uncertainties regarding how it can achieve the requisite scale to meet its full potential.

The report notes the need for greater collaboration between sponsors developing the batteries, regulators and national policymakers setting renewable targets, and the financing community funding development. This cooperation is necessary for battery storage to be maximally useful amid profound shifts in how Europe and the UK source energy.

Key Takeaways:

• Battery storage is set to come into focus given government requirements to keep up with renewable energy and energy security ambitions, especially given headwinds stemming from the Ukraine-Russia conflict.
• Funding techniques vary, but most battery storage transactions are funded on a short-term basis, taking into account corporate risk rather than on a pure stand-alone, nonrecourse basis.
• Regulation has a role in bridging the gap between inherent merchant exposure and long-term lenders’ needs for predictable cash flows.
• Achieving scale for battery storage will likely require a greater diversity of funding including from long-term nonrecourse bank, institutional, and capital market funding.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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