A new report from Navigant Research explores the fundamentals and challenges of financing distributed energy storage systems (DESSs).
DESSs are inherently flexible, can now be deployed rapidly, can generate multiple value streams, and have the potential to provide multiple grid and customer benefits. In today’s DESS market, significant competition is emerging among project developers in search of commercial debt lending and equity investment partners.
According to the report, in order to seize a competitive edge, DESS developers must ensure their projects have a strong level of guaranteed revenue to increase the likelihood of attracting potential debt and equity companies.
“DESS markets are growing due to several factors, including breakthroughs in adjacent digital technologies such as artificial intelligence, blockchain, and predictive analytics that are facilitating the emergence of DESSs as a key enabling technology for aggregated distributed energy resources (DER) solutions,” says Ricardo F. Rodriguez, research analyst with Navigant Research. “These solutions are propelling DESS projects toward economic viability and improved bankability.”
According to the report, as battery prices and balance-of-system (BOS) costs decline, DESS developers need to focus on operational efficiencies to remain competitive. Consequently, new market participation models that use storage’s inherent flexibility to capture multiple value streams are attracting increasing attention. Stakeholders are also focusing on government incentives that enhance the bankability of DESS projects and enable DESS project value chain participants to reduce costs and drive better project performance.
The report, “Distributed Storage Financing Innovations Give Vendors an Edge in the Market,” explores the fundamentals and challenges of financing DESSs. The study examines innovative DESS project financing asset classes, new market participation and government policies that improve the bankability of DESS projects, and solar PV plus storage power purchase agreements (PPAs) and holistic energy management. It also provides guidance for DESS stakeholders on implementing lean practices, taking advantage of real-time integrated control software, and lowering project costs by partnering with engineering, procurement, and construction (EPC) companies.
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