Product Code: SI-IDSF-19
In today's distributed energy storage system (DESS) market, significant competition is emerging among project developers in search of commercial debt lending and equity investment partners. 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.
Further, 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.
This Navigant Research report 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.
Key Questions Addressed
- What is driving the growth of distributed energy storage?
- What are the fundamentals and challenges of financing distributed energy storage systems (DESSs)?
- What innovative financing asset classes exist for DESSs?
- How are market participation models and government policies improving the bankability of DESSs?
- What is the long-term potential of DESSs in an evolving electric power industry?
- How can lean manufacturing concepts improve financing outcomes and stakeholder value?
Who Needs This Report
- Engineering, procurement, and construction (EPC) companies
- Energy storage software and technology vendors
- Energy storage project developers
- Electricity industry regulators
- Finance community
- Investor community
Table of Contents
Financing Innovation Is Poised to Support Growth of Distributed Energy Storage
- Fundamentals and Challenges of Distributed Energy Storage Financing
- DESS Projects Offer Economic Benefits and Have Low Technological Risk Levels
- Market and Regulatory Context in North America and Europe
- DESSs Present Creative Solutions for Utilities and Their Customers
Assessing DESS Project Financing Risks Is a Complex Task
- Innovative DESS Project Financing Asset Classes
- Behind-the-Meter Host-Controlled Projects
- Equipment Lease Financing
- Demand Charge Shared Savings Agreement
- Asset Management Service Agreement and Demand Reduction Performance Guarantee
- BTM Solar Plus Energy Storage Power Purchase Agreement
- BTM Utility-Controlled Projects
- DR Energy Services Agreement
Lowering DESS Costs Is Critical to Improving Financing Outcomes and Stakeholder Value
- Modularity Driven by Lean Manufacturing Concepts Will Improve Financing Outcomes and Stakeholder Value
- Creating ROI through Flexibility Services Is Propelling DESS Sector to New Heights
- New Market Participation Models for DESSs Bring Positive Benefits
- Government Policy Is Improving the Bankability of DESS Projects
- Federal Solar Investment Tax Credit
- US State-Level Policy Actions
Solar PV Plus Storage PPAs and Holistic Energy Management Offer Opportunities for DESS Stakeholders
- Solar PV Plus Storage
- Holistic Energy Management
EPC Companies Are Vital to a Competitive DESS Financing Environment
Guidance for Stakeholders Moving Forward
- Stakeholders Must Implement Lean Practices across the Value Chain
- DESS Stakeholders Need to Focus on the Advantages of Real-Time Integrated Control Software
- Owners Can Lower Project Costs by Sharing Risk with EPC Contractors
List of Charts and Figures
- Services Provided by Energy Storage on the Grid by Stakeholder Groups
- DESS Project Delivery Value Chain
- Operation of C&I DESS for Demand Charge Management
- EaaS - Integrated DER and Energy Management Solutions
List of Tables
- Overview of DER Project Finance Risks