Project finance
A financing structure where debt is secured against the project's assets and future cash flows rather than the developer's or asset owner's balance sheet (non-recourse or limited-recourse). Utility-scale BESS projects are typically financed with 60–80% debt and 20–40% equity.
In energy storage
Lenders assess BESS project finance against a Debt Service Coverage Ratio (DSCR) derived from forecast revenues, which in turn depend on degradation assumptions, market price scenarios, and the RTM contract structure. Battery-specific risks — shorter track record than solar or wind, merchant revenue volatility, and technology obsolescence — typically result in higher equity requirements and shorter debt tenors than comparable renewable energy projects.
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