How to Raise Capital for a BESS Project

A battery energy storage project is, in investment terms, a grid connection with a trading strategy attached. The batteries themselves are increasingly standardised. What differentiates one BESS project from another, and what investors therefore spend their time on, is the connection, the revenue and the way the asset will be operated over its life.

Understand how BESS revenue has changed

The first generation of grid scale batteries in Great Britain earned much of their income from frequency response services. Those markets are relatively small, and as storage capacity has grown they have become saturated. Revenue has shifted towards wholesale trading, the balancing mechanism and other flexibility services, with capacity market contracts providing a contracted base.

The consequence for a raise is that most BESS revenue is now merchant, and investors underwrite it accordingly: with independent revenue forecasts, downside cases and close attention to who will operate and trade the asset.

Contract what you can

Debt capacity follows contracted revenue. The instruments that most change a BESS project's financeability are:

• Capacity market agreements, which provide a contracted payment for availability.
• Tolling agreements, where a counterparty pays a fixed fee for the right to operate the battery.
• Revenue floors, where an optimiser or insurer guarantees a minimum revenue in exchange for a share of the upside.
• Optimisation agreements with a credible route to market provider, even where revenue remains merchant.

Investors will check the counterparty behind each. A floor is only as good as the balance sheet that stands behind it.

Evidence the grid terms

Connection date and capacity are the foundation of the project. Investors will also ask about import and export limits, whether the connection is firm or non firm, any curtailment exposure, and the milestones and securities attached to the connection agreement. Each needs to be reflected in the model, not just described in the deck.

Model degradation, cycling and augmentation together

A common reason BESS models fail review is internal inconsistency: a revenue forecast that assumes intensive cycling paired with a degradation curve that assumes light use. Investors expect the model to link the two, to reflect warranty limits on cycling, and to include an augmentation strategy and budget to maintain capacity over the project life. Our guide to preparing a financial model for investors covers the wider standards.

Match the stage to the capital

• Development: specialist development investors and strategic partners, often funding a pipeline rather than a single site.
• Ready to build: infrastructure and energy transition funds, frequently acquiring the project from the developer.
• Construction and operation: private credit and bank debt, sized on contracted revenue, alongside equity.
• Platforms: growth equity for developers building a repeatable pipeline.

The trade offs between the two main forms of capital are covered in equity vs debt for renewable energy projects.

A BESS readiness checklist

• Grid connection agreement with capacity, dates, firmness and milestones
• Planning consent and fire safety strategy
• Independent revenue forecast by service, with downside cases
• Capacity market position and any toll, floor or optimisation agreement
• Battery supply, warranty and long term service terms
• Degradation, cycling and augmentation assumptions linked in the model
• Clean project company structure and land rights

The Investor Readiness Review tests each item against your materials. For investors active in storage, see BESS investment.

This article is general information, not investment, legal, tax or financial advice. BriHel Capital introduces only and does not arrange transactions, provide advice, or carry out regulated activities.