Transmission
Securing debt for battery energy storage with Brandon Faber (Director @ NORD/LB)
Feb 27, 2025
Brandon Faber, Director at NORD/LB, shares his expertise in financing renewable energy, focusing on battery energy storage projects. He discusses the complexities of raising capital in this field, including how banks evaluate and structure financing. Brandon elaborates on the significance of tolling agreements and how merchant risk impacts lending decisions. He also highlights the relationship between solar energy and battery storage, while shedding light on the evolving landscape shaped by incentives from the Inflation Reduction Act.
38:18
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Quick takeaways
- Financial institutions like NordLB assess risk and structure their financing based on the cash flow profile of battery storage projects.
- Tolling agreements are crucial for securing contracted revenue and mitigating risks associated with cash flow in energy storage financing.
Deep dives
Role of Financial Institutions in Energy Storage Projects
Financial institutions, including banks and private equity, play a crucial role in funding energy storage projects by providing various types of financing. NordLB primarily offers senior debt, which is considered the most conservative and reliable type of funding in the capital stack. This debt is typically sized based on a project's cash flow profile, essential for battery storage projects where revenue often comes from the merchant market. The input from institutional investors is key, especially as they are better suited for the risk profile of more merchant transactions, allowing banks like NordLB to operate safely within their senior debt mandates.
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