- World’s biggest lenders and investment banks increasingly figuring in storage financings
- Strengthening conviction regarding the potential of standalone projects and long-duration storage
- Santander and Goldman Sachs among the institutions with the most extensive track records
In a sign that energy storage is increasingly being viewed as a mainstream asset by the finance community, some of the biggest lenders and investment banks in the world have provided backing for storage deals in recent times.
Such is the increasing confidence in the ability of energy storage to produce attractive returns that major players such as Goldman Sachs have shown a willingness to back companies that develop standalone storage – previously, the biggest finance providers had generally confined themselves to projects that combined storage with solar. This reflects the fact that there is a growing consensus among finance providers that standalone storage projects represent the best way to consistently incorporate green energy into the grid.
In another example of the market’s evolution, leading lenders and investment banks are now convinced of the need for utility-scale long-duration storage – so much so that they are providing substantial finance for alternatives to lithium-ion batteries, such as compressed air storage technology.
Santander has been one of the pioneers of green energy finance and has developed an impressive track record in the field. Goldman Sachs also stands out as one of the more forward-thinking financial institutions when it comes to energy storage investments. However other big lenders and investment banks are piling in, and the last year saw the likes of Morgan Stanley, J.P. Morgan and Bank of America figure in some of the sector’s biggest financings.
Here we bring you a run-down of the track records of major lenders and investment banks in the field of energy storage investment:
In October last year, it was revealed that large-scale standalone battery storage project developer Gridstor – which is backed by the sustainability and infrastructure investing groups within Goldman Sachs Asset Management – had acquired a 500MW portfolio of storage projects being developed in the greater Los Angeles area. Meanwhile in July 2022, Northvolt completed a $1.1 billion capital raise to finance the expansion of battery cell and cathode material production in Europe. Investors participating in the capital raise included Goldman Sachs Asset Management. Goldman Sachs Bank Europe acted as a joint placement agent on the deal.
In another deal focussed on California – which highlighted the significant demand for solar and energy storage projects in the state, Goldman Sachs Renewable Power commissioned a 390MW solar plus 561MWh storage project located in Kings County in March 2022. The so-called ‘Slate’ project has secured five power purchase agreements with California-based organisations: BART, Central Coast Community Energy, the Power & Water Resources Pooling Authority, Silicon Valley Clean Energy and Stanford University.
Goldman Sachs has also demonstrated a strong appetite for investment in alternatives to lithium-ion battery storage. Back in January 2022, it was announced that Canadian long-duration energy storage system provider Hydrostor had secured a preferred equity financing commitment of US$250 million from Goldman Sachs Asset Management’s private equity and sustainable investing businesses. The investment proceeds were earmarked for the development and construction of Hydrostor’s 1.1GW of advanced compressed air energy storage (A-CAES) projects in Australia and California.
Meanwhile, in 2021, asset management firm Capital Dynamics secured tax equity investments from Goldman Sachs – and US Bank – for its 60MW / 240MWh California Flats battery energy storage system, which is located on the same site as the 280 MWac California Flats Solar power plant operating within Jack Ranch, which is located in San Luis Obispo and Monterey counties in central California.
Last month, it was confirmed that Zenobē, the international EV fleet and battery storage specialist, had secured a £235m long-term debt facility – with financing coming from a consortium of banks including Santander UK – to fund Zenobē’s next two grid-scale, transmission connected battery storage assets in Scotland totalling 400 MW / 800 MWh.
Meanwhile, in January this year, it was confirmed that TagEnergy had reached financial close on its fourth battery storage facility, the 49.9MW/100MWh Roaring Hill development in Fife, Scotland after receiving funding from Santander UK.
Elsewhere, in September last year, one of the biggest renewables deals of the last 12 months saw Intersect Power confirm the $3.1 billion financial close of one of the US’ largest ever solar-storage portfolios. The deal included approximately $1.6 billion of construction financing – of which Santander, along with MUFG, served as co-lead arrangers – for four solar energy projects totalling approximately 1.5GWdc of photovoltaics and 1GWh of battery energy storage.
In August 2022, Santander Corporate & Investment Banking – along with Sumitomo Mitsui Banking Corporation, Helaba, and Bank of Montreal – served as green structuring agents, coordinating lead arrangers, joint bookrunners, and syndication agents on US wind, solar and storage developer Apex Clean Energy’s $650 million debt capital raise. Five months earlier, Italy-headquartered energy company Enel and Santander signed a memorandum of understanding with a view to collaborating on the supply and financing of solar facilities, lithium batteries and energy efficiency systems for households, SMEs and corporations.
Santander is recognised as one of the pioneers of green energy finance and has been heavily involved in the renewables sector for a number of years. Back in September 2021, Gresham House Energy Storage Fund agreed a five-year £180m debt facility with a syndicate of banks including Santander, The Commonwealth Bank of Australia, Lloyds Bank and NatWest.
Earlier the same year, in June 2021, Canadian Solar secured a €50 million (US$59.7 million) bilateral corporate facility with Santander to support its project development efforts – which include battery storage – in Europe, the Middle East and Africa (EMEA). Three months previously, Gore Street Energy Storage Fund secured a £15 million revolving credit facility with Santander to finance the construction of existing projects and to purchase new grid scale battery storage projects.
Morgan Stanley was another of the investment banks involved in the mammoth $3.1 billion financing facility closed by Intersect Power last year – it included $775 million of commitments from tax equity investors, among them Morgan Stanley Renewables. Meanwhile, in July 2022, Northvolt completed its $1.1 billion capital raise to finance the expansion of battery cell and cathode material production in Europe, with Morgan Stanley acting as one of the joint placement agents to Northvolt. Back In November 2021, Intersect closed eight separate transactions representing a total of $2.6 billion of financing commitments – from a number of finance providers including Morgan Stanley – for the construction and operation of a portfolio consisting of six US solar and storage projects.
J.P. Morgan acted was another of the joint placement agents on Northvolt’s $1.1 billion capital raise in July 2022. A month earlier, Leeward Renewable Energy closed $58.5 million in construction financing and secured tax equity commitments for its 100MW Rabbitbrush Solar Facility, which will include a 20MW / 50MWh battery energy storage system, in Kern County, California – J.P. Morgan provided approximately $12.5 million in tax equity financing and agreed to invest a further $50 million once the project is operational, which is expected to occur in August 2022.
Bank of America
Bank of America was one of the joint lead arrangers on the $3.1 billion financing facility closed by Intersect Power last year. Elsewhere, in June 2022, it was one of the financial institutions that committed a share of $50 million of funding to Crossboundary Energy Access, an investment platform which is project financing solar-powered mini-grid projects – which will combine solar PV with storage – in rural Africa. Meanwhile, in March last year, renewable energy company Ameresco increased its secured credit facility with a group of lenders, led by Bank of America, by $262 million. The facility will be used, in part, to fund the company’s design-build agreement involving Southern California Edison’s 537MW large distribution battery energy storage systems. The year previously, in November 2021, Intersect Power closed eight separate transactions representing a total of $2.6 billion of financing commitments – from a number of providers including Bank of America – for the construction and operation of a portfolio consisting of six US solar and storage projects.
A backer of Milan-headquartered utility-scale long-duration energy storage company Energy Dome, which is recognised as one of Europe’s most innovative energy storage companies. In one of the most recent developments, Barclays led Energy Dome’s $11 million bridge funding round last June.
In January this year, US renewable power and energy storage developer Hecate Energy closed a five-year $550 million credit facility, consisting of a $250 million term loan and $300 million letter of credit facility to support the expansion of its solar and energy storage project pipeline – Deutsche Bank, along with Investec Inc, Nomura Securities International and National Bank of Canada served as initial coordinating lead arrangers and syndication agents. Meanwhile, in July 2022, utility-scale battery storage platform Broad Reach Power closed a $160 million project financing for 17 operating battery energy storage systems in Texas and one in California – Deutsche Bank and MUFG Bank acted as coordinating lead arrangers and joint bookrunners for the financing. MUFG acted as administrative agent and Deutsche Bank Trust Company Americas acted as depositary bank and collateral agent.
At the beginning of this year, Wells Fargo, MUFG and Silicon Valley Bank completed $260 million of construction financing for Leeward Renewable Energy’s Chaparral Springs solar-plus-storage project – incorporating 174MW of solar and an 88MW energy storage system – in California. Meanwhile in June 2022, Wells Fargo also served as the administrative agent on the construction financing element of Leeward’s $58.5 million facility for its 100MW Rabbitbrush Solar Facility – which also includes a 20MW / 50MWh battery energy storage system – in Kern County, California. In November 2021, Wells Fargo closed its first tax equity investment in a solar project paired with battery storage, the Arroyo solar and storage project in New Mexico, which combines 300MWac of solar PV with a 150MW / 600MWh battery energy storage system.