What European Banks Need to Finance Battery Storage - ABN AMRO

Battery storage looks simple - a steel box that charges when prices are low and discharges when they're high. But financing a BESS project in Europe means underwriting a trading position: convex revenues, volatile returns, and a growing menu of contractual choices that each shift the risk profile in a different direction.

Lisa McDermott, Managing Director and Head of Energy Transition Project Financing at ABN AMRO, has been structuring BESS deals across Europe since 2023*. In this episode, she opens up the credit committee. What gets a project over the line, and what quietly stops it.

Covered:

- Why battery storage finance is fundamentally different from solar or wind and why contracting it away doesn't change the underlying risk when the contract ends.

- From physical tolls to day-ahead swaps, Lisa breaks down which offtake structures are gaining traction in Europe and why the day-ahead swap is the hardest to bank.

- Too much merchant exposure, insufficient sponsor equity, weak technical track record and why pushing too many levers at once is the fastest way to stop a deal.

- How battery warranties have evolved from 8 to 20 years and why coverage beyond the debt tenor is a bankability requirement, not a nice-to-have.

- Germany's grid fee reform has created financing uncertainty at COD, while the Netherlands' congestion model is, counter-intuitively, better for bankability.

Want to model battery revenue stacks or stress-test tolling structures for a specific market? Ko, Modo Energy's AI analyst, is built for exactly these questions. Free sign up: https://help.modo.energy/en/articles/13335470-ko-your-ai-analyst?utm_source=podcast_apps&utm_medium=podcast&utm_id=lisa_mcdermott

Transcript available here: https://modoenergy.com/transmission-podcast/e2b12f17-f7b4-49d3-9d85-e4cc822695f6

────────────────────────────

⏱ CHAPTERS

0:00 Introduction - Is financing battery storage the same as financing solar?

2:32 Why a battery is financing a trader, not an infrastructure asset

5:14 Financing across technology types - TRL 8 vs TRL 9

10:43 What stops a BESS deal in credit committee

15:53 Comfort zone: from fully merchant to fully contracted

18:43 The growing offtake menu, physical tolls, virtual tolls, and floors

24:43 Day-ahead swaps explained and why they introduce basis risk

31:59 Gearing: the sliding scale from 30% merchant to 85% fully tolled

34:37 European market comparison: Netherlands, France, Italy, Germany

40:23 Final question

────────────────────────────

You can watch or listen to new episodes every Tuesday. Transmission is a Modo Energy production. Your host is Ed Porter — Director EMEA & APAC at Modo Energy.

*Correction: The intro incorrectly states that Lisa McDermott has been financing batteries since 2020. She has been doing so since 2023. We apologise for the error.