The deal marks the largest project-level financing in the energy storage segment in Europe
The financing comprises a $284mn long-term debt facility and a $483mn accordion facility that will be deployed towards the development of 600 MW/1,200 MWh of projects. The debt facility will be used for the development of Phase 1 of the Blackhillock and Kilmarnock South battery energy storage systems (BESS), each of which will initially comprise 200 MW/400 MWh of capacity. The accordion facility will be used for the expansion of these systems, as well as future projects developed by Zenobe. The combined funding was provided by the Canadian Imperial Bank of Commerce, Rabobank, Santander UK, Siemens Financial Services, and NatWest.
Uk-based-Zenobe is an EV fleet and grid-scale battery storage developer, with operations in Europe and Australasia. The company has 1.6 GW of BESS capacity in operation, construction, and late-stage development in the UK, and is a major operator of EV buses in the UK, Australia, and New Zealand.
The REPowerEU strategy announced in May’22 outlined clear goals for the deployment of solar and wind energy, with 600 GW of solar and 450 GW of wind capacity targeted to be installed by 2030. However, industry executives have noted the ambiguity in a clear path toward the buildout of energy storage capacity, which will become increasingly important as countries transition away from fossil fuel-based power plants to renewable energy sources. According to the European Association for Storage of Energy (EASE), the deployment of grid-scale storage systems needs to be ramped up to at least 14 GW/year in order to meet a target of ~200 GW by 2030. Supportive legislation and an expansion of revenue-generating mechanisms for storage projects are the key challenges the continent will need to overcome to build out the required BESS capacity. A recent report highlighted that merchant revenue remains the primary source of income for grid-scale storage assets in Europe, a trend that is impacting the investor appetite in the region. As per Enerdatics’ research, BESS-focussed investments in North America more than doubled y-o-y in 2022 to more than $3bn, while investments in Europe were roughly consistent with the amount deployed in 2021, at ~$2.5bn. Over the medium term, we expect greater y-o-y increases in investments in North America, driven by incentives offered under the Inflation Reduction Act (IRA), while the European market matures and new regulation is passed by the EU.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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