Romania’s Scornicesti battery project has secured non-recourse financing of up to 44 million euros from the European Bank for Reconstruction and Development (EBRD), with support from InvestEU. The standalone project has 127 MW of power capacity and 254 MWh of storage capacity. Its financing shows that project finance can accommodate substantial exposure to merchant revenues without a traditional long-term offtake contract.
That approach depends on a sufficiently robust operating and contractual framework, rather than treating merchant income as equivalent to contracted revenue. For a battery energy storage system (BESS), lenders need to assess who controls dispatch, how the asset earns revenue and which risks are transferred through contracts.
Renewable-energy project finance has traditionally used long-term offtake contracts to stabilise income. Standalone batteries, by contrast, earn value from their ability to charge and discharge and move between markets, rather than selling a single fixed-price product under a long-term agreement.
Risk allocation and revenue support
A package of protections can take the place of a conventional power purchase agreement (PPA). An optimiser or storage-services agreement can set out dispatch authority, market-access obligations and revenue sharing, while technical warranties should protect usable capacity and availability. Financial models should incorporate hourly scenarios and conservative assumptions for spread compression and lower balancing prices.
Debt sizing needs to distinguish income from merchant markets from contracted revenue. Grants can ease pressure on leverage: Romania’s Modernisation Fund opened a 150 million euro call for standalone storage. Until the regional market has a longer operating history, banks are likely to seek lower leverage, stronger reserve accounts or greater sponsor support.
A floor-price or tolling component can support higher leverage by converting part of a project’s cash flow into income more similar to contracted revenue. The Scornicesti financing deal shows that a BESS PPA is not essential if lenders can establish how the battery is controlled, how it generates cash and how it would perform if market volatility is lower than the sponsor expects.
The central financing implication is that a PPA is optional, but disciplined risk allocation is not. Before relying on merchant-market cash flows, lenders must be able to identify the risks borne by the project and the protections available.