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April 25, 2019

Storage 101: Project Economics

Understanding the energy storage industry also requires familiarity with the economic factors influencing these business decisions. On this Storage 101 webinar, listeners can learn about the financial and economic challenges that storage projects currently face, the factors that influence the cost viability of energy storage projects, and key considerations essential to meeting a projects financing needs.

Emma Elgqvist, an engineer of energy optimization modeling at the National Renewable Energy Lab, started off the webinar with background on the decline in prices for lithium-ion batteries. “Why are we talking about storage now? Because we have seen a dramatic drop in the cost of lithium-ion batteries,” she said. “They are becoming cost effective in settings where they perhaps were not before.”

Elgqvist also spoke about the differences between PV and batteries and the range of storage use cases, which detailed graphics to describe both topics.

Next, Steve Casey, manager of strategic planning at Eversource, gave an overview of his company and its focus on its utility-scale grid connected storage work. “Eversource is the biggest electric utility in New England, with four million electric, water and gas customers.”

Casey also discussed the importance of project locations and how that can affect the economics of a project, as well as closing the loop of project control and how that intertwines with the economics.

The final speaker was Keith Martin, co-head of United States projects at Norton Rose Fulbright. Martin focused on financing issues and the process of financing energy storage.

“There are two ways to look at project finance,” Martin said. “One is that borrowing a large amount of money to build a project requires locking down costs and locking in a revenue stream. Banks focus on the net amount a project will have to pay debt service after covering costs. Another way to think about project finance is it is an exercise in risk allocation.”

Check back in regularly for updates on upcoming  Storage 101 programs and the accompanying Storage PLUS webinar series. These resources are designed to help keep ESA members up-to-date on the latest industry news and share information with fellow energy industry stakeholders.

Download the slides here.

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