Recent weeks of high temperatures, drought and historically low Danube flows have done something that years of industry presentations could not: they have made energy storage visible well beyond the circle of developers, investors and power-market specialists.
Batteries were already one of the main points of interest for energy investors. Large projects are being developed, project portfolios are changing hands and storage is increasingly attached to renewable developments.
Romania appears to have capital willing to enter BESS. What it still lacks is enough operating history to make that capital comfortably bankable, particularly through conventional commercial debt. That was one of the conclusions I took from a recent conversation with Jacopo Buriollo, the founder and CEO of Megawatt, a company “financing utility-scale solar and battery storage across Central and Southeast Europe, acquiring ready-to-build projects, funding construction and holding each asset in its own project company”, as put by his LinkedIn page. I found in Jacopo a good example of what I call “young blood”, not as a reference to age, but as a proxy for people entering the industry with different professional histories, questions and ways of combining expertise. Jacopo comes from industrial engineering, management and finance, digital transformation and later blockchain. His interest in energy grew partly from trying to invest himself in smaller solar and battery assets and discovering how difficult it was for an outside investor to assess what was actually behind a project. He talked about information asymmetry and the difficulty of achieving scale as two of the problems that eventually led him to build Megawatt.
Lack of operating history limits bankability
The widespread perception among developers has traditionally been that there is not enough capital. Jacopo argues that, at least for the market he currently sees, the diagnosis has changed. “Capital is abundant, actually. It is more this lack of history that doesn’t make capital move in the region at the moment,” he told me.
For a commercial bank, a spreadsheet showing that a battery can make money is not enough. It needs enough evidence to understand how the business behaves when market conditions are less favorable. “Banks move when there is some sort of certainty,” Jacopo said. In markets such as Germany or the UK, several years of battery operations allow lenders to look at good years and bad years, compare revenue behavior and build assumptions around an observed range of outcomes. Romania does not yet have a comparable history.
A battery does not generate power; it trades time, buying energy when it is cheap and abundant and selling it when it is scarce and expensive. That makes its returns look less like a utility and more like a financial asset with a physical base.
The consequence is not necessarily that banks will never finance storage. It is that they may lend less, require stronger guarantees or look for a contracted component of revenue against which debt can be sized. A revenue floor can fundamentally change the conversation with a conventional lender.
Private capital moves differently. Investors with a higher tolerance for risk can accept larger merchant exposure, bet on stronger revenues during the first years of operation and accept that returns may decline later. They may also expect the asset to move between revenue sources as the market develops. That last point is important because today’s BESS economics should not automatically be projected over the full lifetime of the asset.
The puzzle the investors are facing
Large battery projects naturally make headlines. For the time being, Jacopo focuses on smaller or mid-sized projects looking for capital or buyers. They are large enough to require serious due diligence but often too small to command the attention, internal resources and specialist teams that surround the largest transactions.
Smaller projects should not be dismissed because of their individual size. Jacopo points out that several such assets can be aggregated and that building a number of smaller batteries faster can ultimately provide the system with flexibility comparable to that of a much larger project whose development takes considerably longer.
Large projects, meanwhile, naturally absorb experienced technical advisers, lawyers, grid specialists, financiers, traders and due-diligence teams. A scarcity of expertise can therefore become just as relevant as a scarcity of capital.
That creates a role for companies and experts able to sit between capital and projects, not simply as brokers introducing one side to another, but as parties willing to take on the evaluation, the structuring and the ownership themselves.
Questions investors need answered
- How secure is the grid connection in practice?
- What revenue can a lender credibly recognize?
- How much merchant risk should an investor take?
- What happens when today’s arbitrage spreads narrow?
- Who controls dispatch?
- How good is the optimizer?
- What degradation assumptions sit behind the financial model?
- What reserves should be created today for problems that may emerge in six years?
- Who continuously gives the investor reliable information about the asset?
Megawatt is one emerging attempt at such a model. The company identifies projects, finance construction and hold individual assets in project companies. Investors provide capital against the asset while energy revenues service their investment. Jacopo was careful not to describe the structure as a fund, although he said the management logic has some similarities. Megawatt is still at an early stage, but it illustrates the type of response the market is generating to the current challenge: capital is available, while good projects can still struggle to reach it.
As Jacopo put it, the question he is trying to address is “what a lender actually sizes debt against when a large share of revenue is merchant”.
ATR is only the beginning
“Ready to build is a word that is used a lot, but not all projects have the same quality,” Jacopo said. The ATR, Romania’s technical grid-connection permit, is an obvious example. Having one does not eliminate connection risk. The value of a grid right depends on the underlying agreements, conditions, deadlines and obligations. Failure to comply with those conditions can still put the connection at risk.
A second trap is to treat financing as a problem that ends once construction is completed.
For batteries in particular, project quality continues to depend on decisions made after commercial operation starts. Trading is one example. Two technically similar batteries can generate very different economic results depending on bidding strategy, access to markets and the quality of optimization. The asset can participate in arbitrage, ancillary services, capacity mechanisms or other revenue streams, but somebody still has to make the right decisions about when and how to use it.
Battery degradation is another example. A financial model necessarily includes assumptions about how battery performance will evolve over time. Yet the starting data often come from manufacturers and controlled testing conditions. Real operating conditions may produce a different curve.
Jacopo’s answer is particularly useful because it avoids pretending that every uncertainty can be removed. “You don’t really solve it, you price it,” he said.
In practice, that can mean independent verification, modelling a range of degradation outcomes instead of relying on one curve, and setting aside money from the beginning if later replacement or revenue losses have to be covered.
