AleaSoft Energy Forecasting, October 16, 2026. The fall in the prices captured by solar PV has made it harder to finance new projects without storage. Hybridisation with batteries can change this situation by providing flexibility and new sources of revenue, especially when part of that revenue is contracted over the long term and offers the visibility that financial institutions look for.
The financing of renewable energy and storage projects was one of the central topics of the 70th webinar of AleaSoft Energy Forecasting, held on October 15 with the participation of Deloitte for the seventh consecutive year.
The event highlighted the change that the financing of renewable projects has undergone in recent years. Securing financing for new stand-alone solar PV plants has become much more complex, while banks are looking with growing interest at projects with batteries and, in particular, at the hybridisation of storage with solar PV installations.
Stand-alone solar PV faces more demanding financing
The strong growth in solar PV generation has increased the frequency of low prices during solar hours and has eroded the captured prices of this technology. This situation affects projects financed under expectations of higher revenue and, in some cases, forces a review or refinancing of debt structures.
Financial institutions are also particularly cautious about merchant exposure and demand greater visibility on future revenue before taking on risk in new projects.
Solar PV has not stopped being a sound long-term investment. Projects have useful lives of several decades, and current market conditions need not last throughout their entire life. However, the way to secure financing is changing, and new projects need structures capable of coping with greater volatility and lower captured prices during solar hours.
Hybridisation improves the revenue profile of solar PV
Adding a battery changes the economic profile of a solar PV plant. Instead of selling electricity when it is produced, storage allows part of the generation to be shifted to hours with higher prices, taking advantage of market price spreads.
The same spreads that penalise the prices captured by solar PV create opportunities for batteries. For this reason, hybridisation has gone from being an option to increase profitability to also serving to improve the financial structure of projects.
The banks that traditionally take part in the Project Finance of renewable projects are already analysing these transactions. However, storage has fewer historical references than solar PV or wind, so risk committees maintain conservative criteria. The first transactions will be essential to create references, validate revenue assumptions and increase the confidence of financial institutions.
Contracted revenue will be key to financing
Battery projects combine different sources of revenue, from arbitrage in the electricity market to participation in system services and other markets. From a financing perspective, banks particularly value structures that secure part of this revenue for several years.
During the webinar, formulas such as tolling contracts, contracts with optimisers and revenue share structures with a minimum revenue floor were analysed. These mechanisms give up part of the upside potential in exchange for greater stability and predictability in cash flows.
The new capacity market can also play a relevant role. Its revenue may not be enough on its own to determine the profitability of a battery, but its contracted nature helps make a project financeable.
The distinction between profitability and bankability will become increasingly important. A project can show attractive profitability and still be difficult to finance if its revenue is too uncertain. Likewise, adding contracted revenue makes it easier to access debt even if it partially limits the asset’s revenue potential.
A battery also adds complexity
Hybridisation does not automatically turn a solar PV plant into a financeable project. The revenue of a conventional renewable plant depends fundamentally on production and the captured price. A battery, on the other hand, must be actively managed, and its revenue depends on when it charges and discharges, the markets in which it participates, the number of cycles, degradation and the operating strategy.
More intensive use can increase revenue, but it can also accelerate degradation and bring forward investments to replace certain components. The financial model must reflect all these factors.
For this reason, financing batteries requires an integrated understanding of the technology, the electricity markets and the operating strategy. It also increases the importance of technical and market advisers, who give financial institutions confidence in the assumptions used.
Forecasts become part of the financial structure
This scenario reinforces the role of market forecasts. To estimate the future revenue of a battery, an expected average spread multiplied by a number of daily cycles is not enough. Optimal operation changes every day depending on prices, the state of charge, the previous operation and the opportunities in the different markets.
A robust assessment needs long-term hourly price simulations and multiple scenarios on the evolution of demand, installed renewable capacity, weather and the other variables that will shape the electricity market. On these, it is necessary to reproduce how the battery would actually operate, with its technical constraints, its degradation and its different sources of revenue.
The price curves and revenue forecasts become one of the main inputs of the financial model. They must be robust and justifiable to investors, banks, auditors and the other stakeholders in the project.
From financing generation to financing flexibility
For years, the expansion of solar PV relied on assets that were relatively simple to model: a production forecast, a price forecast and a revenue estimate. Growing solar penetration and price volatility make that scheme increasingly insufficient.
New projects will be more flexible and will manage when they produce, store or sell energy. Batteries store electricity and can also restore financing capacity to new solar PV projects, provided that competitive investment costs, robust forecasts, efficient operation and contractual structures with revenue visibility are combined. As more transactions close and banks accumulate experience, financing should expand.
Hybridisation can thus reactivate solar PV development, with profitability, flexibility and bankability analysed together.
The role of AleaStorage and AleaGreen in financing hybrid projects
In this context, AleaStorage, the division of AleaSoft Energy Forecasting specialised in energy storage, analyses the revenue of stand-alone batteries and of hybridisation projects with solar PV, sizes the battery and assesses its operation in the different markets. For its part, AleaGreen produces long-term forecasts with a horizon of up to 40 years, which underpin the financing of renewable projects.
The methodology of AleaSoft Energy Forecasting combines Artificial Intelligence, time series and statistical models. This single methodology generates coherent scenarios that banks, investors and auditors can verify when assessing the bankability of a project.
Source: AleaSoft Energy Forecasting