Asset Finance for a Battery Energy Storage System

Asset finance is a vital method of acquiring funding to improve and grow your business, and with recent government initiatives that promote the development of energy-saving technologies, securing funding for them is offered at incredibly competitive interest rates. 

Utilising asset finance is suitable for the development of green energy solutions for a multitude of reasons, namely because by splitting the cost over a longer period, your business's revenue is less impacted by what can be costly technology.  

Due to some cash flow constraints, our client sought our help to acquire asset finance after facing difficulties approaching lenders directly.

The Scenario

The client owns a number of properties which are rented by a selection of businesses in what is an ‘OpCoPropCo’ arrangement (a structure that separates the property asset from the trading business).  

To generate a separate source of income for the rental income, the client decided to install a battery energy storage system above the commercial properties they own, to store solar energy. The client would then sell the energy stored to the UK’s energy grid, earning a profit. 

They didn’t have the cash required to fully install the battery energy storage system themselves – a cost of roughly £1m – so they sought funding from a lender to cover the remaining £750K they needed. 

There were some issues the clients had with securing the asset loan itself: 

Though lenders have a strong appetite for green technology deals, the key to securing the asset finance loan was to demonstrate that the battery energy storage system would generate sufficient power to cover the costs of the loan itself, which isn’t as straightforward as it might’ve been in a business with stronger creditworthiness.

The Process 

Our experienced asset finance broker reached out to a panel of lenders keen to support green finance, explaining to them the potential profitability of the battery energy storage system once installed.

Using projections of the potential energy generated by the storage system, and therefore the profit earned by selling the energy to the UK energy grid, our broker quickly convinced a selection of lenders of the reliability of the client.