Romania’s Scornicesti standalone battery project has secured non-recourse financing of up to 44 million euros from the European Bank for Reconstruction and Development (EBRD), supported by InvestEU. The project has 127 MW of power capacity and 254 MWh of storage capacity, and its financing shows that project finance can accommodate substantial merchant-revenue exposure without a classic long-term offtake contract.
Renewable-energy project finance has traditionally depended on long-term offtake contracts to stabilise income. Standalone batteries, by contrast, earn value by charging and discharging flexibly and moving between markets, rather than selling a single fixed-price product under a long-term agreement.
That financing structure depends on a sufficiently strong operating and contractual framework, not on 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 contracts transfer.
Contracts and modelling shape lender protections
A package of protections can take the place of a classic power purchase agreement (PPA). An optimiser or storage-services agreement can set out dispatch authority, market-access obligations and revenue sharing, while technical warranties need to protect usable capacity and availability. The financial model should use hourly scenarios and conservative assumptions about spread and balancing-price compression.
Debt sizing must distinguish revenue from merchant markets from contracted revenue. Grants can ease leverage pressure: 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 closer to contracted revenue. The Scornicesti financing arrangement 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.
A PPA may be optional, but disciplined risk allocation is not. Before relying on merchant-market cash flows, lenders need to identify the risks borne by the project and the protections available.