GP REVIEW · WEEKLY SIGNALS · WEEK OF 28 SEPTEMBER 2026
The battery is the asset. The contract sizes the debt.
By Alain Stoeckli · Greenpeak Capital Partners
Two identical batteries can support different amounts of debt. The difference may be a clause, not a cell.
On 23 September, Revera announced financial close and notice to proceed for the 400MW / 800MWh Hunterston battery-storage project in Scotland. Its non-recourse senior financing sits alongside long-term tolling and floor arrangements. Commercial operation is expected in Q3 2028.
The announcement does not disclose the debt amount, margin, contract tenors or the allocation between those arrangements. It is evidence of an executable financing, not a public template for its leverage. The broader question for sponsors is more useful: what does a revenue contract allow a lender to count?
Stop maximising the wrong number
A merchant revenue forecast answers what a battery might earn. A financing model must also answer what can be paid to the lender in a downside case, after charging costs, operating expenditure, tax and the relevant maintenance and reserve requirements.
Those are different objectives. A contract that gives away some trading upside can improve the reliability of debt-service cash flow. It may support a different amortisation profile or reduce the sponsor’s equity requirement. It can also be poor value if the price of that protection exceeds the financing benefit.
The right comparison is not “highest revenue wins”. Compare the present value and downside resilience of the sponsor’s equity cash flows under each contract, using each structure’s actual debt terms. More debt is not automatically a better investment.
A floor is not an unconditional cheque
Ask what the floor measures. Gross trading revenue? Revenue after charging energy? A payment per unit of available capacity? What is deducted before the project company receives cash?
Then test availability, efficiency, cycling limits, settlement periods, collateral calls and termination rights. A contractual minimum that falls when the battery underperforms is not the same as an unconditional payment. A year-end true-up does not necessarily solve a quarter-end liquidity shortfall.
Do not add merchant upside to a contracted payment if the counterparty already owns the dispatch rights that generate that upside. Every revenue line needs an owner, a cost allocation and a rule for whether it can coexist with the others.
The financing date that matters is not always the loan maturity
Put three dates on one page: revenue-contract expiry, expected major augmentation expenditure and loan maturity.
If the contract ends before the debt is repaid, part of the financing rests on a future merchant market or a replacement contract. If the loan matures first, the refinancing may still depend on a much shorter remaining contracted period. Neither structure is inherently wrong. Both need to be priced explicitly.
Model the outstanding debt at contract expiry. Then remove the assumed renewal, stress merchant income and include the cost of maintaining usable capacity. That residual balance is a more revealing conversation than the day-one loan-to-cost ratio.
THE GREENPEAK TAKE
The next financing advantage in battery storage may come from negotiating the revenue agreement and the debt structure together. A sponsor can sell away valuable upside without receiving equivalent financing value in return. Or retain merchant upside that forces more equity into the project than the upside is worth. Negotiate the contract against a debt model, not a headline revenue forecast.
A borrower’s bid process needs two prices
Ask each revenue counterparty for comparable economic terms, and each prospective financier for an indicative debt case against those terms. Compare debt quantum, amortisation, reserves, hedging costs, fees, cash traps and equity contributions on the same operating assumptions.
The useful output is a contract-to-debt bridge: how each clause changes eligible cash flow, permitted debt service and the residual debt balance. Debt-service coverage, or DSCR, is cash available for debt service divided by scheduled principal and interest. The permitted debt-service amount is not the loan amount; the latter still depends on interest, timing, tenor and repayment shape.
For example, in a deliberately simplified sensitivity, £10m of annual debt-service cash flow at 1.30× coverage permits about £7.69m of annual debt service. At 1.50× it permits £6.67m. These are illustrative assumptions, not market terms or Hunterston figures. A change in risk treatment can matter before anyone negotiates a basis point of margin.
What this means for your financing process
Before asking for a maximum loan-to-cost quote, assemble the revenue term sheet, dispatch and degradation assumptions, augmentation budget, grid and construction milestones, and a downside debt schedule. Add the actual counterparty credit support and the provisions needed for lender step-in. The equipment still matters as security. But steel, cells and a grid connection do not, by themselves, explain the cash that repays the loan.
If you are preparing a storage financing, can you show which three contract provisions change your debt capacity most?
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Editorial analysis, not a financing offer. Illustrations are not underwriting terms.