Despite their clear market potential–and their potential to boost the resilience of our communities–innovative energy storage projects are getting stuck in development. Almost all development-stage energy projects face a “valley of death,” where costs for essential activities—feasibility studies, permitting, and interconnection—quickly add up, and capital to fund those activities is often lacking. This dynamic is exacerbated for innovative energy storage projects, which are capital-intensive and require complex revenue streams that make it difficult to secure patient capital.

For years, regulators, utilities, developers, and public agencies have been collaborating on how to move clean energy projects through the “valley of death” by addressing the policy and technical challenges to storage deployment in New York State.

The Energy Storage Capital Challenge builds on this work by bringing in the creativity and expertise of capital markets to focus in on the financing challenges faced by energy storage projects. Some of the capital challenges raised in our convenings are common across clean energy projects and have been discussed in detail by leaders in climate finance.

Other challenges are specific to or exacerbated by energy storage’s unique characteristics. These challenges fall into two categories: 1) Traditional capital markets are not incentivized to support innovative energy storage projects due to high transaction costs and perceived risks, which drives up the cost of capital for developers, and 2) Development uncertainty creates further investment risk, limiting debt access and forcing developers to use expensive equity that stymies growth.