Financing Storage as a Transmission Asset: Initial Considerations for an Emerging Use Case
Deploying energy storage as an electric transmission system asset is a unique use case that, despite a body of policy and regulatory support, has received little attention or investment in the United States. The benefits of using storage on the transmission system—and the remaining barriers to that use—have been explored elsewhere. This paper complements that body of research by exploring the finance implications of using energy storage as a transmission asset (SATA). Because transmission infrastructure in the U.S. is generally subject to rate-of-return regulation, in which asset owners receive both a return of their invested capital and a return on that capital, storage assets deployed for that use are not subject to market volatility and have a much lower risk profile overall. That lower risk profile would, in theory, correspond to lower interest rates and other more favorable financing terms relative to a storage project deployed in a market setting. This paper draws from corollaries in other markets to estimate the expected finance impacts of SATA projects.