What Makes a BESS Project Bankable in Germany? - NORD/LB

**Ed Porter** (0:03)
When a bank finances a battery project, it isn't just writing a check, it's judging whether the rules will change, grid connections will slip, or revenues fall before the debt is repaid. In Germany, none of those aspects are guaranteed. This episode is all about the inner workings of financing battery storage. Today's guest, Florian Hock, coordinates Nord LB's battery storage footprints across Europe. Globally, they finance 90 gigawatts of renewable energy across more than 30 markets, with 30 gigawatt hours of BESS in the US and Europe, and 10 gigawatt hours of storage across the UK, France, Germany, Poland, and Italy. This episode isn't about whether to invest in Germany, it's about what it takes to get a project across the line. Welcome to Transmission. Hi Florian, welcome to Transmission.

**Florian Hock** (0:59)
Hi, thanks for having me here.

**Ed Porter** (1:00)
Our pleasure. And listeners will know I love a prop, and you've brought a prop today, and I wanna start off with a prop. So what did you bring?

**Florian Hock** (1:09)
Absolutely. Obviously I should have brought a battery or something like that, but then my daughter gave me this little piece of advice on not to be nervous in a podcast.

**Ed Porter** (1:17)
Oh yes, okay. So this is a small little cardboard token with a smiley face on it. That is the most heartwarming gift or the most heartwarming prop we've ever had. I love it. Okay, let's get into the episode. So starting off, what is the one part of the market that everyone gets wrong about financing battery assets?

**Florian Hock** (1:39)
Yeah, I think most people think somehow that banks are just there to provide money on tap and it goes a lot more deeper. I mean, you can provide money on tap, but what we're actually doing is, I would focus more on the process of what we are doing, which is, can go many steps and into many dead ends over many months into very wrong streets, okay? But at the end, it will lead out to something that is then financable and doable. And this is the process that we try to support with a lot of experience. So we have financed renewable energy for 30 years now. And from that experience, we draw into that we need to be an advisor to the client in that sense that we go together with the client to the off-taker, try to find a solution. We explore different options with them. We find out if something is maybe not so good. They find out if something is not so good for them. And this is not something where you just consume data. You actually go with them and think about solutions.

**Ed Porter** (2:38)
Yeah. And I think that's going to be a lot of what today's episode is about, which is like getting underneath the processes of how the banks actually support projects. So let's get into it. Everyone listening will be able to hear that you're German. And today we're going to be talking about both the German market and wider European markets. And let's start off by talking about what are the key financials and regulatory hurdles that are facing battery projects today.

**Florian Hock** (3:03)
So if you look into the financial hurdles, the interesting thing is that many people think it's about volume, right? So if you want to finance a battery of 100 megawatt plus, you need a lot of money, which means equity and debt. But what we've observed is actually the investment that is really required is investment in time and into experience. And that is not something that is very popular because you just have to be very patient. So the really successful and sophisticated investors that we've seen in countries like Germany are those. They basically for a few years, they only look into batteries as in the technology, try to understand that from an engineering perspective. Then they may be built a very small plant, five megawatts, ten megawatts, twenty megawatts. And take that from A to Z through permitting, constructing it and then also operating it. And once they have that experience, then they say, look, we have a story, we have proven that concept. We can now go to someone and say, give me a lot of money of that volume that we discussed before, right? And put it into a project which I am really sure I will be able to build. And this is what we are experiencing with those projects that we are actually financing at the moment. And these are all those people that have gone through that very lengthy process and now they are really successful with it. And by the way, that's why I think that for a UK investor, it might be really interesting to go into Germany. It's one of the few markets in the world where you could actually gain real operational experience, right? And you could take that and now go to a different market. Obviously, you need some local knowledge, etc. You need to apply that in local circumstances. But nevertheless, it's something that has already been invested in.