\u201cThe Netherlands has the potential to become another deal-making hotspot, the trend there is a blend of contracted revenues with the asset \u2018sliced\u2019 into several tranches. I think this is a strategy to hedge against grid tariffs which are very high, but at the same time the spreads are very high, so it makes sense for the owner to retain some merchant exposure.\u201d <\/p>\n
Indeed, \u2018slicing\u2019 BESS into several tranches to different offtakers is the strategy opted for by basically all the big BESS owner-operators in the Netherlands. We\u2019ve interviewed SemperPower<\/a> and Giga Storage<\/a> separately about this, while Lion Storage has gone a slightly different route.<\/a> <\/p>\n Many countries are seeing their first ever BESS offtake deals announced recently too, including Bulgaria, Greece, Poland, to name a few, Valassas adds. <\/p>\n Where different offtake structures are popular is becoming clearer too, he says. \u201cIn GB we see floors being more popular than tolls, while in Germany tolls seem to be the go-to option to make larger scale assets bankable.\u201d <\/p>\n And the length of the deals is increasing: \u201cAcross the board we are also seeing longer tenors. The volume weighted average tenor on the deals we\u2019ve tracked is just over five years, but that will increase over time.\u201d<\/p>\n We then ask Valassas how the emergence of government-backed long-term revenue-providing schemes like capacity markets (CM) and Italy\u2019s MACSE auction<\/a> may affect the value of BESS offtake deals. Valassas says that the logic of how this worked in solar may not apply to BESS.<\/p>\n \u201cIn the renewables space, government-backed subsidy schemes have tended to function in a competitive way against PPAs. I am not sure if we can apply the same thing to capacity markets or MACSE for BESS, since you can just stack them together.\u201d <\/p>\n A big discussion in Europe right now is around hybrid power purchase agreements (PPAs), where one offtaker contracts with a project owner for both the renewables (usually solar) generation and BESS portion of a hybrid project. This deal structure is relatively common in North and South America, but very rare in Europe. <\/p>\n