Hybrid financing models can unlock fresh investment for the renewable energy transition
15 April 2026
Erin Lee, chief financial officer of Eku Energy, the Macquarie-backed BESS developer, discusses risk-balanced returns from long-term offtake agreements as the route to secure financing for new energy storage projects.
Financing models designed to deliver long-term, risk-adjusted returns are the means by which developers can secure the investment they need to finance new clean energy storage projects in the transition to net zero.
BESS developers are competing to secure the financial backing they need to build and bring new storage projects online with which they can secure their share of the expanding market for energy storage and grid-related services.
The answer to the question of securing this finance is in de-risking battery storage as an asset class for investment.
The challenge for developers is to overcome the uncertainty among potential investors that is created by a shifting policy landscape. They need to encourage backers to invest in BESS as a specific asset class ahead of other renewables-related assets with the prospect of steady, stable returns.
To date, the business model for battery storage in the UK mainly relied on mostly merchant projects – that is, revenues being derived from direct exposure to wholesale, ancillary services and imbalance markets.
Although a merchant strategy provides great upside potential, investors are increasingly looking to reduce their risk profiles with projects being partially or even fully contracted on the rise in the UK.
All this comes at a time of fresh demand among countries for infrastructure that accelerates their transition to renewable power as a means to ensure greater energy security and independence.
Combining the merchant business model with longer-term BESS revenue contracts helps to de-risk the development of energy storage by delivering stable revenues and providing reasonable upside potential as well.
The onus is on developers to build awareness of these so-called hybrid offtake agreements and to encourage more investors to invest in battery storage as a new type of low-risk asset class
A case in point is Eku Energy’s own 10-year tolling agreement with independent UK electricity provider Smartest Energy for its 99MW/198MWh BESS project at Ocker Hill in the West Midlands region of the UK. Eku and SmartestEnergy finalised the agreement terms in early 2025 and the project will be fully operational by the end of this year.
This long-duration, fixed-price tolling agreement was the longest of its kind when it was signed, and the first publicly announced debt-financed toll in the UK. It provides a credible, scalable model for how battery storage developers can engage with institutional investors and provide regular low-risk returns.
SmartestEnergy is owned by Marubeni Corporation, one of the largest trading houses in Japan. Its involvement demonstrates the growing appetite among large-scale investors worldwide to back storage assets in recognition of these projects’ value in underpinning renewable energy supplies.
Our deal with SmartestEnergy shows that battery storage can now be a low-risk asset for investors to buy into with confidence. This innovative hybrid model is breaking new ground in financing for BESS and delivering positive returns for our offtake customers.
