For non‑recourse financed BESS projects, the real question today is how cash flows behave under stress. With FCAs introducing ramp‑rate limits, ancillary caps, curtailment and schedule freezes, even traditional tolling structures are becoming harder to offer cleanly. The answer isn’t “more merchant” or “more fixing” – it’s smarter RtM design. 

 

Why pure merchant exposure rarely works for non-recourse BESS finance, and why tolling became the benchmark 

Across Europe, large‑scale battery storage pipelines continue to expand rapidly. Volatility, intraday spreads and a growing need for flexibility all point to strong long‑term fundamentals for battery energy storage systems (BESS). 

 

Pure merchant exposure can work in specific circumstances, for example for equity investors, early‑stage assets, or projects with limited leverage ambitions. However, for BESS projects targeting non‑recourse project finance (relying exclusively on the project’s assets and cash flows), merchant exposure alone is rarely sufficient to deliver a bankable outcome. 

 

The reason is structural. Banks do not underwrite average revenues or long‑term market narratives. They underwrite downside risk and the stability of debt service. Under merchant exposure, DSCR (the ability to cover debt obligations from the project’s cash flows) outcomes become highly sensitive to market volatility, regulatory intervention and operational constraints, all of which are risks for which lenders receive no upside compensation. As a result, uncertainty feeds directly into weaker downside DSCR cases and reduced debt capacity. 

 

This is why, from a financing perspective, tolling emerged as the benchmark structure for bankable BESS projects. Availability‑based tolling agreements provide what lenders value most: fixed and predictable revenues, clear risk allocation, and cash flows that are largely insulated from market volatility. For many projects, tolling has successfully bridged the gap between merchant market exposure and the requirements of non‑recourse finance, and it continues to serve as the reference case against which other Route-to-Market (RtM) solutions are assessed by lenders, lawyers and credit committees alike. 

 

However, this historical bankability is increasingly being challenged by changes outside the commercial contract itself. 

 

Why it could break: FCA reality changes the equation The introduction and increasing use of Flexible Connection Agreements (FCAs) is structurally changing how BESS assets can be operated and, by extension, how revenues can be fixed. 

 

Depending on the specific FCA profile, projects may face: 

  • ramp‑rate restrictions that limit the speed at which the asset can ramp-up (or down) its power output 

  • partial or full exclusion from ancillary service markets 

  • power or energy curtailment over significant numbers of hours 

  • schedule‑freeze requirements that restrict intraday trading 

 

Under these conditions, offering a clean tolling agreement becomes materially more complex. Availability definitions require greater nuance, tolling fees must be discounted to reflect reduced operability, and in some cases combinations of restrictions make pure tolling commercially unattractive or operationally fragile. In short, tolling becomes harder to price, harder to structure and harder to execute.

 

Remaining merchant as the obvious fallback rarely solves the problem. Under FCA conditions, merchant revenues inherit the very operational uncertainty lenders are trying to avoid. Cash‑flow volatility increases, downside scenarios worsen and debt sizing becomes even more constrained. 

 

This leaves developers caught in a growing gap: tolling remains the most bankable solution in principle, but is increasingly difficult to offer in practice. Merchant retains upside, but rarely satisfies financing requirements on its own. 

 

What replaces it: Tailored RtM solutions combining bankability and flexibility 

The answer is not to abandon bankability, but to rethink how it is achieved. 

Between pure merchant and full tolling sits a spectrum of tailored Route-to-Market solutions, combining physical and financial elements to stabilise the most debt‑relevant cash flows while preserving operational flexibility. 

 

A key insight is that bankability does not require fixing the entire revenue stack. It requires fixing the right risks, at the right points in the value chain. 

Day‑ahead swap structures, in their simplest form often referred to as TBx, partial tolling arragements and hybrid models allow developers to do exactly that. By fixing a defined portion of revenues, for example exposure to day‑ahead spreads, these structures materially reduce downside volatility without constraining asset dispatch or eliminating upside. 

 

Crucially, standard TBx structures are largely insulated from FCA restrictions as physical constraints affect how the asset operates, not how the financial settlement is calculated. This makes them particularly well‑suited to restrictive grid conditions, where physical optionality is impaired but price formation in the wholesale market remains intact. 

 

Recent project experience illustrates how this works in practice. Even assets facing severe FCA restrictions, such as limited ramping, no balancing market access and significant schedule freezes, can be made financeable by combining: 

  • a limited tolled fraction where technically viable 

  • a fixed financial component via a TBx structure 

  • a residual merchant exposure acting as a buffer for operational noise 

 

The result is not a fully de‑risked project, but a bankable one, capable of supporting meaningful leverage while preserving long‑term value. 

 

Designing such structures is not a standardised exercise. It requires a deep understanding of how specific FCA restrictions interact with individual revenue streams, and how lenders assess risk across the stack. Under these conditions, the role of a flexible, credit‑strong Route-to-Market partner becomes central. 

As grid constraints increase and regulatory uncertainty persists, Route-to-Market is no longer a commercial afterthought. It has become part of asset design and a key driver of bankability. 

 

How Centrica Energy enables bankable BESS under FCA conditions 

Centrica Energy is uniquely positioned to support developers, investors and lenders in navigating the growing complexity of large‑scale BESS projects. 

 

With deep expertise across energy markets, storage optimisation and structured offtake solutions, Centrica Energy designs tailored Route-to-Market structures that balance bankability with operational flexibility. This includes full and partial tolling arrangements, day‑ahead swap structures, and hybrid models that stabilise debt‑relevant cash flows while preserving merchant upside where it adds value. 

 

As a counterparty with strong credit standing and extensive trading and optimisation capabilities, Centrica Energy can absorb and manage market, operational and regulatory complexity that non‑recourse financings struggle to tolerate. Critically, our structures are designed with lender requirements in mind, ensuring clarity on risk allocation, cash‑flow resilience and downside protection. 

 

Under increasingly restrictive FCA conditions, Route-to-Market design has become a central component of asset bankability. That’s why we work alongside developers from early structuring through financial close, helping turn technically constrained assets into financeable infrastructure investments.