As Europe's largest economy leans ever more heavily on wind and solar power, the race to build the batteries that keep the grid stable is attracting serious money from banks.
Return, an energy storage company with offices in Amsterdam and Berlin, has secured €835 million in portfolio financing to build large-scale battery storage in Germany, the company announced on Thursday, November 5. Deutsche Bank and Rabobank underwrote the financing, with Rabobank also acting as financial adviser.
The company described the deal as a "first of its kind" financing that covers multiple facilities, according to its announcement. It aims to install at least 1 gigawatt of battery storage in Germany every year from 2027, implying planned annual investment of €750 million to €1.2 billion, subject to market conditions.
How the financing works
The financing combines funding for physical battery storage assets with Return's Virtual Flexibility Portfolio, which pools capacity from multiple battery projects into a single portfolio that customers can access through one interface.
Under the framework, eligible new projects can access capital without going through a separate financing process for each site, which can save time and costs. Return used a similar multi-project approach in the Netherlands, where its Sirius project reached financial close earlier this year.
The initial portfolio covers 117 megawatts across three German battery projects that are already under construction. More projects are expected to join the facility in the near future and during 2027.
Assuming four-hour batteries cycling twice a day, the facilities could discharge roughly as much electricity each year as about 100,000 German households use, according to Return.
Why Germany needs batteries
Germany's electricity system increasingly relies on wind and solar power, which produce electricity only when the wind blows and the sun shines. This creates large fluctuations in supply, with surpluses on sunny, windy days and shortages at other times. Batteries can store surplus electricity and release it when it is needed, helping to balance the grid, reduce prices and avoid curtailing renewable generation.
"Germany needs more flexible capacity as wind and solar generation grows," said Marc Schmitz, head of project finance Europe at Rabobank, according to Return. Dominik Thumfart, head of infrastructure and energy origination at Deutsche Bank, said that "Battery storage plays a crucial role in Germany's energy transition."
Scaling the financing
Return's chief financial officer, Daniel Witvoet, said the company needs to scale not only its battery capacity but also the way it finances it. "We need to scale not just our battery storage capacity," he said, according to the company's announcement, describing the new framework as a way to finance growth more efficiently.
Project finance for battery storage has historically been more difficult than for wind and solar farms, because battery revenues are less predictable. Batteries earn money by trading electricity, providing grid balancing services and through capacity contracts, and these revenues can fluctuate. Portfolio financing, which spreads risk across multiple projects and contracts, can make lenders more comfortable.
Commercial partners
Return has secured significant commercial agreements that provide revenue certainty. ENGIE expanded its partnership with Return in Germany to 400 megawatts of contracted battery flexibility, and Centrica Energy signed a separate 100 megawatt agreement, according to Return. The company also works with Vattenfall, Essent and Eneco in other European markets.
