Why financial risk is the real challenge for battery storage in Europe

As battery energy storage systems (BESS) move from pilot projects to core infrastructure across Europe, the conversation is changing. Technology and costs still matter, but for investors and lenders the decisive question is increasingly financial: how resilient are BESS projects when revenue is delayed, disrupted, or degraded?

Across Central and Eastern Europe as well as mature Western markets, storage projects are entering a phase of tighter margins, more complex financing structures and lower tolerance for uncertainty. In this environment, insurance is no longer just about protecting equipment; it is becoming a central tool for managing financial risk and preserving bankability.

Financial continuity defines bankability

For storage projects, technical performance is only half the equation. The other half, the one that ultimately determines financing terms, is financial continuity. Every phase of a BESS or hybrid PV+BESS project carries exposure to income loss: during transportation, construction, commissioning, and operation.

Even short disruptions can have disproportionate consequences. A damaged transformer during shipping, a fire incident during testing or a commissioning delay before grid connection can postpone the start of revenues, while debt service, contractual obligations, and operating costs continue to accrue.

This is why Renewable Energy Insurance Broker (REIB) structures insurance programs around financial outcomes, not just physical damage. The objective is simple: ensure that delays or performance issues do not automatically escalate into financial stress.

ALOP: From overlooked add-on to financing safeguard

One of the most underestimated insurance covers in the BESS sector today is Advance Loss of Profit (ALOP). Traditionally seen as optional, ALOP is rapidly becoming essential, particularly for large-scale storage and hybrid projects with tight financing schedules.

ALOP protects expected revenues when construction or commissioning is delayed due to insured physical damage. In practice, it bridges the critical gap between construction risk and future cash flow. In 2025, REIB observed multiple projects where even short delays could have triggered penalty clauses, refinancing pressure, or delayed revenue start.

When structured correctly, ALOP ensures that delays do not automatically translate into financial crises. For lenders, it increasingly functions as a bankability safeguard, providing confidence that revenue projections remain protected even if timelines slip.

DSU and logistics: When delays start before construction

Financial risk does not begin on site. For BESS projects, it often starts much earlier – during transport. Batteries, inverters and transformers travel thousands of kilometers before installation, making logistics one of the most exposed phases of the project lifecycle.

A single cargo incident can delay commissioning by months, increasing financing costs and contractual exposure. REIB addresses this risk through Delay in Start-Up (DSU) insurance combined with Cargo coverage, ensuring that if a critical shipment is damaged, stolen, or delayed, the project is compensated not only for the physical loss but also for the income lost during the resulting downtime.

For investors and lenders, this closes one of the most dangerous financial gaps in project planning: the period before operations even begin.

Construction and commissioning: The most fragile phase

The construction and commissioning stage is where technical and financial risks converge. Fires, installation accidents or testing failures can delay grid connection, pushing revenue timelines back while expenses continue.

Many traditional insurance policies either exclude this phase or cover it only partially. REIB structures construction-phase DSU coverage that runs from installation through commissioning, responding not only with repair costs but also with compensation for lost income.

This transforms insurance from a reactive instrument into a strategic financial stabilizer, keeping debt service, investor expectations, and project schedules aligned even when delays occur.

Business Interruption: Insuring the ability to earn

Once operational, BESS and hybrid projects depend on consistent performance to meet financial models. Yet standard Business Interruption (BI) insurance often fails to reflect the complexity of storage revenues.

REIB structures BI coverage around the project’s actual revenue mechanism – whether tolling, profit-sharing or hybrid arrangements. The focus is on protecting total income, not just net profit, with coverage that includes partial degradation and extended indemnity periods of up to 18 months.

In short, insurance protects the project’s ability to earn, because that is what sustains investor confidence and lender support.

Design decisions are financial decisions

Across Europe, particularly in fast-evolving markets, investors often underestimate how deeply design choices affect bankability. Decisions related to battery suppliers, container layouts, or control-system design can materially influence insurance availability, scope and pricing.

REIB’s role is to ensure these risks are identified and addressed early, when corrections are technically simpler, financially cheaper, and far more effective. Projects that integrate insurance expertise from the outset consistently achieve broader coverage and more favorable financing terms. When insurance input comes too late, exclusions, higher deductibles, or gaps in ALOP protection are far more common.

Conclusion: Financial risk will shape Europe’s storage rollout

Battery storage is no longer a technical experiment; it has become a financial asset class. Its success now depends on how effectively revenue risks are managed across the entire project lifecycle.

As Europe accelerates BESS deployment, insurance is evolving from a compliance requirement into a core element of financial structuring. By focusing on income protection, early risk assessment, and coverage aligned with real revenue models, insurance is increasingly influencing which storage projects move forward, and which stall at the financing stage.

For BESS in Europe, managing financial risk is no longer optional; it is the foundation of bankability. In 2025 alone, REIB insured more than 8 GWh of BESS capacity across Europe, demonstrating how revenue-focused risk management can turn financial uncertainty into long-term resilience.