Guide

Bankability: what a bank really wants to see in an energy storage project

An energy project rarely fails on the technology. It fails because the figures do not hold up in front of the bank. This guide explains what lenders actually look at in industrial battery storage and PV — and how those figures can be stated defensibly rather than optimistically.

DSCR — the debt service coverage ratio

The central figure of any project financing: is the operating cash flow enough to cover interest and repayment — and with what buffer? Banks expect a DSCR clearly above 1.0 across the whole term, computed on the contracted rather than the merchant cash flow. EXAIOS states the DSCR year by year, including the years with the thinnest coverage.

p10 — the downside cover

Financeability is not decided by the expected value but by the bad scenario. The p10 figure shows what is reached in at least 90 % of cases. A project that looks good on average but tips over at p10 is not bankable — EXAIOS makes that distribution visible.

The do-nothing comparison

Every investment has to be measured against the alternative of doing nothing and continuing to buy from the market. Only the difference — avoided cost minus investment over the lifecycle — is the real contribution. Without that comparison a return cannot be interpreted.

Tipping distance — how robust is the GO?

How far may assumptions (power price, interest rate, utilisation) deteriorate before a GO becomes a NO-GO? That tipping distance separates a marginal project from a robust one. EXAIOS quantifies it instead of leaving it unsaid.

Frequently asked questions

Why is IRR alone not enough for the bank?

IRR describes the return at the expected value but says nothing about servicing the debt in a bad year. Banks lend against DSCR and p10 — not against the mean.

What makes a figure reproducible?

Same input, same number — at any time, for any reviewer. EXAIOS seals every recommendation deterministically (SHA256), so the bank can retrace exactly the same calculation.

What is the biggest mistake in bankability?

Stacked optimism: best utilisation, best price and best interest rate all at once. EXAIOS computes the downside distribution and states the tipping distance, so the GO holds.