Energy storage investment moves from system need to bankability, DLA Piper report finds

DLA Piper has released its latest global energy storage report, Capital Unlocks Capacity, examining how investment in energy storage has moved from broad market enthusiasm to more mature, disciplined capital deployment, as hunger for resilient and flexible power fuels demand for storage assets.

The report, part of DLA Piper’s Energy Storage Unlocked series, finds that investors and lenders are increasingly focused on projects in jurisdictions with clear market rules, viable grid access, strong counterparties and revenue structures capable of supporting bankable investment decisions.

For New Zealand, the report’s findings are particularly relevant as new renewable generation build-out and increasing electrification bring sharpened attention to the benefits of energy storage.

Despite increasing interest levels, New Zealand has not yet seen capital deployed into storage projects at the scale observed in other markets such as Australia, the United Kingdom, the United States and China – which are among the top-rated destinations for storage investment.

DLA Piper partner Rob Macredie says the distinction is important.

“Energy storage can support the stable and resilient power system New Zealand needs, but unlocking capital requires investors and lenders to have confidence in predictable revenue stacks, bankable projects, secure connection availability and accommodating market regulations,” he says.

“Storage can support renewable firming, peak capacity, congestion management, grid resilience and electrification. The challenge is that much of that system value is not yet translated into contracted cashflow for project owners. We have seen the gen-tailers starting to develop more grid scale BESS assets, but progress has been slower for other developers despite the significant opportunity”.

Energy storage revenue streams in New Zealand are currently derived from energy arbitrage and the instantaneous reserves market, but do not provide frequency keeping services. New Zealand also operates an “energy only” system and does not have a capacity market or similar forms of government support, meaning storage projects must be commercial on a standalone basis.

 

Regulatory Environment

The Electricity Authority has recently consulted on options to improve wholesale market arrangements for utility-scale storage systems, including proposed changes to the Electricity Industry Participation Code. If these proceed, early and interim proposals are expected to be in place in September 2026, with the longer-term proposal expected by the end of 2027.

These changes seek to address wholesale market and regulatory settings that can make BESS challenging to operate in.

“The opportunity for New Zealand is to move from recognising the strategic importance of storage to building the commercial and regulatory settings that support investable projects”, Rob says. “Other markets have scaled more quickly where storage has clearer routes to market, but we do see confidence building in this market as shown by recent platform investments and successful battery project commissioning”.

 

Mergers & Acquisitions

The global report also highlights a broader shift in global storage M&A and investment strategy. Investors are increasingly focused on ready-to-build projects, experienced sponsors and developers, portfolio structures and projects where key development risks are materially de-risked.

Rob says that while the M&A market for BESS or hybrid projects is still nascent in New Zealand, there is a significant pipeline of BESS assets in various stages of development, as indicated by Transpower’s generation and battery connection pipeline (which shows there are over 7 GW of projects in the connection pipeline). These trends have clear implications for independent developers, sponsors and investors, financiers, gen-tailers, infrastructure funds, large energy users and policy makers.

“There are significant investment opportunities to invest in and develop storage assets, whether as standalone projects or co-located with renewable generation. As more storage projects progress to "ready-to-build" stage, we expect investors will focus on more established platforms, partnering with local developers through joint ventures to scale and accelerate development."

DLA Piper’s Capital Unlocks Capacity report is available here