Global clean energy enterprise TagEnergy has secured a landmark debt package to finance its next UK-based battery energy storage system (BESS) project under an innovative financing model.

The non-recourse debt package of up to £70m provided by lenders Santander, Rabobank, and Triple Point on a fully merchant basis (except for Capacity Market revenues) will finance the construction and operation of TagEnergy’s Lakeside project, and includes an uncommitted accordion facility with a view to incorporate further assets into the funding structure.

Coinciding with financial close, TagEnergy has announced Tesla, Habitat Energy and RES as project partners on the 100MW/200MWh facility in North Yorkshire, England.

Engineering Procurement and Construction (EPC) contractor Tesla will provide a system of Tesla Megapack 2XL lithium-ion batteries. Habitat Energy partners as route to market and battery optimiser, while independent renewable energy company RES has been engaged as asset manager.

The debt was arranged by IDCM as financial advisor, with TLT serving as borrower legal advisor, Burges Salmon as lender legal advisor, Aurora Energy Research as energy analytics provider, Everoze as technical advisor, WTW as insurance advisor, Ester as hedge advisor and RSM as the model auditor.

Construction commenced on the Lakeside project in August 2023 with the energy park due to go live by mid 2024. TagEnergy acquired its 100 per cent stake in the battery storage facility – then its fifth investment in the UK – from RES in December 2021.

Franck Woitiez, Chief Executive Officer, TagEnergy said: “Securing a single non-recourse debt package without a revenue floor is testament to the value our innovative approach to financing offers the market. We’re excited to now move to the next stage of the project to accelerate the energy transition.”

“Just as important as our innovative financing practices are the relationships we’ve built with a strong network of UK project partners. We’re pleased to be working with Habitat Energy, Tesla and RES to deliver our Lakeside facility, as we relentlessly pursue our ambitions to achieve Net-Zero by connecting more people to more renewable power.”

Habitat Energy UK Managing Director, Jon Doughty, welcomed the opportunity to partner with TagEnergy.

“TagEnergy shares our belief that the full value of battery storage lies in a merchant-first approach. We look forward to applying our award-winning technology and trading capabilities to maximise the performance of their innovative Lakeside project.”

Mark Cumbo, Director, Specialised and Project Finance at Santander UK said: “Santander UK is delighted to have once again supported TagEnergy with funding for the construction and operation of a new BESS asset and supporting the growth of their activities in the UK. The investment in BESS assets in the UK, like Lakeside, are a key enabler for the increasing penetration of renewable generation assets and the wider Net Zero transition.”

Carol Kort, Executive Director Project Finance said: “Rabobank Project Finance congratulates TagEnergy on the successful financial close of this milestone financing for Lakeside in the UK.

“This project will facilitate further renewable energy build out in the UK which fits well within Rabobank’s banking for the energy transition strategy. We are therefore delighted to work with TagEnergy and look forward to supporting them as they continue to build out their portfolio of renewable energy assets across the globe.”

Ariane Brunel, Investment Director at Triple Point said: “Triple Point is delighted to be supporting TagEnergy’s further growth in the UK BESS market. Financing the construction of greenfield BESS assets is key for the decarbonisation of the UK power sector, which is at the heart of our energy investment strategy.”