How is FTM energy storage typically financed?

FTM storage financing has matured significantly in recent years, following a similar trajectory to solar and wind project finance.

Tax equity: The federal Investment Tax Credit (currently 30% for standalone storage under the Inflation Reduction Act) is a major driver. Tax equity investors provide capital in exchange for the ITC and accelerated depreciation benefits. This structure is familiar to renewable energy investors and has become standard for large storage projects.

Project debt: Banks and institutional lenders provide non-recourse project finance debt secured by the project's revenue contracts and assets. Lenders typically require contracted revenue (tolling agreements or capacity contracts) covering a significant portion of debt service. Fully merchant projects are harder to finance with debt.

Sponsor equity: The developer or asset owner contributes equity capital, typically 20-40% of the project cost after tax equity. Returns to equity holders come from residual cash flows after debt service and tax equity distributions.

Revenue structure matters: Projects with long-term offtake contracts (7-15 years) from creditworthy counterparties are significantly easier to finance than merchant projects. Contracted revenue provides the predictable cash flows that lenders and tax equity investors require.

The financing landscape continues to evolve as the asset class matures, battery costs decline, and more projects build operational track records. Standalone storage ITC eligibility under the IRA was a major catalyst — prior to 2022, only storage paired with solar qualified for the credit.