What are the main risks in FTM energy storage projects?

FTM storage is a maturing asset class, but it carries risks that investors and developers should understand.

Market and revenue risk: Energy arbitrage revenue depends on price volatility. If wholesale electricity price spreads narrow (less difference between peak and off-peak prices), arbitrage margins shrink. Markets with high renewable penetration tend to have greater volatility, which benefits storage — but policy changes or new generation capacity can shift the dynamics.

Technology risk: Battery degradation can exceed projections if systems are cycled more aggressively than designed. Thermal events (fires), while rare, carry significant financial and reputational consequences. Technology is evolving rapidly — a system installed today may be outperformed by cheaper, longer-duration alternatives within a few years.

Regulatory and policy risk: FTM storage operates within complex wholesale market rules set by ISOs and RTOs. Changes to market design, capacity payment structures, or interconnection policies can materially affect project economics. State-level policies on storage mandates and incentives also shift.

Offtake and contract risk: Projects relying on long-term contracts (tolling agreements, resource adequacy contracts) carry counterparty risk. Merchant projects without contracts face full market exposure.

Interconnection risk: Connecting to the grid requires approval from the local utility and grid operator. Interconnection queues in many regions are backlogged by years, and upgrade costs can be unpredictable. This is currently one of the biggest bottlenecks for FTM development.