New Zealand storage investment hinges on bankability

DLA Piper has published a report on global energy storage investment, finding that investors and lenders are placing greater weight on project bankability.

The findings point to a shift away from broad enthusiasm for storage assets toward more selective capital deployment based on market rules, grid access, counterparties, and revenue structures. The report also highlights New Zealand as renewable generation build-out and electrification increase interest in storage.

While demand for energy storage is rising, New Zealand has yet to attract capital deployment on the scale seen in Australia, the United Kingdom, and the United States, which the study identifies as among the strongest destinations for storage investment.

Rob Macredie, partner at DLA Piper, said the gap reflects the difference between recognising the system role of storage and creating conditions that support financing.

"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," Macredie said.

He said storage could serve several roles across the electricity system, but many of those benefits are not yet reflected in revenue that project owners can contract against.

"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 gentailers starting to develop more grid-scale BESS assets, but progress has been slower for other developers despite the significant opportunity," Macredie said.

Market settings

At present, New Zealand storage revenues come mainly from energy arbitrage and the instantaneous reserves market. The country does not provide frequency-keeping services for storage operators, and it runs an energy-only electricity market without a capacity market or similar government support mechanism.

As a result, projects must stand on their own economics, which can make financing harder in a market where investors are looking for stable and visible cashflows. In more mature markets, storage projects often benefit from clearer routes to market or policy frameworks that improve revenue certainty.

The Electricity Authority has consulted on changes aimed at improving wholesale market arrangements for utility-scale storage systems, including proposed amendments to the Electricity Industry Participation Code. The report says early and interim proposals are expected in September 2026, with a longer-term proposal due by the end of 2027.

The proposals are intended to address parts of the wholesale and regulatory framework that can make battery energy storage systems difficult to operate. Developers, investors, and lenders assessing whether New Zealand can move closer to the conditions seen in larger storage markets will watch progress closely.

Macredie said confidence in the local market was beginning to improve.

"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," he said.

"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," he said.

M&A focus

The report also tracks a broader shift in mergers and acquisitions strategy across the global storage sector. Investors are increasingly targeting ready-to-build projects, experienced sponsors and developers, portfolio structures, and assets where key development risks have already been reduced.

That trend has implications for New Zealand, where the market for battery energy storage system and hybrid project transactions remains at an early stage. Even so, Macredie said there is a substantial pipeline of projects moving through development.

Transpower's generation and battery connection pipeline indicates more than 7 GW of projects in the connection queue. The scale of that pipeline suggests a large pool of potential assets, although connection status does not guarantee construction or financing.

The changing investment approach may favour developers that can move projects closer to construction readiness before seeking buyers or partners. It may also support joint venture structures, particularly where offshore or institutional investors want local development expertise.

Macredie said this would shape how capital is deployed as projects mature.

"There are significant investment opportunities in developing 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 to focus on more established platforms, partnering with local developers through joint ventures to scale and accelerate development," he said.

The report is based on a survey of 550 respondents conducted in early 2026, including private equity and institutional investors, project owners and developers, financial advisers, commercial banks, energy storage developers, and independent power producers across a range of international markets.