How do you get flex solutions properly financed?

The funding gap regarding flexibility

The energy transition requires smart solutions for flexibility and storage. Think of batteries, Power2Heat, hydrogen storage, or smart demand management for industrial consumers. Such solutions are technically often feasible but prove difficult to finance. Business cases are uncertain, development costs are high, and there is often a lack of scalable financial instruments.

Unraveling bottlenecks together

To accelerate the energy transition, Invest-NL, together with the government and the financial sector, launched the Financing Tables: sessions where parties work together to find financing solutions.

During the Flex and Storage Financing Table, Invest-NL brought together government, financiers, and experts to bridge the funding gap for flexibility solutions. Together, they mapped out where the biggest bottlenecks lie and which interventions are promising to address them.

The bottlenecks mainly relate to feasibility (such as grid connection), affordability (uncertain costs and benefits), and financial viability (due to uncertain revenues and lack of suitable financial instruments).

Participants explored, among other things, the possibilities of:

• A fund for the risky development phase of projects
• The establishment of a (junior) debt fund for smart demand management in industry (industrial Demand Side Response (iDSR))
• Allowing Flex solutions to be financed via green bonds from network operators by including them in their regulated infrastructure.

An example: smart demand management in industry

Industrial demand response (iDSR) is a good example: think of a factory that intelligently adjusts its energy consumption to when there is plenty of solar and wind energy available. Technically feasible, and economically attractive at the right scale. But without targeted intervention, financing can be difficult to establish.

The Ministry of Climate and Green Growth has now made € 200 million available to stimulate this demand response. Following the financing table, Invest-NL is now working together with the ministry to explore how this amount can be used to attract private capital for these investments.

Next steps and expansion

The Flex and Storage financing table is thus an example of how Invest-NL, in collaboration with the Ministry of KGG and the Climate Commitment Financial Sector, connects parties, mobilizes knowledge, and works on solutions. By working together with government and market stakeholders to find financing solutions for crucial energy transition projects, Invest-NL directly supports its mission: accelerating societal transitions by removing financial bottlenecks and mobilizing capital. New tables for other topics within the energy transition are already underway.

Curious about the potential solutions? View the visual or contact us if you want to contribute ideas on the upcoming Financing Tables.