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The Middle East’s energy storage sector is attracting significant investor interest, but developers still face challenges in turning large project pipelines into financeable, commercially viable assets.
At the Energy Storage Summit Middle East 2026, held earlier this month, financiers, investors and industry experts discussed what is needed to move energy storage projects from development plans to financing, construction and operations.
The panel, titled “Financing the Energy Storage Sector: Strategies for the Middle East,” focused on revenue certainty, risk allocation and the bankability of battery energy storage projects.
Jessen Shah, energy and climate policy manager at the British Embassy in the UAE and moderator of the session, said the industry’s focus has shifted beyond proving that storage technologies work.
“Now, it’s fundamentally about the revenue certainty, risk allocation, and, of course, the bankability of these projects,” Shah said.
According to Shah, capital is available for energy storage investments, but developers still need to provide sufficient visibility over project revenues and risks. Creating financing structures that can be repeated across multiple projects will be critical to scaling the sector.
Turning a Large Pipeline Into Bankable Projects
The Middle East’s energy markets offer different opportunities for storage development. Gulf countries benefit from substantial pools of capital and centralised procurement systems, while other markets are increasingly looking to energy storage to strengthen energy security and support economic development.
The challenge is converting this demand and investor interest into projects that are consistently bankable, financeable and capable of being replicated.
Sukh Sidhu, director of energy at Société Générale, said the region does not lack either capital or potential projects. However, the energy storage market remains relatively young compared with renewable energy, which has benefited from more than a decade of market development.
Sidhu described the current environment as a “scale-up issue,” while noting that the storage industry could expand more rapidly than renewable energy did because developers and financiers can draw on lessons learned from previous projects.
Hammad Rabani, managing partner at Burj Capital, similarly pointed to the gap between opportunity and bankability.
“It’s more about converting a huge pipeline of opportunities into bankable projects,” Rabani said.
He noted that battery energy storage is becoming strategically important as countries seek to manage renewable energy intermittency. However, projects still require predictable cash flows and financially credible counterparties before they can attract large-scale financing.
Calls for Energy Storage to Be Recognised as a Separate Asset Class
Another key issue discussed by the panel was the regulatory treatment of standalone energy storage.
Yosra Assaker, senior energy specialist at the World Bank Group, said regulators should recognise standalone battery energy storage systems as a distinct infrastructure or asset class rather than treating them simply as generation or supply assets.
She argued that storage has different characteristics and financing requirements from conventional power generation.
Assaker also highlighted the need to better capture and monetise the grid flexibility provided by batteries. Regulatory frameworks, she said, need to enable storage operators to generate revenue from multiple services and applications.
That could require updates to grid codes and market regulations so that energy storage can participate across different parts of the electricity system.
Gulf IPP Model Continues to Play a Major Role
While regulatory frameworks are expected to evolve, Sidhu said the Gulf’s established independent power producer (IPP) model is likely to remain central to large-scale energy storage development.
The IPP structure was originally designed around conventional power generation but has increasingly been adapted for renewable energy and, more recently, battery storage.
Société Générale is already seeing both standalone and hybrid storage projects emerge across the region, according to Sidhu.
However, he said the Middle East is unlikely to move toward fully liberalised electricity markets with the same variety of merchant revenue opportunities available in some mature storage markets.
“The IPP framework offers the most cost-effective way to develop large-scale projects, energy storage, or other types,” Sidhu said.
He added that the GCC has a strong pipeline of storage projects, although financing conditions are being affected by higher interest rates and competition for available liquidity.
Higher base rates have increased project development costs, while a large number of infrastructure projects are competing for financing under the same procurement structures.
Standardisation Could Help Unlock Scale
Saajan Sujanani, director of structured finance at Sumitomo Mitsui Banking Corporation, said battery storage should increasingly be viewed as an infrastructure asset rather than simply a technology investment.
Drawing on experience from Europe and the Middle East, Sujanani said greater standardisation of contracts and financing structures could help create repeatable models capable of being deployed across multiple projects.
The Middle East is expected to develop financing structures that differ from European markets, where storage projects can have greater exposure to merchant revenues.
For lenders in the region, however, predictable payment mechanisms will remain particularly important.
Sujanani highlighted capacity-based and availability-based payment structures as critical factors in determining whether projects can achieve sufficient bankability.
As the Middle East accelerates its deployment of renewable energy and battery storage, the next stage of market development will therefore depend not simply on the availability of capital, but on creating reliable revenue frameworks, clearer risk allocation and standardised contractual structures that lenders can finance repeatedly.
