Investment in vital energy storage systems is concentrated in a small number of markets offering an attractive mix of ‘pull’ factors.
The Capital Unlocks Capacity report, by the DLA Piper law firm, is based on a sample survey in early 2026 of 550 private equity and institutional investors, project owners and developers, financial advisors, commercial banks, energy storage developers, and independent power producers.
The sample included 50 respondents across the US, UK, Europe, Australia, the Middle East, East Asia, China, Canada, and Latin America.
Results show that the US is viewed as the most attractive market by 25% of BESS investors, despite perceived policy volatility. The UK is the second most popular choice at 19%, with China – the world leader in many areas of battery technology – coming in third with 14%.
The report shows that investors are channelling capital into countries where they see the greatest potential to repeat successful models at scale, prioritising those regions over territories that may have a bigger need.
Factors that garner the most confidence include local supply chain strength, the predictability of market rules, grid access, and the bankability of contracted revenue options.
Investors still seek out markets which possess regulatory stability and a clear commercial model, according to the report. This has positioned the UK as the second most desirable location for investment, despite being down the list in terms of market size.
Natasha Luther-Jones, partner and Global Chair of Energy and Natural Resources at DLA Piper, said: “In barely five years, investors and other market participants have transformed a nascent battery storage industry into an institutional, rule-based one.
“Our research clearly shows that the industry is no longer just chasing asset storage capacity but rather prioritising a stable rulebook – a ready pathway to grid access and clear revenue visibility. The capital is there but is being distributed in a much more disciplined way than before.”
The report shows that investors and lenders are taking a more considered approach to balance returns and exposure. In less mature markets, for instance, lenders are more reluctant to accept merchant exposure.
However, in a sign that the BESS market is maturing, investors are becoming more open to merchant revenue risk, with 44% open to between 21-40% exposure.
This reflects a willingness among investors who seek higher returns to accept additional merchant risk, so they can participate in any market upsides.
Overall, the market is converging toward a blended-revenue structure, where merchant exposure is strategically used within careful limits alongside fully contracted income streams.
The stage of project development is also having an impact on investment, according to findings.
Most investors (43%) are pursuing ‘Goldilocks’ projects that are in the later development stage, rather than greenfield projects or de-risked assets already in operation.
Half of the investors questioned are seeking an internal rate of return (IRR) of between 11 to 12%, rather than take on higher risk for higher return, where only 3% were looking for an IRR of more than 15%. This reflects a market that is not seeking risk but will deploy capital where uncertainty is limited and clearly defined.
Robert da Silva Ashley, partner and Americas Chair of Energy and Natural Resources at DLA Piper, added: “As sectors such as BESS continue to evolve, investors are showing a growing risk tolerance given the right conditions.
“This is driving a broader move toward blended revenue models, where merchant risk is carefully calibrated alongside contracted income streams.
“And while capital for BESS continues to grow, much of this capital is chasing a narrower universe of ‘Goldilocks’ opportunities – projects that sit between early development-stage uncertainty and fully de-risked, lower-yield assets.
“In essence, the market is coalescing around a middle ground – not risk-seeking, but risk-aware – with capital flowing to and competing for projects where uncertainty is not eliminated but clearly understood and appropriately priced.”
