2025 marks the 25th anniversary of USDA's popular Farm Storage Facility Loan program. Through the program, USDA's Farm Service Agency (FSA) provides low-interest financing to producers who want to build or upgrade their commodity storage facilities or purchase eligible handling equipment.
In this Ask the Expert, Toni Williams answers questions about how Farm Storage Facility Loans (FSFLs) provide low-interest financing to help producers build or upgrade commodity storage facilities. Toni is the Agricultural Program Manager for FSFLs at the Farm Service Agency (FSA).
On-farm storage facilities can help farmers succeed financially by giving them greater control over their products and the timing of marketing. USDA's Farm Service Agency (FSA) provides low-interest loans for farmers to build storage units, upgrade and expand existing storage, or purchase mobile storage facilities.
Since May 2000, FSA has made more than 40,000 loans for on-farm storage. Eligible facility types include grain bins, hay barns, bulk tanks, and facilities for cold storage. Drying and handling and storage equipment including storage and handling trucks are also eligible.
The Western Area Power Administration is a good example of how one of these groups can support energy storage project financing of large projects. Through an infrastructure financing program aimed at expanding and modernizing the electric grid, WAPA's Transmission Infrastructure Program (TIP) can make loans to project.
We finance both solar plus storage projects as well as standalone storage projects. We know the asset class and can provide value with long-term, project-level debt. Our solar lending team members are experts in utility-scale and C&I solar, community solar and energy storage project financing nationwide.
Most groups involved with project development usually agree that energy storage projects are not necessarily different than a typical power industry project finance transaction, especially with regards to risk allocation.
The Summit was the first Energy Storage Finance Advisory Committee Meeting for a U.S. Department of Energy sponsored study to issues and challenges surrounding project and portfolio valuation.
Since the majority of solar projects currently under construction include a storage system, lenders in the project finance markets are willing to finance the construction and cashflows of an energy storage project. However, there are certain additional considerations in structuring a project finance transaction for an energy storage project.
These projects will have long-term predictable revenue streams. In addition, lenders may be willing to finance merchant cashflows, but with less leverage and subject to detailed market studies and cash sweeps. These trends for solar and wind projects also apply to energy storage projects.
The rapid growth in the energy storage market is similarly driving demand for project financing. The general principles of project finance that apply to the financing of solar and wind projects also apply to energy storage projects.
Co-located solar and storage projects usually feature a mix of the fixed and variable revenue sources, which continue to evolve as changes occur in regional energy regulations and markets.
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