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Key points for reviewing energy storage lease contracts

10 Things To Look For During A Contract Review

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Free Storage Rental Agreement Template

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Key Considerations for Utility-Scale Energy

US Energy Information Administration, Battery Storage in the United States: An Update on Market Trends, p. 8 (Aug. 2021). Wood Mackenzie Power & Renewables/American Clean Power Association, US Storage Energy

Key considerations for Battery Energy Storage

As we explained in a previous article, developers of BESS projects are increasingly using a multi-contractor, split-scope contracting structure instead of the more traditional single EPC contractor approach this context, a

Key points for reviewing energy storage lease contracts [PDF]

6 FAQs about [Key points for reviewing energy storage lease contracts]

How do energy storage contracts work?

For standalone energy storage contracts, these are typically structured with a fixed monthly capacity payment plus some variable cost per megawatt hour (MWh) of throughput. For a combined renewables-plus-storage project, it may be structured with an energy-only price in lieu of a fixed monthly capacity payment.

Does Reg's agreement to use the battery system meet a lease?

REG’s agreement to use the battery system does meet the definition of a lease. The contract involves an identified asset (because the SunGen battery system is explicitly specified in the contract and SPC has no substitution rights). Further, REG has the right to control the use of the battery system throughout the 10-year term:

Does a power purchase agreement contain a lease?

The use of Power Purchase Agreements (PPA) in the supply of renewable energy is on the rise. Typically, the customer in a renewable wind and solar PPA does not have the right to control the underlying equipment and, therefore, such an arrangement does not contain a lease.

What are relevant decisions during the term of a storage contract?

Relevant decisions occurring during the term of a contract for a storage system generally include the following: Evaluating whether a contract conveys the right to direct the use of an identified asset focuses only on decisions that can be made during the period of use of the asset.

Can energy storage resources be financed on a nonrecourse basis?

Key Finance-ability Provisions: Energy storage resources may also be financed on a nonrecourse basis and, like any other project financed in such manner, will need to address issues upon which nonrecourse lenders will focus, including assignment, events of default, performance requirements, key dates, and collateral.

What are the operational limitations of energy storage?

Operating Limitations: Energy storage resources may be subject to operational constraints that do not affect traditional generation projects. For example, certain battery technologies will degrade more quickly if the state of charge is not actively managed within a certain range.

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