Site Conditions

Because of the value of battery storage in storing and delivering energy close to where the energy is needed, standalone battery storage projects are typically sited as close as possible to the point of interconnection (“POI”), or, in the case of C&I projects, on customer-owned land. Additionally, brownfields or previously developed industrial sites can be good candidates for a battery storage project because they are already zoned for commercial use and may house infrastructure that can be repurposed. Unlike wind and solar projects which require large amounts of land and are typically sited in agricultural or rural areas and further away from the POI, many battery storage projects are built in industrial or commercial areas. The prior or existing use of these sites needs to be taken into account when allocating risk under the site control documents—particularly with respect to environmental liability. Some items to consider include:

• Ensuring there is a process for addressing recognized environmental conditions (“RECs”) or other unfavorable site conditions that are found during site inspections and testing. This might include the ability to adjust the site boundaries or move the project to a different portion of the larger property if any RECs or other problematic site conditions are found.
• Clearly allocating responsibility for any undiscovered environmental issues and ensuring that the project company’s environmental liability is limited only to issues caused or exacerbated by the project.
• Addressing who will be responsible for any remediation if RECs are identified and need to be remediated—either by law or to be able to construct the project. If the landowner will be responsible for remediation, the developer will want to ensure there is a clearly delineated process for selecting an acceptable contractor to do the work and a timeline for the work to be completed. The developer will also want to ensure that it is adequately protected via an indemnification for any claims related the landowner’s remediation work. To avoid delays to the project schedule, the developer should also retain the ability to step in and complete the remediation work if the landowner is unable to meet the required deadline. On the other hand, some developers prefer to have control over the remediation process and will want to assume responsibility for coordinating any necessary remediation work at the landowner’s expense. If this is the preferred route, the developer should make sure that the site control document is very clearly drafted to ensure that, despite doing the work, the developer is not assuming any related environmental liability.

Ongoing Business Operations

Due to the relatively small footprint needed for an effective battery storage project, it is not uncommon for projects to be sited on portions of property that are directly adjacent to property being used for the landowner’s ongoing business operations. Similarly, in C&I projects, the battery storage system is frequently built on customer-owned land and used to support the customer’s existing business. This should be considered when negotiating the site control documents—particularly if the project property is subject to an existing lease.

• If the landowner has an existing commercial tenant on the property and the lease needs to be terminated prior to construction of the project, the developer may be required to give the landowner significant prior notice to allow the landowner time to properly terminate or the existing lease. It is not uncommon to see developers agree to provide between six months and one years’ notice prior to commencement of construction. Additionally, landowners will frequently request guarantees or security from the developer to cover them in the event the landowner terminates their existing commercial lease at the developer’s direction, but for some reason the project stalls and is not constructed and they are left without a tenant.
• If the project will be constructed on a portion of a larger property and the remainder of the property will still be used by the landowner or its commercial tenant, items like shared access, parking and staging for construction will need to be clearly addressed in the site control documents. It is important that there is a balance between mitigating any unreasonable impacts to the landowner’s business operations, while ensuring that the developer and its contractors have sufficient access for construction, operation and maintenance of the facility.

Insurance & Safety Considerations

Landowners are frequently concerned with the possibility of fires or environmental contamination caused by the installation of a battery storage system on their property. While these risks are quite low, many landowners will still want to see additional insurance coverages or safety measures addressed in the project site control documents that would not be typical for a wind or solar project. For example, landowners frequently require:

• Some sort of detailed fire safety plan.
• An agreement to comply with the regulations proposed by the American Insurance Association.
• Additional insurance coverages to address any risk of environmental contamination or pollution caused by the system.

Conclusion

Negotiating and drafting the site control documents for a battery energy storage project requires an understanding of the potential risks that are unique to battery storage and a grasp of what is market in order to reach a solution that works for all parties, including future lenders and tax equity investors. 

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