The number of Battery Energy Storage Systems (BESS) that have begun operating recently is impressive. These storage projects are vital to allowing the existing and future renewable energy projects to reach their full potential in the fight against climate change.
To date, there has been a healthy number of well-funded energy project developers and sponsors that have begun developing and operating BESS projects across the country. However, the high cost of battery technology and equipment involved with storage projects make it difficult for companies and investors to be profitable. Although the costs of the BESS technology may go down over time, it is unlikely to occur at the rate needed to keep pace with energy transition targets. As a result, it is important for all parties involved with the energy transition to look for steps that can be taken to reduce the overall costs and risks of loss related to storage projects.
MSE has spent a significant amount of time and effort learning about the various development uncertainties and expenditures that storage developers face. With this information MSE can partner with developers and take on some of the risks of development. One reoccurring financial issue that we see developers face is the need to purchase the land targeted for the project site at above market prices. Landowners are often unwilling to lease the small tracts of land used for storage for long lease terms (20-30 years). In these circumstances, MSE can purchase the land from the original landowner and then in turn lease the property back to the project at a reasonable rate, preserving the overall economics of the development. This is just one of many ways MSE can collaborate with BESS developers.
If your company is facing an economic or other challenge related to the development or operation of a BESS project, then we would appreciate the opportunity to learn more. Please drop us an email at contact@madisonstreetenergy.com.
