Key Points for Purchasing Energy Storage Systems

Like transmission, energy storage can help to manage supply and demand over broad areas of the electric system because it can provide both generation and load by converting excess electric power into another medium to be stored for later use.

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.

Checklist provides federal agencies with a standard set of tasks, questions, and reference points to assist in the early stages of battery energy storage systems (BESS) project development.

Energy storage also converts energy from one medium to another—whether it be mechanical energy in a pumped hydro facility or chemical energy in a battery—so that energy can be provided when it is needed by the grid.

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.

Some PPAs for new energy storage resources have been structured as capacity-only contracts in which the developer is responsible for the sale of energy and all costs associated therewith—including the costs of the required energy procured from the utility.