This article is the fourth installment in a five-part series exploring the critical components of Battery Energy Storage Systems (BESS) development. Each piece delves into a pivotal phase or document essential for navigating the complexities of BESS projects. In the first three parts, we addressed the importance of Term Sheets or Letters of Intent (LOIs) as foundational agreements and the significance of Site Control and Permitting Best Practices. Here, we turn our focus to Navigating Project Quality and Timelines.
“Sprint at the Beginning, Not at the End”
It is astonishing how much activity and, at times, panic occurs in the final week leading up to a renewable project closing—particularly when it coincides with the fiscal year-end. Like constructing a house, the critical stage of a project often lies at the beginning. Flaws observed at project closing can frequently be traced back to a weak foundation set during the initial stages of development.
A typical DG BESS project may span 30 months or more from inception to Notice to Proceed (NTP), accruing hundreds of thousands of dollars in soft costs. That timeline represents a significant investment of time and resources, leaving little margin for error. While hurdles are inevitable in any project, the goal is to address issues earlier rather than later to avoid costly setbacks.
Several best practices can help developers shorten the overall development timeline and reduce costs. Successful projects start at inception, with careful site selection and meticulous planning. Below are strategies to enhance project outcomes and efficiency:
1. Pick the Right Site
The foundation of a great project is laid with thorough due diligence. Key steps include:
- Reviewing Local Zoning Codes: Ensure that the site complies with local regulations to avoid unforeseen barriers.
- Assessing Hosting Capacity: Evaluate the grid’s ability to support the proposed BESS.
- Considering Environmental Resources: Identify potential environmental constraints and mitigation measures early.
2. Develop a Comprehensive Project Plan and Forecast
Establish a clear project roadmap with input from all stakeholders. Securing team buy-in ensures alignment on timelines, objectives, and responsibilities. Ensure all stakeholders understand the project’s timeline and what is expected of them. Regular communication helps align efforts and minimize misunderstandings.
3. Hire Quality Vendors and Contractors
Partner with vendors and contractors experienced in the market. Avoid selecting services solely based on the lowest cost; instead, prioritize expertise and reliability. Ensure that contractors commit to specific budgets and deadlines to maintain project momentum.
4. Engage Experienced Legal Counsel
Legal expertise is critical in negotiating contracts and navigating land use processes. Select attorneys familiar with local markets who can expedite rather than hinder progress. As the Paramount show Landman highlights, “A good lawyer can sometimes screw up a great deal.” Avoid the temptation to tackle complex zoning or tax issues independently to save costs—this often results in delays and potential critical defects.
5. Proactively Address Zoning Obstacles
Municipal and community opposition can be significant hurdles. Engage early with local governments and community groups to mitigate hostility and explore mutually agreeable solutions. Since zoning and permitting challenges vary by project, adaptability and strategic thinking are essential.
6. Control What You Can Control
While external factors like government agencies, aggrieved stakeholders, and weather are unpredictable, focus on managing internal processes effectively. Vendor onboarding, payment schedules, and document workflows should run seamlessly to avoid unnecessary delays.
7. Maintain Data Room and Document Integrity
An organized and accessible data room is essential from day one. Ensure all participants know how to navigate it and that documents are updated and easily retrievable. Avoid last-minute scrambles by treating the start of a project as the beginning of the closing process.
Conclusion
Project development is inherently challenging, and even the most meticulously planned projects will encounter obstacles. However, proper planning, organization, and commitment to deadlines can distinguish a successful project from a failed one.
Stay tuned for Part 5 of our series, where we’ll explore the next critical phase in BESS development.
Joe Tassone Jr. is founder and a principal of Oncore Origination and has over twenty-eight years of project development experience. Visit www.oncoreorig.com for more information.