Big names in the downstream battery storage market have signed up to join an initiative aimed at simplifying BESS procurement.
Independent power producer (IPP) Neoen and developers BW ESS and MN8 Energy are among 22 member companies in the newly launched Energy Storage Contract Alliance (ESCA), a global effort to create a common contract framework for battery energy storage system (BESS) procurement.
Launched today, it aims to help developers, EPCs, independent power producers (IPPs), project developers and asset owners in their negotiations with battery manufacturers and system integrators.
ESCA has published a model contract for buying utility-scale BESS, which it has made available to view in part publicly and in full for member organisations.
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According to the organisation, it aims to tackle common issues presented by most standard BESS supply and purchase agreements.
“Every BESS project works through the same technical and contractual questions, and most of the answers are not project-specific. Those answers used to stay in each company’s drawer,” Arthur Claire, ESCA secretary general and director of technology at technical compliance and quality assurances provider Sinovoltaics, said.
“ESCA puts a complete baseline in the open, so any developer, utility or manufacturer can take it, use the parts that fit and ignore the rest.”
Utility-scale BESS contracts tend to begin with a supplier’s template, built around the supplier’s offered guarantees, rather than the customer’s needs, ESCA argued. This can lead to serious omissions that do not cover serial defects, cell traceability and data access, with problems going unnoticed until something goes wrong.
The model contract, conversely, includes wording that can be tailored to suit each project. It covers technical specifications, factory acceptance testing (FAT) and site acceptance testing (SAT), commissioning, warranties, payment and price-adjustment mechanisms and cybersecurity.
Value is lost when contract terms cannot be ‘translated’ from project to project
Elsewhere, a recently launched Chinese battery industry initiative seeks to set standard contract terms for power and stationary energy storage battery procurements.
As reported by Energy-Storage.news, in June, the trade association China Energy Storage Alliance (CNESA) and the China Automotive Battery Industry Innovation Alliance (CABIA) launched the ‘Initiative on Standardising Supplier Payment Practices for Power and Stationary Storage Battery Enterprises.’
It is aimed at tackling persistent issues that include late payments and long payment cycles, acceptance inspection delays, bill-related disputes and slow supplier collections. It is also intended to address broader industry shortcomings and its signatories include CATL, Fdbatt, CALB, EVE Energy and Sunwoda.
Meanwhile, the 22 members of ESCA represent 40GWh of BESS projects delivered to date globally.
The ESCA steering committee includes representatives from US developer MN8 Energy, French IPP Neoen, mining and materials company Fortum and reinsurance provider Munich RE.
“Utility-scale energy storage is scaling faster than the contracts that underpin it. Today, every project negotiates availability guarantees, augmentation obligations, performance testing, warranty terms, and risk allocation from scratch, which adds cost, delays financing, and creates uncertainty for developers, operators, offtakers, lenders, and OEMs alike,” MN8 Energy SVP and head of technical operations Pedro Garcia Hrdy said.
MN8 Energy has seen firsthand “how much value is lost” through contracts not being translatable from “one deal to the next,” Garcia Hrdy said.
“Working with peers across the industry to align on common contracting frameworks will help us bring projects to market faster, make risk easier to price, and build the confidence capital providers and owners need to keep investing in the storage assets the grid depends on.”
ESCA’s open access contract can be seen on the organisation’s website.
