Powering ahead: insights from a year in UK BESS transactions

As Autumn blows in, our BESS construction team has been taking a moment to reflect on the past year—looking at what we've learned and how we can apply those insights to better support our clients as we head into the busy run-up to Christmas.

Since last September, the C&E team has worked on more than 40 transactions involving BESS, either as the main focus or as part of a wider deal. A few key themes have emerged along the way:

The move away from EPC continues

This theme was already clear this time last year.  But over the last year or so, multi-package has been the overwhelming choice of procurement route for developers.  Whilst most are opting for just two or three packages, covering technology supply and civils/ICP, we have seen an uptick in developers considering a more fragmented procurement structure – for example, procuring the EMS or PCS separately.  

More contracts means there will be a greater focus on interface, with complementary and consistent co-operation and co-ordination obligations baked into the contractual suite, working alongside other contractual project management tools and the members of the client project management team.  This is something that our developer and contractor clients agree on: focusing on and codifying a sensible, well-thought-through, and balanced regime up-front, which allows developers and their project managers to proactively manage the slings and arrows of the project and help reduce friction and keep parties focused on the job at hand.  

Battery durations are getting longer

In terms of MW, we’re seeing sizing hold steady.  But what we have seen is a move to longer duration batteries, driven by the change in business cases for batteries and backed by manufacturers’ innovations and efficiencies, allowing more storage capacity to be packed into similarly-sized footprints to those we have been familiar with. We think this is a trend that will continue.

Increased focus on testing

It’s always been the case that a testing regime, at taking-over and beyond, needs to be tailored to the use case of the battery.  But as revenue stacks continue to evolve, our experience is that developers have found it beneficial to focus on a few key performance metrics, likely to be relevant across trading strategies and/or to act as a general indicator of performance and “health” of the battery. Based on what we’ve seen in the last year or so, the manner of measuring, reporting, and remedying shortfalls in these performance indicators is still in flux.  Suppliers, buyers and technical advisers alike have shown a willingness to innovate and engage in dialogue (trialogue?) to find fair, balanced, replicable regimes, reflective of the shorter and longer-term promises and expectations of the parties around performance of their batteries.  

We’ve been privileged to be observers and participants in some of the in-depth conversations which culminated in contractual performance regimes for everything ranging from small, to huge, behind and in-front of the meter, co-located, stand-alone and specialist-use batteries. Within the team, we’ve kept in close contact to share our knowledge and as a result we’ve deepened our understanding of the considerations underpinning performance regimes, their perils, pitfalls, limitations and how to draft around them.    

CSR provisions have grown more teeth 

Developers and investors want their projects to be delivered responsibly and sustainably.  So do contractors and suppliers.  In this last year, we’ve seen increased sophistication in the drafting of contractual promises and undertakings around, for example, traceability, work-force issues and audit rights.  Contractors are increasingly signing up to recognised inspection, certification and reporting frameworks, making discussions around visibility and verification much more straightforward.

What’s next?

The BESS landscape continues to evolve at pace. Procurement strategies, performance regimes, technological advancements, responsible delivery: all are continuing to evolve as the UK market matures.  What stands out most to our team is the willingness of the people we engage with every day to collaborate, adapt, and refine.  As we head into the busy months ahead, our team remains as excited about the challenges and developments that we continue to see as we have always been.  We’re looking forward to another year of applying our insights to help clients navigate complexity with confidence and clarity.