Land Lease for Battery Storage
Should I Lease my Land for Battery Storage?
Battery Storage Technology
The availability of solar and wind power is subject to intermittency challenges, necessitating the integration of battery storage systems to mitigate these variations. These systems play a crucial role in "smoothing out" the intermittent nature of renewable energy sources, ensuring a consistent power supply regardless of whether the sun is shining, or the wind is blowing. By storing excess energy in batteries during periods of high production, it becomes possible to tap into this reserve during periods of increased demand.
The concept of a battery energy storage system (BESS) goes beyond a mere backup solution. The most common type of battery used is the Lithium-ion Battery. It represents an advanced technological approach that enables versatile energy storage for subsequent use. In scenarios where energy supply may be affected by weather conditions, blackouts, or geopolitical events, battery systems emerge as vital components for utilities, businesses, and residences alike. This is also the case when energy demand unexpectedly increases, during cold or hot weather events. BESS systems contribute to achieving a seamless and uninterrupted flow of power, addressing the challenges posed by the inherent intermittency of renewable energy sources. They also help to stabilize the grid. Battery energy storage systems can help support grid stability by providing a fast response time in the frequency control market. Frequency is the measure of the speed at which alternating current (AC) changes direction, and it must be kept within a given range, normally 50 or 60 Hertz to ensure the stability of the grid. If the frequency deviates from this range, it can cause damage to equipment. Visit Merus Power for more information on how the battery system stabilizes the grid.
The significance of a battery energy storage system is evolving; it is no longer an afterthought or a supplementary feature but has become a cornerstone of comprehensive energy strategies. Recognizing the critical role of BESS in ensuring grid stability and uninterrupted power availability, industries and individuals are increasingly incorporating these systems into their energy plans. As the world transitions towards a more sustainable and resilient energy future, the integration of battery storage is emerging as a fundamental and indispensable element in the broader landscape of energy solutions. Visit EnelX for more information on battery technologies.
According to a recent 2024 report by the Solar Energy Industries Association (SEIA), battery storage demand in the United States is expected to surge within this decade. ERCOT reports also indicate the same. The evolving landscape of renewable energy and the increasing demand for reliable energy storage solutions have led to greater interest in battery storage projects across the United States. As a landowner, the prospect of leasing and making money from your land for battery storage might be an enticing opportunity. However, before making a decision, it's essential to carefully consider the advantages and potential drawbacks associated with such arrangements.
A Battery Storage project – Source: LEK Consulting
Merits of Leasing Your Land for Battery Storage
Brings Stable Income: Leasing your land for battery storage provides a stable and predictable income stream. Before the battery storage system is installed in your land, a detailed lease option agreement needs to be negotiated between the landowner and the project developer, which specifies the amounts to be paid, how the payments are made, installments, and the project duration based on the life cycle of the plant. This will ensure a predictable income stream. Typically, lease agreements involve fixed payments or structured revenue-sharing models. Let your land host the energy transition by contacting Telkes and discovering what your land can do for you. We can provide you with free advice.
Supporting Renewable Energy Transition: The Energy Transition refers to the global shift from traditional fossil fuel based energy like coal and natural gas, towards more sustainable renewable energy such as wind, solar, geothermal, biomass, etc. Due to their intermittence, wind and solar in particular contribute to the growth of battery storage projects, which aligns with the broader transition to renewable energy. There are various investment incentives for energy transition projects, particularly tax credits. Traditionally, in the energy storage space, tax credits have been available only for energy storage systems that are paired with renewable energy generation projects. However, with the passage of the New Tax Credits and Monetization Opportunities for Energy Storage, tax credits are now available for standalone energy storage systems, and thus lenders may be willing to provide bridge capital that is underwritten based on the receipt of proceeds from an anticipated tax equity investment, similar to renewable energy projects. There is also an increased call to decarbonize the US economy by 2050, hence by leasing your land for battery energy storage, you play a role in advancing sustainable and clean energy solutions.
Minimal Land Impact: The amount of land needed per megawatt-hour (MWh) of battery storage from lithium-ion batteries varies depending on the specific type of battery and the installation configuration. However, in general, the land requirements for lithium-ion battery storage systems are relatively small compared to other types of energy infrastructure, such as wind and solar power plants, allowing landowners to maintain other land uses simultaneously. This is particularly beneficial for agricultural or multi-purpose landowners.
According to Convergent, the land use requirements for utility-scale lithium-ion battery storage system is about 0.02 acres per MWh of storage capacity, depending on factors such as the battery chemistry, the size of the system, and the location of the installation. This is small compared to the 4 – 7 acres per MW that are required for solar PV. Telkes has helped investors implement very large battery projects on plots of land that were normally around 20 acres or smaller.
Long-Term Agreements: Lease agreements for battery storage projects often require commitments of several decades, normally the period corresponding to a Power Purchase Agreement (PPA) with the developer and the utility or a private power consumer. Since these are long term agreements, they typically include inflation adjustments to maintain the value of the lease payment over time. This offers landowners a long-term and consistent source of income. This stability can be appealing for those seeking a reliable investment and even loan facilities for various personal projects. Contact Telkes to get advisory assistance on best terms for battery storage land lease agreements.
Drawbacks of Leasing Your Land for Battery Storage
Technological Changes: Rapid advancements in energy storage technologies may render current systems obsolete in the future. There are projections that future batteries will have improvements such as extended life cycles, faster charging and recharging, enhanced safety features, employing AI, Internet of Things (IoT), among others. Ceiba Renewables gives a detailed breakdown of expected technological developments of the battery storage technology. With advancements in efficiency, performance, battery chemistries, smart technology integration, and sustainability, homeowners and businesses can look forward to even more reliable, effective, and eco-friendly energy storage solutions in the years to come. Landowners should carefully assess the technology being deployed and consider potential changes that may affect the project's sustainability. Stay in touch with Telkes to get informed on these technological advancement trends.
Permitting and Regulatory Challenges: The development of battery storage projects is subject to various permitting and regulatory processes. According to a report by Powermag, BESSs are relatively new, and most zoning ordinances do not allow the installation of these facilities without receiving a variance or special use permit. Zoning variance applications appear to be challenging in some states and counties, such as Virginia and New York, while states like California have enacted legislation to make the application process more streamlined to facilitate faster deployment of BESSs. States like Arizona appear to be focused on the climate, environmental, and economic implications in determining rezoning applications for the systems. Landowners should be prepared for potential challenges related to environmental assessments, zoning regulations, and community approvals.
Conclusion
Leasing your land for battery storage is a decision that requires careful consideration of both its benefits and potential challenges. While it can provide a stable income, contribute to renewable energy goals, and offer long-term agreements, landowners must be mindful of technological uncertainties and regulatory bottlenecks.
Reach out to Telkes, battery storage experts and get assistance to lease your land for battery storage in the United States. Before entering into any agreements, it is advisable to seek professional advice, engage in thorough due diligence, and negotiate terms that align with your objectives. As battery storage continues to play a crucial role in the nation's energy landscape, landowners stand at the forefront of a transformative opportunity that can contribute to a more sustainable and resilient energy future.
