An overbuild strategy in Battery Energy Storage Systems (BESS) projects involves initially installing more capacity than required to meet contractual performance obligations. This approach offers several benefits:
- Risk Mitigation: Overbuilding helps mitigate the risks associated with future supply chain disruptions, including labor and equipment shortages. By having excess capacity, developers can ensure that their project’s performance is not compromised even if later expansions or replacements are difficult to execute.
- Long-term Cost Efficiency: While there is a higher upfront cost, overbuilding eliminates the need for future augmentations, which can be costly and risky due to potential compatibility issues with evolving technologies and uncertain future costs.
- Operational Continuity: Projects designed with an overbuild strategy do not require shutdowns for future augmentations, maintaining continuous operation and avoiding the logistical challenges associated with site mobilization and commissioning.
- Financial and Tax Benefits: Overbuilding allows for the utilization of available tax credits more efficiently. In projects utilizing tax equity, claiming the full investment tax credit in the first year of operation is often preferable, as future augmentations may not qualify for similar credits.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-benefits-of-an-overbuild-strategy-in-bess-projects/
