Benefits of Using Build-Transfer Agreements (BTAs) for Energy Storage Projects
Build-transfer agreements (BTAs) offer several advantages for utilities and developers in the context of energy storage projects. Here are some key benefits:
- Ownership and Risk Mitigation:
- Utilities: BTAs allow utilities to acquire ownership of energy storage assets without assuming the development and construction risks. They pay for the project after it is completed and operational, reducing upfront financial exposure.
- Developers: Developers bear the risks associated with project development and construction. However, having a creditworthy buyer like a utility provides them with a guaranteed purchase agreement, which can facilitate construction financing.
- Long-Term Value:
Utilities can include these projects in their rate base, potentially earning a return on investments without the immediate capital outlay. This aligns with the overall strategic goal of utilities to increase their renewable and energy storage portfolios. - Tax Benefits:
BTAs enable utilities to claim tax credits and accelerated depreciation, which can be beneficial for their financial performance. They may also partner with tax equity investors to enhance these benefits. - Operational Flexibility:
The utility has options for operating and maintaining the project, which can be done by themselves, the original developer, or a third-party contractor. This flexibility allows utilities to choose the most cost-effective operational strategy. - Knowledge Transfer:
Although not typically emphasized in energy storage BTAs, they can provide an opportunity for utilities to gain expertise in managing new technologies.
While BTAs offer these advantages, they often require higher upfront costs compared to other procurement models like EPC contracts. Despite this, they remain a viable option for utilities seeking to integrate energy storage into their portfolios with minimal development risk.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-benefits-of-using-build-transfer-agreements-btas-for-energy-storage-projects/
