Performance guarantees play a crucial role in the procurement process of energy storage systems, ensuring that the system operates as intended and meets specific performance criteria. These guarantees are typically included in procurement contracts to mitigate risks related to the technical performance and reliability of the energy storage systems.
Key Aspects of Performance Guarantees
- Specific Measurements: Performance guarantees often include metrics such as:
- Capacity: The ability of the system to store energy.
- Round-trip Efficiency (RTE): The efficiency of charging and discharging energy.
- Rate of Charge/Discharge: How quickly the system can absorb or release energy.
- Availability and Ramp Rates: The system’s accessibility for operation and its ability to adjust power output quickly.
- Risk Mitigation: By including these guarantees in contracts, buyers can protect themselves against potential underperformance or equipment failure, ensuring that the system meets agreed-upon standards. This is particularly important for energy storage systems, which may involve new technologies with higher risks compared to traditional power generation methods.
- Warranty and Long-term Support: Performance guarantees often come with long-term warranties and service agreements (LTSA), which obligate suppliers to provide ongoing support and maintenance. This includes ensuring that the system retains its energy storage capacity over time, which is critical for maintaining the system’s efficiency and profitability.
- Variability in Offerings: The energy storage market shows a great deal of variability in terms of performance guarantees offered by different suppliers. Top-tier suppliers typically provide comprehensive guarantees, while smaller integrators might offer less robust warranties or guarantees, making some project offerings non-financeable from a project finance perspective.
- Project Finance Considerations: For project financiers, robust performance guarantees are essential for ensuring that projects remain viable over their lifespan, as they help manage technology risk and ensure revenue stability.
In summary, performance guarantees are essential for ensuring the reliability and efficiency of energy storage systems. They mitigate risks associated with new technologies, provide long-term operational assurance, and are critical for securing project financing.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-role-do-performance-guarantees-play-in-the-procurement-process-of-energy-storage-systems/
