Independent engineer reports for energy storage projects are designed to mitigate several specific risks, helping investors and financiers understand and manage these risks when considering investments. Here are some of the key risks these reports focus on:
- Technology Risks:
- Capacity Degradation: This refers to the decrease in battery capacity over time. Independent engineers assess the potential for degradation and evaluate measures to mitigate it, such as performance guarantees and equipment warranties.
- Safety Issues: Such as overheating, which can lead to fires. Engineers review designs to ensure compliance with safety standards and identify measures to prevent accidents.
- Construction Risks:
- Supply Chain Volatility: Risks related to the availability and cost of components, particularly batteries, are evaluated. Reports help identify strategies to manage these risks, such as ensuring adequate reserves for cost increases and delays.
- Operating Risks:
- Operational Limitations and Maintenance: Engineers assess operating and maintenance (O&M) plans to ensure that the system will be operated within its limitations. They also review O&M agreements and reserves for major maintenance costs.
- Intellectual Property and Software Rights: Lenders want assurance that project companies have sufficient rights to software and intellectual property, which are crucial for operations.
- Fire and Explosion Hazards:
- Thermal Runaway and Explosion Control: Reports focus on preventing and mitigating fire and explosion hazards by evaluating fire protection and suppression systems, explosion control measures, and compliance with relevant standards like NFPA 855.
- Commercial and Financial Risks:
- Use Case Consistency: Independent engineers verify that the project’s use case(s) align with its design and financial models.
- Commercial Agreements and Warranty Terms: They assess commercial agreements, including battery module supply warranties, to ensure they protect against operational limitations and provide necessary commercial protections.
These risks are mitigated through comprehensive due diligence, which includes technical assessments, safety reviews, and financial analyses to ensure that energy storage projects are viable and bankable.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-specific-risks-are-independent-engineer-reports-designed-to-mitigate-in-energy-storage-projects/
