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What I Learned Pricing Out Battery Storage

Published 4 months ago • 1 min read

Alright, this one's fun. I've been knee-deep in battery storage proposals lately.

While I get the basic concept of "buy electricity when it's cheap, and use it when it would be expensive", we're a long way from just going to Home Depot, buying one, and plugging it in.

I've been evaluating a battery energy storage system (BESS) installation at an office building we manage in New Jersey for a family office client through my property management company, Metropolitan America. Three vendors, three very different proposals. Here's what stood out.

  1. The revenue assumptions varied more than the equipment cost did. Two vendors priced the hardware within 8 percent of each other, but their demand-charge reduction and frequency-regulation revenue projections differed by nearly 40 percent. That gap comes entirely from which utility programs and ISO markets they assumed we'd participate in, not from anything about the building.
  2. Interconnection timeline risk is the part nobody puts a number on. Every proposal had a clean payback model. None of them modeled what happens if utility interconnection approval takes 18 months instead of 6. That's the assumption I'm now stress-testing before recommending anyone to ownership.

If you've installed BESS on a commercial property, or you're mid-evaluation like I am, I'd like to compare notes. Reply to this email or write me at josh@kahrrealestate.com.

Comments? Concerns? Reach out and let me know what's on your mind.

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Kahr Notes

Joshua Kahr

Every two weeks, I publish a newsletter on commercial real estate topics such as financial modeling, asset management, and portfolio management. Subscribe to my newsletter.

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