example , tri or bi partite structures where a standalone GridCo offers shared grid connection access to SolarCo and BatteryCo ).
Formatting a project in this way is likely to result in greater upfront costs , including in terms of considering and documenting the rights and obligations of SolarCo and BatteryCo in respect of shared assets ( including , in particular , the grid connection and access rights ) but may provide more flexibility for future actions . Separate legal entities for the relevant renewable asset may also help future-proof against regulatory developments that might differentiate the requirements for battery and solar assets . Such a structure also offers the benefit of ring-fencing the development risk of each individual asset , potentially offering some downside protection to interested parties if there is a serious loss event .
If considering a multiple SPV project structure , there will be a few key points of interaction to manage , most of which relate to the allocation of costs ( and all of which should be manageable by entry into a form of grid / land sharing agreement ):
• Any potential liabilities under the grid connection arrangements will need to be allocable between the entities , such as maintenance or minimum capacity usage costs .
• For shared access routes , pre-agreement of priority rights between EPC and O & M contractors will help avoid unforeseen impediments to project development and / or operation and rights and obligations in respect of shared assets , such as the grid connection .
• If development of the projects is taking place in close proximity , it may be of value to have in place a mechanism for dispute resolution and apportionment of liability for serious loss events , to the extent the development or operation of one project may result in physical damage to the other . This will be of particular concern where one project is operational and receiving revenue .
Retrofitting an existing project
Where a BESS is to be added to a generation asset which is under construction , in pre-commissioning or already in operation , there will be additional considerations , even when using a single SPV structure . The sponsor will need to carry out a detailed review of the existing arrangements to ensure the BESS installation will not prejudice the generating asset . Although not a complete list , certain key matters that should be considered are as follows :
• A key asset for both the generating and BESS facilities will be the grid connection rights . The project developer will need to get comfortable that the BESS installation and operation will not interfere with the export capacity usage of the generating asset or otherwise jeopardise the grid connection . The technical specifications under the grid connection agreement and any related construction agreement should be closely reviewed .
• Any existing offtake arrangements for the generating asset ( usually a PPA ) will need to be preserved in order to ensure that the SPV continues to comply with its offtake obligations and , where relevant , continue to repay any financing . If included , the following terms in particular should be considered :
• planned outages and outage payments : if there are notification or payment obligations that apply in respect of outages , the developer should make appropriate provisions for any interference the BESS connection may cause ;
• delay payments : similar to the above , if there are terms that require payment in respect of any delays to commission of the project , these should be borne in mind when planning BESS connection ; and
• rights to offtake : PPAs often provide for ( i ) exclusivity of offtake from a specified metering point , and ( ii ) a right to offtake ancillary services the project provides . In both cases , BESS co-location will need to be structured either to avoid the consequences of these terms or to acknowledge them ( for example , by offering the BESS offtake to the existing PPA counterparty , or by seeking a waiver of such rights ).
• The terms of any existing lease agreement or planning permission will need to be considered in order to determine whether the addition of the BESS will require any amendments or supplemental applications in respect of such lease or permission .