Technical Due Diligence on an Operating Battery

What the client needed

An infrastructure investor was preparing a binding offer for a 100 MW / 200 MWh grid-connected battery, three years into operation. The seller's information memorandum said the asset was performing as expected.

The question they needed answered: Is the battery performing as the seller says, what will it cost to keep delivering its contracted capacity, and should any technical risks change the price or the deal terms?

What we did

• Reviewed the data room: supply and warranty agreements, the long-term service agreement, capacity tests, SCADA and dispatch history, availability records, and fire safety and compliance documents.
• Rebuilt the state-of-health trajectory from capacity tests and battery management system data, then projected it forward under the actual dispatch pattern.
• Checked dispatch history against warranty conditions: cycle limits, state-of-charge windows and temperature.
• Inspected the site, including thermal management, transformer records, spares and maintenance practice.

What we found

The hardware is in reasonable condition and well maintained. The issue is how hard the battery has been worked.

Measured state of health after three years is 91.4% against a warranted 92.6%. On this trajectory the battery falls below its contracted 200 MWh in year 5, so the first augmentation is needed in year 5 rather than the seller's year 8.

The battery has averaged about 1.6 full cycles a day chasing arbitrage and FCAS revenue, against a warranty cap of 365 cycles a year. On a strict reading, part of the warranty is already at risk.

Availability (97.1% against 98% guaranteed) and round-trip efficiency (85.2% against 86%) are slightly short. Neither is serious alone, but both affect revenue.

Each MWh of throughput uses up around $40 to $60 of battery life. Bidding that cost in would cut cycling to about 1.1 a day for a modest revenue loss, by filtering out the low-value cycles first.

What we recommended

• Adjust the offer for the earlier augmentation and the warranty exposure, indicatively $12 to $15 million in present value.
• Seek a specific indemnity or escrow covering warranty claims rejected because of past cycling.
• Get the OEM's position on the warranty in writing before close.
• Pursue the availability shortfall under the service agreement, and build a degradation cost into the bidding strategy from day one of ownership.