Battery energy storage system (BESS) projects fail for many reasons: poor grid economics, planning delays, and financing gaps. But one of the most consistent and preventable causes of failure is a lease that was never built to carry the weight of the project sitting atop it. Abhijit Mone, a real estate and commercial structures adviser with 15 years of experience working with developers and energy operators on BESS transactions, has spent his career closing the gap between what a standard commercial lease looks like and what a bankable energy storage project actually requires. The distance between those two things is where projects quietly fall apart. “A BESS lease is not a standard commercial document,” Mone states directly. “It is a project-critical instrument. Get it right at the outset, and you remove legal, financial, and operational friction for the entire life of the asset.”
Structure and Term Are Not Negotiable
BESS projects require long-term certainty: leases of 20 to 40 years, contracted out of security of tenure, with flexible commencement provisions that account for the reality of grid and planning delays. The term must align precisely with the grid connection agreement and the financing structure. When those three elements are out of sync, bankability erodes before construction begins. The misalignment is often invisible until a funder raises it in due diligence, at which point the project is already behind schedule, and the commercial pressure to patch, rather than fix, becomes significant.
Mone is clear about the consequences of getting this wrong early. No amount of downstream engineering competence or commercial creativity can compensate for a lease that creates structural uncertainty at the foundation. The term, the contracted-out status, and the commencement flexibility are not details to negotiate away in exchange for other concessions. They are the minimum viable structure for a project that needs to attract financing and sustain operations across decades.
The Grid Connection Is the Asset. The Lease Must Reflect That
The land on which a BESS project sits is not the source of value. The grid connection is. A lease that fails to robustly protect the rights associated with that connection, cabling routes, substation access, upgrade capacity, repowering rights, and co-location with solar or electric vehicle (EV) infrastructure undermines the asset it is supposed to support.
Mone recommends building conditionality into the structure so that material obligations only trigger after planning and grid milestones have been achieved. Without that protection, developers can find themselves contractually bound to a site before it has been demonstrated to be viable. That exposure is materialized in projects where early-stage obligation lock-in, combined with subsequent grid refusal or planning failure, left developers carrying costs against an asset that could never be built. The lease should be structured to track the project’s risk profile, not run ahead of it.
Commercials That Reflect Actual Risk
Fixed rents rarely fit BESS projects. Revenue-linked or stepped rental structures better reflect the genuine risk profile of energy storage assets, where revenue generation depends on dispatch, market conditions, and operational performance that cannot be predicted with the precision a fixed rent assumes. Repair obligations should be limited with a schedule of conditions rather than left open-ended. Assignment, charging, and step-in rights must remain accessible for funders.
Decommissioning terms deserve particular attention. Agreeing with them early, when the parties have goodwill and commercial flexibility, prevents end-of-life disputes that can become disproportionately expensive relative to the residual value of the project. “Get it wrong, and no amount of engineering will save the project,” Mone reflects. The lease is the foundation. Treat it accordingly.
Follow Abhijit Mone on LinkedIn or visit 4D Energy Advisory Ltd for more insights on BESS lease structures, energy storage transactions, and building the commercial and legal foundations that make storage projects bankable.
