So, I've been approached by a "broker" for a ground lease option to set up a storage (battery farm) facility to store power from the grid. An LCRA transmission line bisects my property, and I'm in fairly close proximity to one of their sub-stations (may not be the proper term). Previously, I was unaware this "industry" existed, but it makes sense…apparently, "excess" power is purchased from the power generating company at low, off-peak rates, taken off the grid and stored in batteries, and re-sold (perhaps even the same day) at a profit by simply plugging it back into the grid. Genius! How long has this been going on?

Questions that come to mind include: with only one source (in this/my case it's LCRA) how can they guard against getting squeezed on cost of power, as well as other market fluctuations surely to occur. Seems they'd need to lock in long term guaranteed contracts, but I can visualize numerous pitfalls in that scenario.

Anyone here have any experience in this area? I'm trying to get up to speed and analyze my options.

My first bunch is that they're probably looking at load leveling and peak smoothing. I'm taking minute even seconds, not hours.

Spot market, instant response power can be extremely expensive and very valuable.

I don't know much about it, but from a failed stock investment in a battery company several years ago and this was a market they could have really excelled in. Bad management and maybe too early for some markets.

No idea about the business, but at the risk of stating the obvious, I would make sure their contract includes a provision that forbids them from abandoning the unit when the batteries reach end of life. Based on technology advancements, I think it's possible that it would be cheaper for them to just abandon the unit and build new elsewhere… make sure they can't leave you with something that would be expensive to get rid of. I would guess that it should be similar to O&G agreements that call for full restoration of the land when the unit is no longer productive.

No doubt, but they're talking in terms of a 25 year lease, with extension options, so well beyond the life cycle of individual batteries, at this point. It's basically a "farm" of re-purposed inter-connected shipping containers full of batteries. On the surface, it doesn't appear to be that Capital intensive. Still learning.

Grid-scale batteries are actually rated for about that length of cycle life. The batteries they use are less energy dense, but allow for more charge/discharge cycles. They also don't go through daily charge/discharges.

This is Tesla's version of a grid scale battery. It has up to a 20 year warranty.
https://www.tesla.com/megapack

This is their software they utilize to manage energy trading:
https://www.tesla.com/en_eu/support/energy/tesla-software/autobidder

These are the other software programs they use in grid energy management
https://www.tesla.com/en_eu/support/energy/tesla-software


They and other battery manufacturers do the same thing on a smaller residential scale. Tesla's product is called the Powerwall and the program where they do the energy trading for the residential battery owners is called Tesla Electric.
https://www.tesla.com/electric
https://www.tesla.com/powerwall

It's a rapidly emerging industry. I would consult an attorney with experience in this scenario, if you can find one. Also attys w/ cell tower ground lease experience, solar farm lease experience, etc. At the end of the day you want some decent mailbox money, with favorable terms that enable you to renegotiate periodically.

Thanks for those links! Will check them out.

How does one identify those attorneys?

Btw, I grew up with some Kolaches in George West. Johnny even played football at A&M in 1961. Cousins?

I actually just kicked off a project where a client is buying these up/developing them across the south. One in particular is getting built in Odessa to soak up solar and wind energy to smooth/provide a boost to the grid. They'll be tying into LCRA.

Some big time private and venture capital going into the space… this facility alone will be a ~$200mm investment.

The Tesla Powerwall is a small residential thing. This is what they are doing at utility scale (and it's in Texas):

https://electrek.co/2022/01/06/tesla-unveils-giant-megapack-battery-project-texas/


My understanding is this is made up of their used car batteries. I think people expect to replace their car batteries when the capacity drops to 60-70% of full. That's reduced, but not zero, so Tesla is giving them a second life by putting thousands of them out in a field where energy density is not an issue. Pretty good idea, if you ask me. I'm not sure what capacity they will run these down to, but I'm guessing about 30% or so. Then they go to the recycle, or whatever they need to do. And if the recycle is not a pay-back situation, then using them like this to push the recycle cost out into the future helps the overall NPR.

I'm not sure how other BESS companies can compete with Tesla on this, because for Tesla, the batteries are basically free due to them having been paid for in the sale of the car.

That has nothing to do with the OP on leasing land, but it's just some info on what's happening around the utiltiy level BESS industry.

I signed a ground lease 3 years ago with North Fork Energy in the Liberty Hill area. They have a 7 acre battery facility on my property. It's great passive income. Best to deal directly with the companies and not the "broker" so you maximize your revenue.

"Best to deal directly with the companies and not the "broker" so you maximize your revenue."

My intention precisely!

Are you near a substation? I suspect that is a requirement.

Yes. Battery facility and PEC substation sit across 183 from each other.

The total cost to build the facility 3 years ago was $45MM. Companies aren't going to just walk-away. The amount of pad work, concrete and electrical overhead tie-ins is extremely cost intensive. This is not even including the batteries.

Battery companies buy the power made from wind and solar during the day when residential demand is less. They store the power then sell to power companies to smooth the demand on the grid in the evenings when people come home. LCRA lines are just the pathway for the electricity to be brought in and sent out. The sun-station is where the local grid gets its power.

You need a broker of your own.

Tesla did this in Brazoria county Angleton Tx

Google tesla angleton tx

I would really like to consult with you, if you don't mind emailing me @ markgriser@yahoo.