Excessive Delay Degradation in BESS Supply Contracts

Prepared by William Lauwers, Head of Technology, BESS, with contributions from Ken Chee, Director, Consulting & QAQC; and Andres Gordo, Energy Storage Engineer

Executive Summary

Overlapping warranty and delay degradation provisions within battery energy storage system (BESS) supply agreements can lead to double-counting calendar degradation, reducing guaranteed capacity and shortening the bankable operating life of the asset. Clear contractual alignment is essential to mitigate this risk.

BESS are central to the energy transition—but hidden risks in supply agreements can significantly impact project value. This article highlights a critical and often overlooked issue: the double counting of calendar degradation through overlapping warranty and delay provisions, which can materially reduce guaranteed capacity and shorten the bankable operating life of an asset. By unpacking real-world contract structures and scenarios, it reveals how degradation can be overstated—not due to actual system performance, but due to how it is contractually defined and applied. The paper underscores the importance of contract clarity and independent technical review to safeguard project economics and ensure long-term asset performance in an increasingly complex BESS market.