ENERGY STORAGE INDEPENDENT ENGINEERING REPORT

Energy Storage Independent Engineering Report

Fractal provides independent engineering review for an energy storage system or hybrid project seeking investment or financing.

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10-Step Review Methodology

Fractal has a proven 10-step methodology for conducting an energy storage or hybrid project independent engineering review.

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Our goal is to provide technical and financial expertise to reduce project risks and improve rate of return.

  • CAPEX Review / Validation / Optimization
  • Project Condition Assessment
  • Portfolio Analysis
  • Physical and Economic Useful Life Assessment
  • Asset Valuation
  • External Benchmarking with Current Costs
  • Operations and Maintenance Review / Validation / Optimization
  • Asset Valuation
  • Project Design and Performance Reviews
  • Degradation and Replacement Analysis
  • Decommission Review
  • Federal ITC and Local Incentive Review
  • Environmental Compliance
  • New Technology Evaluation
  • Project Cost Validation and Estimation
  • Loss Prevention
  • Value Engineering
  • Vendor Performance, Technology and Warranties

Grid Connection and Electrical Review

  • CAPEX Review / Validation / Optimization
  • T&D characteristics and network offtake capacity and technical conditions, behavior and operation of the ESS
  • Operations and Maintenance Review / Validation / Optimization
  • Track record, operational experiences, and quality control of utilized equipment
  • Origin of major electrical equipment to be used in the Project
  • SCADA system and communications

Financial Modeling Review

  • CAPEX Review / Validation / Optimization
  • Qualification and application of federal, state and local incentives
  • Validation of revenues streams against market tariff and state policy
  • Degradation analysis and replacement costs
  • Reasonableness and adequacy of parameters of the financial model sensitivity scenarios (including suggesting potential scenarios of ESS availability related to the probability of major maintenance / defects
  • P50 versus P90 or P95 production analysis
  • Market qualification and participation mechanics
  • Adequacy of the working capital, major maintenance requirements, O&M, inventory of spare parts, projected operating budget for the Project, and other relevant technical aspects that should be considered in the financial model
  • Benchmarking of costs against other proposals

Project Documentation and Contractual Provisions

Review project contracts on technical adequacy, consistency among the contracts and their suitability to achieve Project scope and cash flow projections:

  • EPC Contract between Project Company and EPC Contractor
  • ESS Supply Agreement between Project Company and EPC Contractor
  • O&M Contract between Project Company and O&M Contractor
  • Civil Works Contract between Project Company, EPC Contractor and the civil works contractor (TBD)
  • PPA Contract between Project Company and off-taker and any other agreements between Project Company and off-taker related to interconnection and transmission
  • Others

Review of the EPC contract(s), including civil works contractor and other subcontractors:

  • Conformity with good engineering and construction standards and industry practices
  • Contractors’ and/or the Sponsors' experience and their ability to meet contractual requirements, and risk allocation
  • Performance testing and acceptance criteria for the ESS and each of the individual systems
  • Adequacy of liquidated damages, guarantees, warrantees and indemnities, performance guarantees, bonuses, contract price, and contingencies

Review Power Purchase Agreements and other contracts such as the project concession and grid connection agreement (if any) and report on:

  • Reasonableness of tariff adjustment mechanism
  • Payment terms, including impact of potential shortfalls in energy production
  • Reasonableness of measuring and maintenance provisions under the PPA
  • Performance testing and acceptance criteria for the ESS
  • Liquidated damages, payment adjustments, force majeure
  • Reasonableness of the termination and/or buy-out provisions

Construction and Start Up

  • Construction schedule including construction and payment milestones and contractors’ and subcontractors’ execution plans
  • Assessment of reasonableness of Project Cost estimation (including potential scenarios of cost overruns), including spare parts
  • Safety assurance program
  • Site conditions, including site accessibility as well as adequacy of the available infrastructure (ports, roads, vehicles) to transport to the Project site the different components of the ESS
  • Review of the commissioning and start-up plan including performance testing and acceptance criteria Fractal can plan to observe and attend the ESS commissioning
  • Independent estimation of the Project completion date as well as recommendation for delay contingencies

Operations and Maintenance Program

  • The O&M program, including routine and unscheduled maintenance
  • Staffing, start-up, training program, labor management
  • Adequacy of ESS availability guarantee
  • Key staff qualifications, capability and experience, including international exposure/ capabilities and track record
  • Monitoring program and the preventative and major maintenance program required/recommended for the ESS and other components of the Project
  • Spare parts inventory and availability/risk of shortage (logistical issues)
  • Expected major maintenance requirements for the ESS
  • Construction Contractors support, post completion technical risks

Technical Evaluation

  • The technical design, adequacy and performance characteristics of the selected batteries and components for the ESS and weather conditions at the Project site
  • Chemistry and C rate selection based on duty cycle
  • Adequacy of the ESS manufacturer's engineering and design standards and procedures
  • Adequacy of control system design, architecture and communication
  • Origin of the different components of the ESS
  • Review of performance guarantees
  • Validation of duty cycle, SOC requirements and impact to ESS sizing
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