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Sep 11, 2024 Solar Availability Series Part 4 Welcome back for Part 4 of Camelot’s series on solar availability. If you’re just joining us for the series, here are some links to parts 1 , 2 , and 3 . We’ve set the groundwork with a summary of the ongoing validation efforts from IEs, and the resulting changes the industry is making to their assumptions. We’ll revisit their reasoning here. We’ve also described how availabilities are calculated and reported, and touched on ways of maximizing availability by minimizing downtime. If you’ve followed along with the last few parts and you’ve been waiting for our own stance as an Independent Engineer (IE), look no further! Thank you for joining us. Re-Setting the Scene Until somewhat recently, the utility-scale solar industry didn’t have the kind of established history needed to accurately predict or validate what long-term average availabilities will be at newly-proposed projects. Engineering judgement said that a relatively simple solar project would see the equivalent of about 3-5 days of total site outages per year, leading to expected availabilities of about 98.5% to 99.2%. For modeling simplicity, most everyone assumed a relatively consistent availability throughout a project’s lifetime. However, as projects became operational, the industry started to question itself. Especially early in new projects’ operational lives, downtime was high and availabilities were lower than expected due to teething issues. Even after the initial startup period, many folks started seeing trends with their average availability levels below what they had hoped. Over the last year we have started to see the beginnings of some robust data-backed approaches to redefining availability assumptions, aided by all the new operating data which is available to us. There have been three IEs who have recently updated their assumptions based on aggregated data from the projects they supported. ICF led the charge with its performance paper published by kWh Analytics in 2023. DNV and Natural Power followed suit with their own methodology updates in early 2024. Others with access to the data have weighed in as well, from NREL to kWh Analytics. Here, we focus in on the results of the IE validations, each of which took slightly different approaches and used different data sets. The table below summarizes the projects which went into the IEs’ comparisons, and some key comments from their results. We’d like to highlight a few key findings from this comparison: Every IE relied on data from monthly operating reports produced by the operators, which are rarely independently calculated or verified. As described in part 2 of this series, there is no single, standard way that availabilities are defined or reported across the industry. The conclusions from these studies should be interpreted carefully, especially because the data QC processes have not been explicitly described. DNV’s analysis used more data and resulted in recommendations which are more clearly tailored to the sites. ICF found that fixed tilt systems showed lower availabilities than tracker systems while DNV found the opposite. Despite every IE noting lower availabilities early in a project’s life, only DNV adjusted their recommendation to treat the first year differently from other years. No IE has taken a stance on availability changes later in a project’s life yet. Here is a summary of the IE’s post-validation default availability recommendations. As you can see, only DNV makes a distinction between different kinds of projects at this time, though every IE noted that they are open to changing their assumptions based on project-specific data such as operator or technology history. In practice, however, IEs are often reluctant to deviate from their standard assumptions, as this requires going out on a proverbial limb. While that conservatism is understandable, it may be producing unintended consequences. For instance, if an IE will not give “credit” for more robust technology choices or operating strategies, then owners have little incentive to consider any options but those that can be considered “bankable” at the lowest possible cost. This approach penalizes owners for considering better than baseline equipment, spending more on O&M, or otherwise looking for creative solutions to improve availability. The need for more data was a theme repeated by each company, and this will likely ring true for as long as we do this kind of work. Our availability assumptions will need to be updated regularly, just like we update our approaches to Energy Yield Analyses. Camelot’s Recommendations The Camelot team is compiling the data needed to supplement these studies and validate our conclusions, and we welcome the opportunity to work with industry partners on this effort. In the meantime, we base our own recommendations off the meta-study described above and in Part 1. Without further ado, here is our own take on availability projections: Until we have more information, we should not be differentiating between different mounting types . ICF’s and DNV’s observations contradicted each other. It’s likely other factors influenced the analyses, especially the sample sizes and quality of the input data. The factors which can impact downtime should be studied further, which means collecting more data, ensuring its accuracy, and capturing all potentially-relevant project details. In addition to mounting types, the difference between inverter technologies must be studied further as one of the primary sources of downtime observed at operating sites. For instance, the higher availability noted by DNV on smaller fixed-tilt sites than larger fixed-tilt sites may indicate a reliability advantage for string inverters over relatively small sites with central inverters. This would align with our general experience with operating sites but the data to positively confirm this is not yet available in sufficient quantity. The major sources of downtime should be studied and modeled separately . Using an overall system availability as a metric can muddy the waters significantly, especially when trying to tease out the impact of different design decisions on future performance. When performing energy yield analyses for wind energy projects, some IEs will include assumptions for balance of plant availability, grid availability, and turbine availability separately. Not only can this improve our validations (data allowing), but it will improve the way we assess technology tradeoffs at the design stage. Swapping out a more robust system for a less-robust one should impact only the downtime assumption for that system. Camelot recommends the industry work towards a bottom-up availability model based on historical failure/downtime data at the module, tracker, inverter, MV, HV, and BOS levels. These levels correspond with likely failure points within the system and provide a lowest common denominator that can be adjusted during project design to optimize expected availability. Ensuring this approach has buy-in from IEs will provide a financial incentive to specify better equipment and design better sites. Year-1 availability should be modeled separately from later years due to initial startup issues observed in each validation. Nearly all financial models are already set up to account for annually-varying losses, so adjusting our assumptions based on the clear signals we see from the data appears to be a no brainer. The industry should start modeling a ramp-down in availability later in projects’ life, as DNV may have alluded to, because component failure rates impact availability trends. Without more data, it is difficult to say the magnitude of the decreases because of the other factors at play. However, based on our experience modeling availability at other infrastructure projects, Camelot considers it reasonable to model availability as a ramp-down as a project nears the end of its design life. The “bathtub curve” shown below is an Engineering concept which supports this idea. It shows how infant mortality failures likely contributed to the observed availabilities in the first 6-12 months of operation, and highlights the further need for more operational data as projects age. This is applicable to individual components in many physical systems. Aggregated across an entire system and accounting for typical replacements and maintenance, one might expect to see a flatter availability curve, but with some consideration for early- and late-stage failures. We have seen this already with 10-15 year old PV sites, where owners struggle to obtain compatible replacement equipment that can be “dropped in” to replace original equipment onsite. As technology continues evolving quickly, we can expect new module types, inverter technologies, sensing devices, and code requirements to all play a role in the maintainability of PV sites in the late stages of their useful life. Camelot’s Balanced Approach The summary below provides a graphical representation of each IE’s default availability recommendations over time, and includes Camelot’s own recommended defaults (when no other project-specific information is available). We note the following: Camelot’s approach accounts for the size impacts observed by DNV, which appears to be a strong signal in the data, but does not differentiate between technologies until more information is made available supporting the distinction. Much like DNV, Camelot’s recommended availability starts slightly lower in year 1 before reaching steady operations, as is supported by all studies. We recommend modeling availability declines after year 20 based on several factors, including the bathtub curve concept described above, the typical useful life for major components, and our expectation that the impacts of mid-life failures will likely offset by the efficiencies gained from experience during operations. While we see this assumption as a necessary recognition of late-stage wear-out failures, it’s worth noting that its impacts on a financial model are muted by the time value of money. On average, Camelot’s assumptions are less pessimistic than ICF, and strike a balance between the assumptions reported by Natural Power and DNV. Camelot will consider quantitative adjustment to our base availability assumptions for sponsor efforts that materially result in increased reliability, such as: Demonstrating better than average historical availability for project- specific equipment (e.g., inverters) through operational data (as described in item 3 above) Adding incentives to O&M Agreements for increased availability, beyond simply guaranteed levels Purchasing extra spare parts for more vulnerable system components likely to need frequent replacing Investing in predictive analytics and above-market O&M services to reduce the frequency and severity of unplanned maintenance events While these recommendations may be Camelot’s “default” values, as an IE which cares heavily about the accuracy of our projections, we will always consider factors such as operator experience or the relative track record of the technologies deployed at each site. As the saying goes, “show us the data.” Before we close, it is important to underscore an important point. Recent reporting that indicates PV projects are falling short of expected availability is a call to action for all of us. It is a call to action for more data, better analysis, and a deeper understanding of what causes PV systems to underperform. It is, notably, not a call to action for unnuanced conservatism. Simply whacking a few points off availability is, in our view, insufficient to the task of ensuring a better-performing PV fleet and it creates blind spots. We hope our fellow IEs will join us in not simply erring on the side of conservatism but, rather, will continue to advance our knowledge of these issues and build better, and more nuanced models that reward innovation, investment, and effort. We hope you’ve found this series to be helpful, and we welcome the opportunity to partner with any of our readers who would be able to support with future efforts. Although this is the last of our solar availability series for now, we fully intend to revisit the topic in the future. For our storage-oriented audience, you can expect a similar discussion on availability assumptions for BESS technologies in upcoming articles. About Camelot Energy Group is a technical and strategic advisor to owners and investors in clean energy and energy storage projects, programs, and infrastructure. Guided by our core values of courage, empathy, integrity, and service we seek to support the energy needs of a just, sustainable, and equitable future. Our team has experience in supporting 7+GW of solar PV and 10+ GWh of energy storage and offers expertise in technology, codes and standards, engineering, public programs, project finance, installation methods, quality assurance, safety, contract negotiation, and related topics. Our services are tailored to a providing a different kind of consulting experience that emphasizes the humanity of our clients and team members, resulting in a high quality bespoke service, delivered with focus, attention, and purpose. Key services include: -Technical due diligence of projects and technologies -Owner’s representative and engineer support -Strategic planning -Training and coaching -Codes and standards consulting -Contract negotiation and support. < Back Back

Camelot Energy Group is a technical & strategic advisor to owners and investors in clean energy & energy storage projects, programs & infrastructure. We specialise in Solar, Energy Storage, Consulting, Engineering, Batteries, Due Diligence, Energy Access, Strategy, Owner’s Engineering & Advisory. GET IN TOUCH Contact Us Boston, Massachusetts hello@camelotenergygroup.com First Name Last Name Email Phone Leave us a message... Submit Thanks for submitting!

Oct 31, 2024 U.S. ISO/RTO Regions The energy storage market, driven in large part by the Inflation Reduction Act, is hot and active, with many developers and investors making new investments and growing their storage portfolios. Unfortunately, overall market growth does not mean low risk for developers and the cost of picking the wrong market, revenue stack, contracting structure, or technology could spell disappointment for investors as they watch others pass them by. Sound and informed guidance on energy storage development is absolutely critical to capitalizing on this important growth area. At Camelot, we provide comprehensive market analyses across all U.S. Independent System Operator (ISO) and Regional Transmission Organization (RTO) regions. Our team analyzes each market’s unique characteristics, helping solar and energy storage developers identify the best opportunities for deploying Battery Energy Storage Systems (BESS) and hybrid projects. Here are some key points for each region: ERCOT (Electric Reliability Council of Texas) ERCOT doesn't have a firm real-time ancillary service market, relying sporadically on Supplemental Ancillary Service Market (SASM) auctions to make up for gaps in day-ahead obligations. However, by 2026, ERCOT aims to roll out a real-time co-optimization system for energy and ancillary services. Moreover, as storage saturates the market and as real-time co-optimization between energy and ancillary services gets implemented, ancillary services prices are expected to decline in the near term. Despite the potential saturation of ancillary services in ERCOT, the ongoing deployment of non-dispatchable renewable energy there, and the potential for new load growth, is helping the Lone Star State retain center stage for energy storage developers. However, many developers that come to Camelot for guidance make the mistake of thinking any Texas ESS project is likely to be successful. In reality, identifying the optimal placement and technology mix means all the difference between a profitable ESS project and one that struggles to pencil. Overall, the Houston Hub faces a lower risk of ERCOT related issues, including curtailment, compared to the South hub, which is likely to experience increasing challenges. CAISO (California Independent System Operator) Energy price volatility in CAISO increased significantly in 2022 and is projected to remain elevated in upcoming years, driven by higher gas prices and concerns over system reliability, creates a strong opportunity for BESS. Gas Pricing: Despite less expensive generation from solar and wind, elevated gas prices, impacted by supply constraints and global market dynamics, contribute to higher electricity prices. The availability of cheap electricity from renewables, combined with relatively expensive electricity from gas turbines during periods of low solar and wind resource, create a strong economic opportunity for energy storage. In addition to daily arbitrage, the combination of renewables generating under long-term fixed price contracts and flexible energy storage assets creates a valuable price hedge against fluctuating natural gas prices. System Reliability: CAISO’s grid faces reliability challenges due to increasing reliance on non-dispatchable renewable energy sources like solar, coupled with aging infrastructure, severe weather, and peak demand spikes, especially during summer heatwaves. BESS can mitigate these issues by providing grid stability, fast-acting reserves, and ancillary services to maintain balance. This growing demand for reliability services, along with capacity payments, offers BESS projects multiple revenue streams and a strategic edge in this volatile market. Moreover, California’s aggressive renewable energy targets make it a prime market for BESS projects. Our market overview highlights CAISO’s resource adequacy and ancillary services market changes, helping you understand how to optimize project returns. SPP (Southwest Power Pool) SPP offers significant wind energy potential and continues to expand its transmission network. The surge in renewable energy within SPP is causing a downturn in electricity prices, especially during periods of strong winds, which places intense financial stress on thermal power sources and underscores the importance of adaptable capacity and presents an opportunity for Long Duration Energy Storage (LDES). Our insights into SPP’s market dynamics focus on strategies to capture ancillary service revenues and enhance renewable energy integration through storage solutions. In addition, our team has demonstrated experience in deploying LDES solutions for BTM and FTM projects, putting us in a position to provide strategic insights in this space. PJM (Pennsylvania-New Jersey-Maryland) Interconnection PJM is undergoing rapid data center expansion, especially in Northern Virginia which has put pressure on the grid, causing congestion and high nodal power prices in the Dominion territory. As one of the largest RTOs, PJM presents a strong market with various revenue streams, including capacity and ancillary services. We provide clients with analysis of PJM’s capacity market changes, ensuring projects align with this highly competitive landscape. MISO (Midcontinent Independent System Operator) MISO is currently experiencing a significant transformation in its energy landscape. This shift is characterized by an accelerated adoption of renewable energy sources, alongside a concurrent phase-out of thermal generation plants. Key drivers behind this transition include elevated prices for natural gas and electricity, legislative actions at federal and state levels, demand from energy off-takers, and increasing pressure from stakeholders. MISO's vast geography and increasing renewable penetration create opportunities for BESS projects. Our team helps you understand the benefits of locating projects near congested nodes to optimize project returns. NYISO (New York Independent System Operator) New York is pioneering ambitious climate policies that prioritize storage development. With the recent update to the Energy Storage Roadmap by the New York PSC, storage deployments are expected to increase by 2030 to achieve 6 GW of energy storage. This includes the procurement of 3 GW of bulk storage through an Index Storage Credit (ISC) mechanism, 1.5 GW of retail (Community/C&I) storage, and 200 MW of residential energy storage through the VDER structure, marking a significant shift towards expanding utility-scale storage in the NYISO market to enhance grid reliability and support renewable energy integration. Our NYISO market overview covers key programs, including the Value Stack and Clean Energy Standard, providing guidance to help you understand program specifics and on to provide you with accurate project revenue estimates. We provided some background on the VDER program to help developers and investors better understand this critical framework, which you can view here . ISO-NE (ISO New England) ISO-NE is currently in the early stages of a major shift in market dynamics, transitioning into a period characterized by rapid renewable energy growth, concurrent retirement of thermal generation facilities, and a surge in storage deployment, all fueled by state policy objectives and incentives for clean energy. ISO-NE faces grid reliability challenges and peak demand concerns, making it ideal for storage solutions. We offer insights on ISO-NE’s capacity market changes and BESS opportunities in this renewable-rich region. With Camelot’s help, developers and investors can make confident investment decisions about target markets, project economics, and navigating the latest policy and regulation challenges. We work across all the major markets and developers rely on our market expertise for everything from negotiating tolling agreements to prioritizing their portfolios of merchant market ESS projects. If you're interested in any of the U.S. ISO/RTO market overviews, feel free to reach out to us at info@camelotenergygroup.com . < Back Back

Oct 10, 2024 Part 1: VDER Revenue Stack Many developers and financiers rely on the Value of Distributed Energy Resources (VDER) Calculator, a freely accessible spreadsheet calculator tool ( here ) to calculate expected VDER revenues for potential projects. While this tool is freely available and relatively easy to use, we find that it can be insufficient for accurately modeling some potential revenue streams. Some potential shortcomings of an approach relying solely on the VDER calculator could include: The VDER calculator uses only a linear degradation model and a fixed round-trip efficiency value for the life of the project. In reality, degradation follows a curve and RTE also degrades over time. The VDER calculator uses historical call periods for Locational System Relief Value (LSRV), when in actual operation, an operator would act to maximize LSRV revenues by discharging coincident with Demand Reduction Value (DRV) periods. This can result in the VDER calculator under-representing LSRV revenues. Actual Location Based Marginal Pricing (LBMP) revenues are calculated at the nodal level, while the VDER calculator uses zonal-level data, which is not sufficiently granular to accurately capture true prices. ConEd revenues are calculated by Group (A-D) and these groups are not present in the VDER calculator. So, while the VDER calculator is a helpful tool for preliminary analysis, when making an investment in utility-scale BESS, it is important to supplement this initial analysis with a more detailed revenue forecast that accounts for the many additional variables present in actual operations. Like other leading BESS market analytics experts, Camelot uses an optimized dispatch model to calculate future revenues for BESS projects participating in merchant energy and ancillary services markets. However, projects with significant programmatic revenues, like NY VDER projects, often require a more tailored approach to validate revenue streams and financial model inputs, so Camelot has built out additional tools and capabilities to incorporate these revenue streams seamlessly with applicable merchant market opportunities. We provided some background on the VDER program to help developers and investors better understand this critical framework, which you can view here . Below, we have modeled the revenue stack for a 5 MW, 4-hour Battery Energy Storage System (BESS) under the VDER program for various utilities. We estimated LSRV and Installed Capacity (ICAP) revenues manually, while using an optimized dispatch model to estimate LBMP and DRV values. Figure 1 Excerpt from Camelot Q4 2024 NY Market Outlook Report Reasons for manually modeling LSRV and ICAP Alternative 3 (Alt 3) LSRV: Since the VDER Calculator does not distinguish between ConEd Groups (A-D), it can incorrectly place LSRV revenue periods outside the DRV windows for ConEd C and D Groups. In reality, these LSRV calls would correctly align with the DRV windows in each ConEd Group, therefore we have manually adjusted the LSRV periods in ConEd C and D Groups to correct for this. For example, in ConEd Group C , 2023 historical data would suggest that the LSRV period occurs from 2pm-3pm, whereas the DRV period is from 4pm-8pm. In this case, an optimized dispatch might prioritize the DRV period, resulting in no LSRV revenues. Camelot, therefore, adjusts the LSRV revenues to reflect the more likely operating scenario wherein a BESS would gain both LSRV and DRV revenues. Regions with longer DRV windows, such as RG&E, show the greatest loss in LSRV revenues due to capacity degradation in the BESS, as the systems age and become less able to fully discharge over 5+ hour DRV windows. Regions with shorter typical DRV windows or windows capturing most of their revenue within an hour or two , such as ConEd A, were less affected by BESS capacity degradation. Figure 2 Excerpt from Camelot Q4 2024 NY Market Outlook Report ICAP Alt 3: Under the VDER program, ICAP Alt 3 is the sole option for BESS projects and is considered the most lucrative ICAP variant, though this varies by region. Monthly compensation is awarded based on injections during the annual peak hour multiplied by the ICAP Alt 3 rate ($/kW), which fluctuates monthly. Additionally, all ICAP alternatives already account for an ELCC (Effective Load Carrying Capability) adjustment, eliminating the need for further capacity accreditation adjustments. Moreover, since capacity prices fluctuates on a monthly and annual basis, we modeled ICAP manually using the 2024 VDER Calculator and applied an escalation rate based on our market outlook. Key trends and insights from the above figure results The energy component is the smallest contributor to the value stack, largely due to higher charging costs in ConEd and PSEG areas, which face elevated electricity prices caused by high demand, congestion, and transmission losses. Thought energy is discharged at a higher price, too, the difference (high minus low) in price can often be modest. Capacity prices vary significantly by NYISO load zones, making it challenging to predict capacity revenues due to the volatility of auction prices across zones. Prices could decline with the addition of offshore wind, which contributes to both energy and capacity. Historically, capacity prices have been high across Zone J (ConEd NYC) and Zone K (PSEG LI), with Zone J (ConEd NYC) averaging 2.5 times higher than other zones due to expected thermal retirements and the difficulty of integrating new renewables due to land constraints. Projects located in regions with 2 PM to 7 PM DRV windows show the best results, as these times overlap with potential system peak windows. For example, DRV revenues in ConEd and PSEG regions are much higher than in other areas, with ConEd DRV revenues 7.02 times higher than the state average and PSEG DRV revenues 2.22 times higher than the state average. In the Central Hudson utility territory, LSRV does not apply. The highest LSRV revenues are observed in ConEd and PSEG, particularly in ConEd Zone A, where LSRV revenue is 3.17 times higher than the state average. PSEG’s LSRV revenues are, on average, 1.13 times higher than the state average. Conclusions In summary, the VDER revenue stack diminishes considerably when projects are located outside of ConEd and PSEG territories. Though CAPEX and OPEX costs for upstate projects may be generally lower, this is more than offset by the more lucrative revenue streams noted in this article. In calculating these revenue streams, it is important to consider the many market nuances applicable to the VDER revenue stack. The freely available VDER Value Stack Calculator, while a good initial analysis tool, may not be sufficient in all cases to estimate accurate forward revenues and our team recommends a more detailed analysis be done to support development and financing of energy storage projects in New York State. Stay tuned for Part 2, where we will discuss and compare the VDER value stack for hybrid projects under ICAP Alt 1 and Alt 2, as well as the PV Charging Only and the PV & Grid Charging considerations. If you're interested in assessing energy storage and/or hybrid projects in NYISO’s VDER Program, feel free to reach out to us at info@camelotenergygroup.com . About Camelot Energy Group is a technical and strategic advisor to owners and investors in clean energy and energy storage projects, programs, and infrastructure. Guided by our core values of courage, empathy, integrity, and service we seek to support the energy needs of a just, sustainable, and equitable future. Our team has experience in supporting 7+GW of solar PV and 10+ GWh of energy storage and offers expertise in technology, codes and standards, engineering, public programs, project finance, installation methods, quality assurance, safety, contract negotiation, and related topics. Our services are tailored to a providing a different kind of consulting experience that emphasizes the humanity of our clients and team members, resulting in a high quality bespoke service, delivered with focus, attention, and purpose. Key services include: -Technical due diligence of projects and technologies -Owner’s representative and engineer support -Strategic planning -Training and coaching -Codes and standards consulting -Contract negotiation and support. < Back Back

< Back Mark Warner Senior Project Manager Mark Warner, a Project Manager at Camelot Energy Group, has over 5 years of experience in the renewable energy development and EPC contractor space. Mark has extensive background in project development, siting, energy analysis, design, construction planning, and permitting for commercial and utility-scale solar projects. Mark holds a Bachelor of Science Degree in Mechanical Engineering Technology from the University of Maine. mark.warner@camelotenergygroup.com

< Back Taylor Parsons Director, Technical Advisory Taylor is Camelot’s Director of Technical Advisory, and has over 10 years of experience in the energy industry. His primary focuses have been in technical due diligence, energy modeling, and analytics for solar, wind, and energy storage assets. Taylor has led some of the largest due diligence engagements for M&A on projects, platforms, and portfolios. Prior to joining Camelot, Taylor was a Team Lead and Project Manager in DNV's M&A and Energy Assessment Teams. He also supported the National Renewable Energy Laboratory's Systems Engineering team engineering and analysis for wind turbines. He has a Bachelor’s Degree in Mechanical Engineering from the Colorado School of Mines, and is actively pursuing his Executive MBA in Energy (renewables focus) from the University of Oklahoma. taylor.parsons@camelotenergygroup.com

Camelot Energy Group is a technical & strategic advisor to owners and investors in clean energy & energy storage projects, programs & infrastructure. We specialise in Solar, Energy Storage, Consulting, Engineering, Batteries, Due Diligence, Energy Access, Strategy, Owner’s Engineering & Advisory. FEATURED PROJECTS Sectors We Serve Camelot Energy Group specializes in the clean energy sector, particularly focusing on these key areas: Solar Energy Storage Clean Energy Programs Energy Access Solar Energy Storage Clean Energy Programs Energy Access 01. SOLAR Enough solar energy falls on the surface of the earth in one hour to supply all of the energy needs of the global population for a year. However, when it comes to capturing and using that energy, the devil is, as they say, in the details. At Camelot Energy Group, we specialize in those details and our team members have supported the financing and construction of over 7GW of solar PV projects, including: Managing quality assurance for portfolios of distributed solar projects and performing hundreds of hands-on field inspections Performing Owner’s Engineering on utility scale projects from 500kW to 100’s of MW Providing technical due diligence and independent engineering (IE) services to support financing of portfolios, projects, and development platforms Supporting and evaluating state clean energy programs to support solar PV and related technologies Developed and delivered numerous trainings on relevant codes, standards, and best practices Our team members have supported many different public and private clients building and investing in solar technologies. See our Services page or contact us to learn more. 02. ENERGY STORAGE Scaling adoption of clean energy technologies will require a range of enabling technologies but none is more critical than the ability to safely and cost-effectively store and manage electricity. Energy storage technologies, from lithium-ion batteries to pumped hydro facilities, are key to managing the grid of tomorrow and the team at Camelot Energy Group has unique expertise and insights into the energy storage industry. From island microgrids to large utility-scale grid support applications, our team members have supported the energy storage transition for nearly two decades and bring core expertise in: Ensured asset owners receive the best possible technologies, designs, and installations during typical Owners Engineering engagements Evaluating new technologies and suppliers through our Strategic Advisory services Performing Technical due diligence and independent engineering on energy storage (including those with colocated solar) facilities and portfolios Developing and delivering trainings to support government entities and clean energy programs Provided key insights on developing codes and standards via our recent publications, including our founder’s recent book , published with the International Code Council and International Association of Electrical Inspectors. Our team members have supported dozens of energy storage projects, including over 4GWh projects. Please contact us if you would like to know more. SOLAR ENERGY STORAGE 03. CLEAN ENERGY PROGRAMS Clean energy programs often provide valuable incentives and technical support that have been key to driving adoption of new technologies. Though solar PV is much more cost-effective than it was even a few years ago, these programs continue to play a vital role and Camelot Energy Group is pleased to support these efforts. Our team members have: Helped state incentive programs build and manage quality assurance programs, ensuring that public funds support high quality, safe, and effective installations through program design, technical design reviews, process improvement, and implementation of over 4,000 hands-on field inspections. Evaluated public and utility-run incentive programs to determine cost-effectiveness, participant satisfaction, attributable energy benefits, and support filings with relevant regulatory bodies. Supported utilities during Integrated Resource Plan processes by analyzing technical, economic, and market potential for solar , energy storage, and other clean energy technologies. Our team members have worked with programs at the federal level and in over a dozen states. If you manage clean energy programs and need support running, evaluating, or expanding such a program please contact us. CLEAN ENERGY PROGRAMS 04. ENERGY ACCESS Globally, more than 750 million people (twice the population of the United States) lack access to electricity and some 2.6 billion people lack access to clean cooking fuels. At Camelot, we believe that a transition to a clean energy future must include energy access for all and we are glad to support these efforts through: Ensuring high quality and safety standards are maintained through Owner’s Engineering Helping impact investors support good projects and technologies with Technical Due Diligence and Strategic Advisory services Providing technical support and expertise to Clean Energy Programs The global impact investment market is a growing and powerful tool for implementing positive change in energy access. If you need help on this important topic, we would like to hear from you. Please contact us. ENERGY ACCESS

Camelot Energy Group is a technical & strategic advisor to owners and investors in clean energy & energy storage projects, programs & infrastructure. We specialise in Solar, Energy Storage, Consulting, Engineering, Batteries, Due Diligence, Energy Access, Strategy, Owner’s Engineering & Advisory. OUR SERVICES At Camelot Energy Group, our services are best defined by our clients’ needs and we approach each engagement by listening to our clients and providing a bespoke solution. With that in mind, our services generally align with the following major activities. If your needs don’t perfectly align with one of these, no worries. These are only general guidelines and you can always contact us. Owner’s Engineering Technical Due Diligence Strategic Advisory Public Program Support Owner’s Engineering (OE) Technical Due Diligence Strategic Advisory Services 01. OWNER'S ENGINEERING (OE) Today’s clean energy asset owner face a rapidly evolving technology landscape, complex technical agreements, supply chain constraints, quality control issues, and schedule risks. At Camelot, we aim to address these challenges and help our clients build more clean energy projects, secure in the knowledge that a team of experts is in their corner ensuring their projects get negotiated, designed, built, and operated to the best possible standards. Our OE clients often ask for our help with: Negotiating supply, EPC, O&M, and other major project agreements Performing technical due diligence on technology and design options Design reviews Project management Commissioning and testing support Field inspections Reporting for financiers and investors Troubleshooting performance challenges Asset management support If you would like to talk to us about your OE needs, please contact us. We look forward to meeting you and learning about your project. 02. TECHNICAL DUE DILIGENCE The market for clean energy transactions is active and growing and projects and portfolios are bought and sold almost daily. Making the choice to invest in a portfolio of greenfield or operating assets, development platform, or new technology can present a great opportunity for savvy investors but there are risks as well. As these bids become more competitive, investors need actionable technical feedback on real-world risks so they can make informed decisions. At Camelot, we have a deep understanding of the M&A process and our team has provided actionable due diligence on everything from energy storage development platforms to large utility scale solar plants and portfolios of C&I projects. Our team evaluates key areas of potential acquisitions, including: Major agreements (EPC, O&M, interconnection, offtake, and supply) Financial models Major technologies Key team members and contractors Energy models Project designs and methods Installation quality Factory QA programs Independent Engineer (IE) reports Camelot and our team members have supported the financing of over $8bn in clean energy assets for private equity, debt, and tax equity financiers, from regional banks to some of the largest financiers in the world. If you think you may need help with technical due diligence on a project, platform, or other investment opportunity, please contact us . If you already have financing and want to make sure your project is well-executed, our Owner’s Engineering services are tailored to provide that peace of mind. OE Technical Due Diligence 03. STRATEGIC ADVISORY SERVICES Many of the world’s most successful investors have identified the clean energy space as ripe for investment and are seeking to successfully enter the market or expand their position to take advantage of the global growth trends. The opportunity is vast but the competition is fierce and wasting valuable time and resources on a bad deal can set you back considerably. Whether the need is to bring your team up to speed on the latest solar and energy storage markets, technologies, and trends or to get help identifying and validating potential M&A targets, our team’s broad industry knowledge, deep relationships, and expertise can help save precious time and avoid the pitfalls of a poor investment choice. Our team provides strategic guidance related to: Leadership team briefings on solar and energy storage market and technology trends Extended trainings and boot camps to get your team up to speed quickly Support for impact investing and energy access Target identification and due diligence Technology roadmap reviews On-call expertise If your team needs help evaluating new market opportunities, please contact us . If you are ready to consider investment in projects or portfolios, you may find our technical due diligence services helpful. STRATEGIC ADVISORY SERVICES

Mar 10, 2025 Constructability Part 1 Constructability refers to the overall ease and efficiency with which a project can be built. This directly influences both the speed of construction, and the cost required to complete the project. It encompasses various aspects of design, planning, procurement, and execution to ensure the project can be built effectively, safely, and within budget and timeline constraints. The Importance of Constructability in Solar and Battery Storage Projects When it comes to solar and battery storage projects, constructability should be considered as early as the site acquisition stage. Typically, during this phase, developers identify a potential land parcel and create a preliminary layout to assess site capacity, estimate annual energy production, and gauge interconnection feasibility using the limited information available. While this is a crucial first step, constructability concerns are often overlooked or insufficiently analyzed. This can lead to projects with critical constructability challenges advancing through the development process—resulting in wasted time and money on projects with a low likelihood of successful execution. The Camelot Energy team has extensive experience in development, engineering, procurement, and construction, allowing us to help owners and developers identify and address constructability concerns early in a project’s lifecycle. By doing so, we help mitigate late-stage issues, ensuring smoother project execution. This article is the first in a series on "Constructability," where the Camelot team will highlight common challenges and showcase solutions that enable seamless project development and construction. The Ups and Downs of Topography in Renewable Energy Projects One of the most common constructability issues we encounter during the development and construction phases is inadequate attention to topography . The terrain of a project site significantly impacts design feasibility, energy production estimates, and overall constructability. Why Topography Matters Most preliminary project layouts are created using publicly available data, which typically provides only 5’ or 10’ contour intervals. While this offers a rough idea of site conditions, it lacks the precision needed to fully de-risk a project. This limitation is particularly problematic for sites with complex terrain, dense forestation, or proximity to floodplains. For such projects, hiring a professional survey company to conduct a detailed topographic survey (with 2’ contour intervals or finer) is essential. This data enables developers and engineers to validate site conditions accurately and plan accordingly. Using Topography Data in Project Design and Development Once a detailed topographic survey is completed, the preliminary layout—including solar arrays, battery storage units, access roads, fencing, and equipment pads—should be incorporated into computer-aided design (CAD) software . By integrating this data into the design, engineers can assess site suitability and proactively address constructability challenges. At this stage, a slope analysis should be conducted to identify areas of concern. This analysis requires input from multiple disciplines, including civil, structural, and electrical engineers, construction professionals, and racking vendors . Collaboration ensures that all aspects of the project are evaluated, and risks are mitigated early. Key Topography Considerations for Constructability Civil Design Grading requirements to meet design standards Stormwater management and hydrology considerations Access road construction feasibility Equipment pad locations and elevation planning Structural Design Vendor-specific racking slope tolerances Structural calculations for stability and safety Accommodation of varying site elevations Electrical Design Trenching and underground conductor runs Placement of medium-voltage poles and guy wires for overhead lines Routing and protection of underground cables Construction Considerations Water management strategies during construction Temporary erosion control measures Site layout for construction staging areas Placement of office trailers and parking zones Operations & Maintenance (O&M) Planning Long-term vegetation management strategies Ongoing erosion control measures Why Early Topographic Analysis is Essential Topography sets the foundation for every aspect of a renewable energy project—it is the building block of successful development and project design. Identifying and addressing topographic challenges early minimizes risks, helps maintain budget and schedule discipline, and ensures that project goals are met. By taking a proactive approach, developers can avoid costly redesigns, permitting delays, and unexpected construction obstacles. Looking Ahead This article is just the beginning of our series on constructability. In upcoming articles, we will dive deeper into other critical factors affecting constructability, including geotechnical challenges, interconnection hurdles, and procurement risks. Stay tuned for more constructability insights from the Camelot Energy Group! < Back Back

Aug 8, 2025 Camelot Unpacks UL 9540 – Part 2 In Part 1 of our Camelot Unpacks UL 9540 series, we tackled some of the most common misconceptions about this critical Battery Energy Storage System (BESS) Standard - misconceptions that can easily derail schedules, inflate costs, or cause compliance headaches. Now, it’s time to move from myth-busting to the nuts and bolts. In Part 2, we’ll walk through some key questions regarding the requirements baked into UL 9540, highlight when and why it’s required, and shed light on the often-misunderstood Field Listing process. Whether you’re overseeing a project, supplying equipment, or working on the financing side, this is the knowledge that keeps your BESS project both compliant and bankable. What does UL 9540 include? While no product certification is ever a perfect guarantee of safety, the UL 9540 Standard is fairly broad in its scope as it's intended for an ESS as a whole, with key tests summarized below. These tests are additional to compliance requirements related to materials, construction, software, electrical design, fire safety design, noise levels, and more. These tests are also additional to any component-level tests required. For example, UL 1973 includes about 30 different tests on the battery modules alone, covering a range of potential risks, such as overcharging, over-temperature operation, external fire exposure, and physical impacts. Table 1: UL 9540 Key Tests Test Category Test Name Description   Electrical Safety Grounding & Bonding Ensures low resistance ground path to safely handle potential fault currents   Electrical Safety Electromagnetic Immunity Ensures safety sub-systems are not subject to electromagnetic interference and electrostatic discharge.   Electrical Safety Insulation Resistance Confirms insulation provides suitable impedance to prevent unintended current flow.   Electrical Safety Dielectric Voltage Withstand Confirms the suitability of dielectric materials to prevent current flow without breakdown.   Electrical Safety Impulse Test Assesses resistance to electrical surges. Fire & Thermal Safety Thermal Runaway Propagation Requires testing according to UL 9540A, with results incorporated into the system design. Mechanical Safety Leakage Confirms no leakage occurs when stress-testing liquid coolant systems with elevated pressure levels. Mechanical Safety Strength Confirms that elevated pressure in coolant systems does not cause damage to piping and equipment. Environmental Testing Seismic Confirms no major equipment damage after simulated seismic event. Environmental Testing Salt Fog Confirms resistance to marine environments. Environmental Testing Moisture Resistance Tests to confirm that enclosures properly resist water ingress. Other Operational Tests Normal Operating Verifies that ESS components do not exceed temperature ratings during normal charge/discharge behavior. Key Subordinate Standards Compliance with UL 1973 (Batteries) Ensures battery modules meet safety and performance standards. Key Subordinate Standards Compliance with UL 1741 (Inverters) Tests the safe integration of inverters in the system.   When is UL 9540 Listing Required? Compliance with UL 9540 is required under a number of major Codes, as summarized below. Note that, as of this writing, nearly all locations within the US require compliance with at least one of the Code editions noted below (or a more recent version). There are likely a few local jurisdictions not yet enforcing these Code editions but, essentially, Listing to UL 9540 is a Code requirement nearly anywhere in the US.     Referencing Code First Version Incorporating Listing for BESS Relevant Section(s) NFPA 70: National Electrical Code 2017 706.5 NFPA 1: Fire Code 2018 Chapter 52, which requires compliance with NFPA 855 which, in turn requires UL 9540 Listing in Section 9.2.1 (2023 Edition) IFC: International Fire Code 2018 1207.3.1   Is it Acceptable to Field List a BESS to UL 9540? Certainly, this is quite common and widely accepted. In practice (and in Code) an ESS is "one or more devices, assembled together, capable of storing energy to supply electrical energy at a future time". As you can see, this goes beyond simply the ESS enclosure to include the equipment facilitating connection to the broader electrical system, such as the inverter. Most ESS manufacturers will not have an infinite combination of their product listed with each possible DC converter, inverter, and transformer. As such, Field Listing is widely required to validate the "system" meets relevant Code requirements.   How does Field Listing Work? The term "Field Listing" is a slight misnomer, as the "field" portion is only a small part of the overall review. In fact, completing the Field Listing requires considerable review of documentation and generally requires that all the components of the ESS be Listed to their own respective Standards (see summary above). The Nationally Recognized Testing Laboratory (NRTL) doing the Field Listing will review the documentation and subordinate Listing status of all the major components in order to underpin their final Field Listing. As you can see, a successful Field Listing requires that the ESS uses high quality components that are properly Listed, and the Field Listing is really just validating the site-specific combination of those components (and that those components have been installed/used per their Listing). Once complete, the NRTL will issue a Field Listing that applies only to that specific project or installation. Even if the exact same equipment is used again at another site, a new Field Listing is still required. The pathway from Code requirement to (some of) the underlying Standards is summarized in the figure below. As you can see, a simple UL 9540 Listing has a lot behind it and is a critical element in having a high quality and bankable BESS. Figure 1: Compliance Pathway   Why do the Components Need to be Listed Separately for a Field Listing? Put simply, many of the required tests to List a BESS to UL 9540 are destructive in nature and you would not want them done to your commercial project. For example: UL 9540A testing requires initiating thermal runaway (aka making the system catch fire on purpose) Vibration and Impact Resistance tests may involve damaging your enclosures Overcurrent and overvoltage tests require exposing the BESS to electrical conditions beyond its design As you can imagine, few manufacturers would be willing to honor warranties after you abuse their system in such ways. So, since we can't deliberately set projects on fire in the field, the NRTL will have to rely on the test results used to obtain other component Listings. As shown above, the DC Block is already Listed to UL 9540. In these cases, all of the most strenuous tests have already been completed and found sufficient by a NRTL and the Field Listing can really focus on the combination of components. In some cases, NRTLs may be willing to issue Field Listings based on manufacturer test reports, engineering analyses, and similar documents but this is a very risky prospect and will take considerably longer and increase the cost to the owner. Also, if the NRTL finds they don’t have sufficient basis for granting the Field Listing, they may require additional testing from the manufacturer, leaving your project in a sort of Limbo state for months, if not longer. So, while any combination of ESS components can theoretically be granted a Field Listing, it is far safer to ensure your ESS is a combination of already-Listed components. In particular, using a DC block that is Listed to UL 9540 in its own right is a great way to reduce the risk of significant costs and/or delays in the final Field Listing process. < Back Back

Nov 7, 2024 Part 2: VDER Revenue Stack As discussed in Part 1: VDER Revenue Stack for Standalone Storage Projects , while the Value of Distributed Energy Resources (VDER) Calculator is a freely accessible tool for estimating expected VDER revenues, it can fall short in accurately modeling certain revenue streams. Therefore, when evaluating investments in Battery Energy Storage System (BESS) or hybrid (solar + storage) projects, it’s crucial to supplement this initial analysis with a more detailed revenue forecast that considers additional variables encountered in real-world operations. Like other leading market analytics providers, Camelot uses an optimized dispatch model to project future revenues for BESS and hybrid projects participating in merchant energy and ancillary services markets. However, projects with substantial programmatic revenues—such as NY VDER projects—often require a more customized approach to accurately validate revenue streams and financial model inputs. To address this need, Camelot has developed additional tools and capabilities that seamlessly integrate these programmatic revenue streams with relevant merchant market opportunities. You can find more background on the VDER program here to help developers and investors understand this critical framework. For our analysis, we modeled the revenue stack of a hybrid system with a 5 MWDC solar array and a 5 MW, 4-hour BESS under the VDER program across various utilities. We estimated the Locational System Relief Value (LSRV) manually, while our optimized dispatch model calculated LBMP, ICAP Alt 1, ICAP Alt 2, and DRV values. Additionally, we created four scenarios based on the following configurations: Hybrid Systems – PV Charging Only PV Charging Only (Alt 1) PV Charging Only (Alt 2) Hybrid Systems – PV & Grid Charging PV & Grid Charging (Alt 1) PV & Grid Charging (Alt 2) Key Trends and Insights from the PV Charging Only Results Figure 1 Excerpt from Camelot Q4 2024 NY Market Outlook Report Figure 2 Excerpt from Camelot Q4 2024 NY Market Outlook Report Energy Component (LBMP): The combined energy (LBMP) values from both BESS and solar in PV Charging Only projects are not the lowest among VDER components when compared to standalone BESS projects. This is largely because there are no charging costs—BESS charges from PV rather than the grid. Installed Capacity (ICAP) Value: Capacity prices vary significantly by NYISO load zones, making capacity revenue forecasts challenging due to price volatility across zones. These prices may decline as offshore wind is integrated, which contributes both energy and capacity. ICAP Alt 2 yields higher revenue than ICAP Alt 1 across all zones, primarily due to the rate structure of ICAP Alt 2. Similar to ICAP Alt 3 (applicable only to standalone BESS), ICAP Alt 2 prices have historically been higher, especially in Zone J (NYC – ConEd Group A) and Zone K (PSEG LI). Zone J prices average 3.04 times higher than other zones due to anticipated thermal retirements and land constraints that limit new renewable integration. Demand Reduction Value (DRV): Like standalone BESS projects in areas with 2 PM to 7 PM DRV windows, PV Charging Only projects also achieve strong DRV results as these hours often align with system peak windows. In ConEd Group B (Westchester), projects within the 2 PM to 6 PM DRV window produce significantly higher DRV revenues compared to those in the 2 PM to 7 PM window, as the former aligns more closely with potential peak periods. For instance, DRV revenue in ConEd Group B is 6.36 times higher than the utility average within the 2 PM to 7 PM window and 5.82 times higher than the state average. Locational System Relief Value (LSRV): In Central Hudson’s territory, LSRV does not apply. However, the highest LSRV revenues are seen in ConEd (Zones A to C) and PSEG territories, where LSRV revenues are 2.60 times higher than the state average. Environmental Value: The environmental value remains constant across all utilities and is locked in for 25 years. This revenue stream applies only to PV Charging Only cases in VDER, making these configurations more attractive than PV & Grid Charging due to the additional revenue stream. Key Trends and Insights from the PV and Grid Charging Results Figure 3 Excerpt from Camelot Q4 2024 NY Market Outlook Report Figure 4 Excerpt from Camelot Q4 2024 NY Market Outlook Report Energy Component (LBMP): In PV & Grid Charging projects, the combined energy (LBMP) components from both BESS and solar, including charging costs, are the lowest revenue component when compared to PV Charging Only projects in VDER. This is largely because PV Charging Only projects incur no charging costs, as BESS charges directly from PV rather than the grid. Installed Capacity (ICAP) Value : Capacity prices vary significantly by NYISO load zones, making capacity revenue forecasting challenging due to price volatility across zones. These prices could decrease with the addition of offshore wind, which contributes both energy and capacity. Like PV Charging Only projects, PV & Grid Charging projects see higher revenues under ICAP Alt 2 compared to ICAP Alt 1 across all zones, primarily due to the higher rate structure of ICAP Alt 2. Like ICAP Alt 3, which applies only to standalone BESS projects, ICAP Alt 2 prices have historically been highest in Zone J (NYC – ConEd Group A), followed by Zone K (PSEG LI). Zone J averages 3.06 times higher than other zones, driven by anticipated thermal retirements and land constraints that hinder new renewable integration. Demand Reduction Value (DRV): Similar to standalone BESS projects in regions with 2 PM to 7 PM DRV windows, PV & Grid Charging projects also achieve strong DRV results as these times often align with system peak periods. However, as with PV Charging Only projects, PV & Grid Charging projects in ConEd Group B (Westchester) within the 2 PM to 6 PM DRV window yield much higher DRV revenues than those in the 2 PM to 7 PM window, as the former more closely overlaps with system peaks. For example, DRV revenue in ConEd Group B is 5.95 times higher than the utility average within the 2 PM to 7 PM window and 4.87 times higher than the state average. Locational System Relief Value (LSRV): In the Central Hudson territory, LSRV does not apply. Similar to PV Charging Only projects, the highest LSRV revenues are observed in ConEd (Zones A to C) and PSEG, where LSRV revenues are 2.73 times higher than the state average. Environmental Value: The environmental value applies exclusively to PV Charging Only cases within VDER, making PV & Grid Charging cases less favorable in the VDER revenue stack due to the lack of this additional revenue component. Conclusions The VDER revenue stack significantly diminishes for projects located outside of ConEd and PSEG territories. Although CAPEX and OPEX costs for upstate projects may generally be lower, this advantage is offset by the more lucrative revenue streams available in ConEd and PSEG regions, as highlighted in this article. When calculating these revenue streams, it’s essential to account for the various market nuances specific to the VDER revenue stack, as discussed in Part 1: VDER Revenue Stack for Standalone Storage Projects. While the VDER Value Stack Calculator is a useful tool for preliminary analysis, it may not always provide accurate forward revenue estimates. Our team recommends conducting a more detailed analysis to support the development and financing of energy storage and hybrid projects in New York State. In summary, when comparing the VDER value stack for hybrid projects under ICAP Alt 1 and Alt 2, as well as the PV Charging Only and PV & Grid Charging options, we find that PV Charging Only (Alt 2) projects generate higher revenues than PV & Grid Charging projects. This is primarily due to the Environmental value, which is locked in for 25 years at a fixed rate of $31.03/MWh, and the increased revenue potential that ICAP Alt 2 offers over Alt 1. To accurately assess the benefits of PV Charging Only versus PV & Grid Charging, Camelot can assist you in determining the optimal storage system size to co-locate with your solar system, helping you maximize returns for hybrid projects. If you're interested in assessing energy storage and/or hybrid projects in NYISO’s VDER Program, feel free to reach out to us at info@camelotenergygroup.com . About Camelot Energy Group is a technical and strategic advisor to owners and investors in clean energy and energy storage projects, programs, and infrastructure. Guided by our core values of courage, empathy, integrity, and service we seek to support the energy needs of a just, sustainable, and equitable future. Our team has experience in supporting 7+GW of solar PV and 10+ GWh of energy storage and offers expertise in technology, codes and standards, engineering, public programs, project finance, installation methods, quality assurance, safety, contract negotiation, and related topics. Our services are tailored to a providing a different kind of consulting experience that emphasizes the humanity of our clients and team members, resulting in a high-quality bespoke service, delivered with focus, attention, and purpose. Key services include: -Technical due diligence of projects and technologies -Owner’s representative and engineer support -Strategic planning -Training and coaching -Codes and standards consulting -Contract negotiation and support. < Back Back

Feb 10, 2026 Foreign Entity of Concern (FEOC) Regulations for Battery Energy Storage Systems (BESS) Definitions Under §48E, BESS is treated as an ‘Energy Storage Technology’ or EST An EST is defined (by reference to §48 (c) (6) as property that: Receives, stores, and delivers energy for conversion to electricity Has a nameplate capacity ≥ 5 kWh Is not primarily used for transportation Includes thermal energy storage properties BESS qualifies for §48E Clean Electricity Investment Tax Credits if: It is placed in service after December 31, 2024 Construction begins after statutory termination dates It does not include material assistance from a Prohibited Foreign Entity (PFE) if construction begins after December 31, 2025 Determination is based on supplier's tax year at time of cost payments Material Assistance Cost Ratio For BESS eligibility depends on definitions under 7701 (a) (52): Total direct costs include direct material, direct labor cost of Manufactured Products (MPs) and components incorporated into the EST PFE direct costs are the portion attributable to MPS or Manufactured Product Components (MPCs) that are mined, manufactured and produced by a PFE. If MACR is below the applicable threshold, the EST includes material assistance from a PFE and is ineligible The threshold percentage are as follows: 55% in 2026 60% in 2027 65% in 2028 70% in 2029 75& in 2030 and beyond Technical Cost Components For MACR, only MPs and MPCs are included, some examples are: Battery modules Battery packs Battery cells Inverters Power conversion systems Control systems Thermal management systems Steel and iron-based structural components are excluded from MACR unless identified as MPs or MPCs Main power transformers can be ignored However, it is important to note that asset owners must focus only on a discrete number of MPs and MPCs for MACR calculations Tracking Methodologies Notice 2026-15 establishes three tracking methodologies: Individual component tracking , where each MP or MPCs is tracked to specific BESS units De-minimis assignment (10% rule), where each MP or MPCs representing < 10% of total direct costs may be assigned across facilities Averaging for small BESS (<1 MWAC) Must be of same type < 1 MWAC Placed in service same taxable year Taxpayers may average direct costs and PFE production percentage. This is especially relevant for Distributed Generation (DG)BESS portfolios Applicable Safe Harbors Two interim safe harbors apply as of the date of the notice: Identified safe harbor - Use 2023-2025 Safe Harbor Tables (Notice 2025-08) to identify and qualify and quantify MPs/MPCs Cost percentage safe harbor - Use assigned cost percentages instead of actual cost tracking (only if using identification safe harbor) It is important to note that safe harbor is: Not allowed for incremental production rule projects Excluding used property under 80/20 rule from MACR calculations Per Notice 2025-08, a grid-scale BESS is one with a name plate capacity greater than 1 MWh, where as distributed BESS shall have a nameplate capacity less than or equal to 1 MWh Qualified Interconnection Property If BESS includes qualified interconnection property: Separate MACR must be calculated If interconnection property fails MACR,BESS ITC can still be claimed but interconnection costs are excluded from qualified investment Qualified interconnection property could include network upgrade costs paid to the interconnecting utility – the IRS has recommended separate MACR calculations for these network upgrades It is imperative to work in concert with the utilities to determine cost and sourcing of equipment to accurately quantify and qualify an interconnection specific MACR The Risk of not Being Diligent If MACR is overstated, then: 20% accuracy penalty applies 1% understatement threshold instead of10% 6-year statute of limitations of MACR-related deficiencies Supplier misstatements subject to§6695B penalties That said, there is both economic and reputational risk of not being diligent about strategic sourcing The onus of traceability is solely on the developer's shoulders and goes beyond traditional checklists and CAPEX focused decision making Technical Implications Supply chain strategy Track origin of battery cells and modules carefully Avoid PFE-produced battery cells unless MACR remains above threshold Portfolio structuring Consider < 1 MW averaging rule for distributed projects Use the safe harbor cost tables where advantageous Contracting Ensure supplier certifications, but be diligent about reviewing these in detail due to potential penalties at play Avoid licensing arrangements that could trigger ‘effective control’ by PFEs Financial modeling Build MACR analysis into tax equity underwriting Model threshold compliance by construction year Future Guidance The IRS is still working on FEOC, so the current notice is one of many expected in the coming months FEOC also bans tax credits from being claimed on any project or product over a Specified Foreign Entity(SFE) has been effective control by contract Congress wrote into the statute 13 contract clauses that are leading signs of effective control to ensure non-circumvention Granting the rights to use Intellectual Property (IP) belonging to an SFE, or modifying an existing contract, on or after July 4, 2025, is automatically considered to give the SFE effective control and as such automatic disqualification from a tax-credit perspective FEOC explicitly bars any company that is a PFE from claiming federal tax credits The IRS is seeking comments on the current notice up until March 30, 2026 Reach out to us at @ hello.camelotenergygroup.com for any questions! Raafe Khan < Back Back