BullishaboutBESS
Fengate’sheadofenergytransitionandAlpha OmegaPower’s(AOP)CEOexplainwhybattery energystoragesystems(BESS)arethebigwinner comingoutoftheOneBigBeautifulBillAct (OBBBA),andhowtailwindsarepositioning batterystoragetocapitalizeongrowingdemand.
In2025,theU.S.electricitysectorisatitsmost volatileindecades.
TheTrumpadministration’sOneBigBeautifulBillAct (OBBBA)sentshockwavesthroughtheUnitedStates (U.S.)infrastructuresectorwhenitwasintroduced earlierthisyear,promisingsignificantrevisionstotax incentivesundertheInflationReductionAct(IRA) thatmanydeveloperswererelyingon.Ontopofthe OBBBA,tariffsintroducedbytheU.S.fueled headwindsalreadyfacedbytheinfrastructuresector. Together,thenewruleshaveupendedthe renewablesmarket.
WhentheOBBBAcameintoeffectonJuly4,wind andsolardrewtheshorteststraw.Onlyahandfulof energysub-sectorswerespared–oneofthemBESS. AccordingtoGregCalhoun,ManagingDirectorand HeadofEnergyTransitionatFengate,BESSemerged astheclearwinneroutoftheOBBBA.
“Ithasn’tchangedourstrategy it’sjustprovenit,” saidCalhoun.“Batterystoragewasthebigwinner comingoutofthisbill,whichapproved14yearsof investmenttaxcreditsforbatterystorage,with10 yearstostartconstructiontoqualifyforthose credits.”
ManagingDirectorand
HeadofEnergyTransition
PaulChoi CEOofAlphaOmegaPower (AOP)
OBBBAtaxincentives,combinedwithsurging powerdemand,arecreatingfertilegroundforBESS –andthedevelopmentpartnershipisdoubling down.FengateandAOPhavea400megawatt-hour (MWh)BESSinoperationsinCalifornia,are constructinga400MWhprojectinTexas,andare nearingconstructionon1,400MWhofprojects acrossTexasandSouthwesternU.S.
PaulChoi,ChiefExecutiveOfficeratAlphaOmega Power(AOP),saidbatteriesandAOP’soperations are“generallyunaffected”bythebill’srestrictions. Choiputsitdowntoacoupleoffactors.Thefirst, theOBBBA’spreferencetowardsreliableand dispatchableformsofpowergenerationsources.
“Solarandwindareintermittent,andthe administration’spreferenceisforreliable generation,”saidChoi.
“BESSistheonlyrenewableenergysourcethatis trulyreliable,”saidCalhoun.“Weinvestinbattery storageprojectsbecausetheyproducepowerwhenit isneededthemost–whensolarandwindprojects arenotproducing–andwhenpricesareattheir peak,whichisidealforreturns”.
“Alotofsolarandwindaregoingtogetbuiltinthe nextfiveyearsuntilthetaxcreditsexpire,buta er that,batterystorageistheonlyprovenrenewable technologywithlong-termtaxcreditcertainty.”
ThesecondfactorisAOPmanagement’sforesightto mitigatetaxheadwindsearly.
Choisaidaproactiveapproachtosupplychain diversificationinsulatedAOP’spipelinefromtariffs andnewforeignentityofconcern(FEOC)rules introducedbytheTrumpadministration,which requirethemajorityofBESSequipmenttobe sourcedoutsideofChinatoqualifyforthe investmenttaxcredit.
“Rightnow,morethan80%ofbatterycellsupply goesthroughChina.Wehavebeenplanningforthe last15monthstoformrelationshipswithproven,tier onedomesticsuppliersinanticipationofpolicy changes,”saidChoi.
“AOPhasdoneaphenomenaljobtomitigatetariff risk.Theyhadtheforesightbeforetheinauguration ofPresidentTrumptobringourbatteryequipment onshore,”addedCalhoun.
ThatforesightmeantAOPwasabletoexpeditethe constructionoffourBESSprojectsbeforetheOBBBA waspassed,safeharboringthemundertheprevious taxcodeandexemptingthemfromcompliancewith FEOCrules.
OBBBAtaxchangesalsoenableAOPtoaccessupto 50percentininvestmenttaxcreditsforevery development.
“AllBESSprojectsthatAOPdevelopareinenergy communities,whichoffersa10%addertothe existing30%investmenttaxcredit,andutilizing domesticsupplyforbatteryequipmentprovides another10%,”saidCalhoun
UnprecedenteddemandforpowerintheU.S.is anotherconfidenceboostforBESS.
“Powersupplygrowthcannotkeepupwiththe powerdemandbeingdrivenbydatacenters, electrification,andonshoringmanufacturing,”said Calhoun.“Withdemandprojectedtogrow25%by 2030,andtheproliferationofrenewablesontothe grid,powerpricesandvolatilitywillincrease–so utilizingbatteriestostabilizethegridisgoingtobe critical”
AOPispoisedtomeetthedemandforreliablepower. “Ourteamhascollectivelydevelopedandoperated over20batteryassets,”saidChoi.“OurCaballero projectisinthetopthreeintermsofavailabilityand isrankednumberoneinrevenueyeartodatein California.Weself-integratedthisbest-in-classBESS project,whichdemonstratesAOP’sabilityto execute.”
About850megawatts(MW)to1,050MWofBESS capacityisunderconstructionintheUS today,and BESSisquicklybecomingthebackboneofthe energytransition.
“Theonlyscalable,ondemandpowersourcethat canbebuiltinthenext5to10yearsisbattery storage,andAOPhasaccomplishedagreatdealin just2.5yearswhichisasignofwhatistocome,”said Calhoun.
