Your development team just received battery pricing that looks exceptional. The OEM is hungry for volume. They’re offering $145/kWh for a 200 MWh system—well below the $160+ you budgeted. Your CFO is thrilled. Your board wants to lock it in before the price expires.

So you sign a Letter of Intent with price protection. You put down a deposit to hold a delivery slot. You update your financial model with the new economics and tell your investors you’ve de-risked the equipment cost.

Eighteen months later, you’re still in permitting. The Fire Marshal required a third-party Hazard Mitigation Analysis that took four months longer than expected. The county planning commission added conditions that required a site redesign. Your interconnection study came back with upgrades that pushed your COD by a year.

That $145/kWh price? The OEM honored it—but now you’re taking delivery of batteries that will sit in a warehouse for 14 months before you can install them. Your carrying costs are eating the savings. Your warranty clock started ticking on equipment that isn’t generating revenue. And the OEM you locked in at $145? Their competitor is now offering $128/kWh with a newer chemistry that better fits your revised site layout.

You didn’t de-risk your project. You created a new risk by locking commercial terms before you understood what you were building.

The Procurement Instinct That Backfires

Developers are trained to lock in costs early. In construction, early commitment to subcontractors and materials protects against price escalation. In solar, locking panel pricing 18 months before COD is standard practice—panels are commoditized, delivery is predictable, and the technology doesn’t affect your permit.

BESS doesn’t work this way.

Battery pricing is volatile. Lithium carbonate prices have swung 300%+ in recent years. Cell manufacturing capacity is expanding rapidly, with new entrants driving costs down. The “great price” you lock today may look expensive in 12 months—or it may look cheap if supply tightens. Nobody knows.

More importantly, your BESS configuration isn’t fixed until you’ve completed permitting. The Fire Marshal may require wider spacing than your OEM’s standard configuration. Your civil engineer may discover the site can’t accommodate the footprint you assumed. Your interconnection agreement may impose reactive power requirements that change your inverter selection. Each of these changes affects which OEM—and which configuration—is optimal for your project.

Locking commercial terms before permitting is like signing a construction contract before you have approved drawings. You’re committing to a scope you haven’t fully defined.

The Two-Stage Discipline

The solution is to separate technology selection from commercial commitment. This requires two distinct procurement events:

Stage 1: Technical RFI (Phase 100 — Feasibility)

The Request for Information is a technical exercise, not a commercial negotiation. You’re gathering data to establish a “Design Basis”—the reference configuration your engineers will use for permitting.

The Technical RFI asks OEMs for:

• Physical dimensions, weights, and foundation requirements
• Thermal management specifications (HVAC loads, operating temperature range)
• UL9540A test report data (spacing requirements, explosion control methodology)
• Degradation curves and augmentation assumptions
• Auxiliary power requirements (critical for station service transformer sizing)
• Safety certifications and code compliance documentation

You’re not asking for final pricing. You’re asking for the technical parameters that determine whether this equipment fits your site, meets your Fire Marshal’s requirements, and integrates with your electrical design.

At the end of the Technical RFI, you select a Design Basis OEM—the reference technology that your civil, electrical, and fire protection engineers will use to develop permit-ready drawings. This selection is based on technical fit, not lowest cost.

Stage 2: Commercial RFP (Phase 400 — Procurement)

The Request for Proposal is a commercial negotiation that happens after permits are secured—or at minimum, after the critical entitlement risks are retired.

By this point, you know:

• Your exact site layout (approved by the Fire Marshal)
• Your interconnection requirements (defined in the IA)
• Your construction timeline (driven by permit conditions and safe harbor deadlines)
• Your augmentation strategy (validated by your BESS Owner’s Engineer)

Now you can issue a Commercial RFP that asks for binding pricing on a defined scope. You can compare OEMs on economics because you’re comparing apples to apples—everyone is bidding the same technical requirements.

The OEM you selected as your Design Basis in Phase 100 may win the Commercial RFP in Phase 400. Or they may not. A competitor may offer better pricing, better warranty terms, or a newer product that wasn’t available when you started development. You’ve preserved optionality.

Why “Price Protection” Is Often Illusory

Developers who lock OEM pricing early typically negotiate some form of price protection—a clause that holds the $/kWh rate for a defined period or until a specified milestone. This feels like risk mitigation. Often, it isn’t.

The delivery timing problem: Price protection usually comes with delivery slot commitments. If your permitting timeline slips—and permitting timelines always slip—you’re either taking delivery before you’re ready (creating carrying costs and warranty erosion) or renegotiating your slot (often losing your price protection in the process).

The configuration change problem: Your protected price is for a specific configuration. If the Fire Marshal requires wider spacing, and that spacing forces you to a different container model, your price protection may not apply. You’re negotiating a change order, not exercising a locked rate.

The market asymmetry problem: Price protection protects you against price increases, but it doesn’t let you capture price decreases. If the market drops 20% during your permitting period, you’re still paying your locked rate while your competitor—who waited to procure—gets the lower price. In a falling market, price protection becomes price imprisonment.

The opportunity cost problem: The deposit you put down to secure price protection is capital you can’t deploy elsewhere. If the project doesn’t advance—permitting fails, interconnection costs blow up, the site has fatal flaws—you may forfeit that deposit or spend months negotiating its return.

The developers who successfully lock early pricing are typically those with the most certainty about their permitting timeline—which usually means they’ve already retired most of the entitlement risk. At that point, early pricing lock makes sense. But if you’re locking pricing to “de-risk” a project that still has open permitting questions, you’re adding risk, not removing it.

The Design Basis Memo

The bridge between Stage 1 (Technical RFI) and your engineering team is a document we call the Design Basis Memo (DBM). This is the authoritative technical reference that governs all downstream design work.

The DBM defines:

• Equipment dimensions and spacing: Exact container footprints and the separation distances required by the UL9540A validation
• Foundation requirements: Pad tolerances, bearing capacity requirements, and any special geotechnical considerations for the selected equipment
• Auxiliary loads: Station service power requirements for HVAC, controls, and lighting—critical inputs for the electrical engineer’s transformer sizing
• Thermal constraints: Operating temperature limits that affect site selection and may require supplemental cooling in extreme climates
• Fire safety parameters: Setbacks, explosion control methodology, and water supply requirements derived from the UL9540A report

The DBM is issued by your BESS Owner’s Engineer after evaluating the Technical RFI responses. It becomes the governing document for your civil engineer (who designs pads and grading to these specs), your electrical engineer (who sizes transformers and cables to these loads), and your fire protection engineer (who validates the safety parameters against local code).

If you change OEMs after the DBM is issued, you may need to revise your engineering. This is why the Design Basis selection matters—and why it should be based on technical fit and code compliance, not on who offered the best preliminary pricing.

The Verification Loop

Selecting a Design Basis OEM requires more than reviewing spec sheets. OEM marketing materials often present optimistic assumptions—spacing requirements based on best-case UL9540A interpretations, auxiliary loads based on mild climate conditions, degradation curves based on gentle duty cycles.

Your project may not match those assumptions.

This is why we require a Verification Loop between the BESS Owner’s Engineer and our internal reference model before finalizing the Design Basis. The Owner’s Engineer develops independent degradation projections using site-specific weather data and your actual dispatch profile. We compare those projections against OEM warranty claims and our own benchmarks.

If the OEM’s claims don’t survive independent scrutiny, that OEM doesn’t become the Design Basis—regardless of their pricing. A battery that degrades faster than warranted, or requires more augmentation than budgeted, will destroy your economics far more than paying an extra $10/kWh for a more conservative technology.

The time to discover warranty gaps is during the Technical RFI, when you can select a different Design Basis. It’s not during Commercial RFP negotiations, when you’ve already permitted a specific configuration and switching costs are prohibitive.

The Timeline Reality

Developers often resist the two-stage model because they fear losing time. If you don’t lock pricing now, won’t you miss the market?

Consider the actual timeline of a BESS development:

• Month 1-3: Site selection, Fatal Flaw Analysis, interconnection application
• Month 4-6: Technical RFI, Design Basis selection, engineering kickoff
• Month 7-12: Permitting (CUP application, Fire Marshal review, public hearings)
• Month 13-18: Permit conditions, interconnection agreement execution, financing
• Month 18-24: Commercial RFP, OEM selection, EPC procurement
• Month 24-30: Construction, commissioning, COD

If you lock OEM pricing in Month 6, you’re carrying that commitment for 18+ months before construction starts. That’s 18 months of market movement, 18 months of technology evolution, and 18 months of project risk that could render your commitment worthless.

If you wait until Month 18 to issue your Commercial RFP, you’re procuring equipment 6-12 months before you need it—a normal procurement cycle that matches your actual construction timeline. You capture current market pricing on a fully defined scope.

The two-stage model doesn’t slow you down. It aligns your commercial commitments with your actual project certainty.

The Takeaway

Locking your OEM too early feels like de-risking. It’s actually risk creation—you’re committing capital and commercial terms before you understand what you’re building.

The discipline is separating technology selection (which must happen early to enable permitting) from commercial commitment (which should happen late to preserve optionality). Use the Technical RFI to establish a Design Basis. Use the Commercial RFP—after permits are secured—to lock final economics.

The developers who understand this will capture market improvements and avoid configuration mismatches. The developers who don’t will learn expensive lessons about the difference between “locked pricing” and “locked in.”

Carina Energy provides BESS development services including procurement strategy, BESS Owner’s Engineer coordination, and full Development-as-a-Service for utility-scale storage projects. Contact us to discuss your project.

Related Reading:

• The Fire Code Trap: Why Your BESS Permit Just Got Rejected
• Mineral Rights: The Silent BESS Project Killer
• The 504-Task Reality: Why BESS Development Isn’t “Solar Plus Batteries”