How to Evaluate a Battery Storage Lease Offer: 8 Questions to Ask Before You Sign

If you've received a lease offer from a battery energy storage developer, congratulations — it means your property has been evaluated and qualifies based on proximity to grid infrastructure. But receiving an offer is just the beginning. Before you sign anything, you need to understand what you're agreeing to, what the terms mean, and where there's room to negotiate.

This guide walks through the eight most important questions to ask when evaluating a battery storage lease offer in Illinois.

1. What is the lease rate, and how is it calculated?

Battery storage leases are paid per megawatt (MW) of installed capacity, not per acre. The rate should be expressed as dollars per MW per year. Industry rates in the ComEd territory range from $5,000 to $12,000/MW/year, with a typical mid-range of $8,000/MW/year.

Ask specifically:

• What is the rate per MW?
• What is the minimum and maximum project size in MW?
• Is there a guaranteed minimum annual payment regardless of final project size?

A developer may offer a flexible project size range (e.g., "5 to 20 MW") but guarantee payment only on the minimum size. Make sure you understand what you're actually guaranteed versus what you might earn.

Use the Illinois Battery earnings calculator to estimate your annual payments at different project sizes and rates.

2. What is the annual escalation rate?

Most battery storage leases include an annual escalation clause — your payment increases by a fixed percentage each year. The industry standard is 2% per year. Some developers offer 1.5%; better terms push to 2.5%.

Over 25 years, the difference between 1.5% and 2.5% escalation on a $40,000/year starting payment is over $200,000 in cumulative income. This is worth negotiating.

3. What happens at the end of the lease?

This is one of the most important provisions in the entire lease, and it's often glossed over in initial offers. You need crystal-clear language on what the developer is required to do when the lease expires or terminates. Specifically:

• Decommissioning obligation: Is the developer required to remove all equipment, including underground conduit and the concrete pad?
• Site restoration standard: Does the lease specify how the site must be restored — e.g., returned to agricultural grade, topsoil replaced, drainage restored?
• Financial assurance: Is there a decommissioning bond or escrow account funded by the developer to guarantee removal even if the company no longer exists at end of term?
• Timeline: How long does the developer have after expiration to complete removal?

Without strong decommissioning language, you risk inheriting an abandoned concrete pad and underground infrastructure 25 years from now. Your attorney should flag any lease that lacks explicit removal obligations with financial backing.

4. What are the access and use rights?

The lease will define what rights the developer has to access your property. Review carefully:

• Primary lease area: The exact footprint of the battery installation — this should be precisely defined, typically as a legal description or survey exhibit
• Access easement: The path from a public road to the installation — verify this doesn't cross your most productive fields or interfere with drainage
• Temporary construction access: Separate from ongoing operations — construction may require wider access during the build phase
• Overhead and underground rights: Some leases claim broad rights to run cables or lines across your property beyond the primary lease area

Make sure the access routes are specifically defined, not described generally as "reasonable access." Vague access language can create disputes years later.

5. What happens if the project doesn't get built?

Battery storage projects sometimes don't reach commercial operation — interconnection costs come in too high, the developer's financing falls through, or the company is acquired and the project is shelved. Understand what happens in these scenarios:

• Development fee: Does the developer pay you a non-refundable option or development fee at lease signing, even if the project is never built?
• Termination rights: Can the developer terminate the lease if the project isn't viable? Under what conditions, and with how much notice?
• Reversion: If the developer terminates, does the land revert cleanly to your control with no encumbrances?
• Force majeure: How is force majeure defined, and does it give the developer an unlimited extension window?

A development fee (typically $2,000-$10,000 paid at signing) compensates you for the exclusivity you're granting the developer during the development period, regardless of outcome.

6. Are there restrictions on your use of the rest of your land?

Some lease agreements include provisions that affect how you can use your land beyond the project footprint. Watch for:

• Height restrictions: Prohibiting structures or vegetation above a certain height near the installation (for shade or interference reasons)
• Non-compete provisions: Preventing you from leasing to another energy developer within a certain radius
• Right of first refusal: Giving the developer the right to match any competing offer on additional acreage
• Agricultural operations restrictions: Some leases include broad language restricting "interference" with the installation that could theoretically apply to normal farming

None of these are necessarily deal-breakers, but each should be carefully defined and limited in scope and duration.

7. What are the developer's financial and operational credentials?

You're entering a 20-25 year relationship with this company. Before signing, verify:

• Track record: How many projects has this developer built and operated successfully? Are those projects still operating?
• Financial backing: Is the developer adequately capitalized, or are they dependent on third-party financing that may not materialize?
• Parent company structure: Many developers operate as project-specific LLCs. Who is the parent entity, and does the parent guarantee the obligations of the project company?
• References: Can the developer provide contact information for landowners with active leases in their portfolio?

A developer with a strong portfolio of operating projects and a creditworthy parent entity is significantly lower risk than a startup with no operational history.

8. Does the lease address insurance, liability, and indemnification clearly?

The developer should carry comprehensive insurance — general liability, property damage, environmental liability, and workers' compensation. The lease should specify:

• Minimum insurance coverage amounts
• Requirement to name the landowner as an additional insured
• Developer's obligation to indemnify the landowner from third-party claims arising from the project
• Continuity of insurance requirement (coverage must be maintained throughout the lease term)

Ask for certificates of insurance before the lease is finalized, and have your insurance agent confirm the coverage is adequate.

Do you need an attorney?

Yes — this is not optional for a 25-year commercial agreement affecting your property. You want an attorney with experience in either agricultural real estate or energy transactions. They'll understand the standard provisions, know what's negotiable, and catch language that could create problems decades from now.

Expect to spend $1,000-$3,000 in attorney fees for lease review and negotiation. On a $40,000/year lease, that's less than 2% of the first year's income — easily worth it.

The timeline post from this blog (From Application to First Payment) has more on what to expect at each stage after signing.

Ready to evaluate an offer?

If you've received a lease offer or want to see what your property might qualify for, submit a free property assessment. Use the earnings calculator to benchmark the rate you've been offered against market rates. And if you're comparing offers from multiple developers, the eight questions above give you a consistent framework to evaluate each one.