New sector guidance for battery projects may cushion the impact of technical derates currently weighing on project development and clouding capacity supply outlooks.
Following a multi-day fire at California’s Moss Landing facility – and subsequent warnings of derates at similar battery installations supporting intermittent renewables – the American Clean Power Association (ACP) released a comprehensive safety framework on March 28.
The guidance spans the entire lifecycle of battery projects. It emphasizes the need for robust design elements such as improved containment architecture, advanced fire suppression systems, and thermal runaway mitigation. Complementary measures include enhanced operations and maintenance protocols, more frequent health audits, and mandates for real-time performance monitoring.
Collectively, the recommendations aim to equip project owners, operators, regulators, and first responders for the accelerating pace of energy storage deployment – a cornerstone of renewable integration and grid stability.
The most financially consequential aspects of the new framework, however, are the operational constraints it introduces. In certain conditions, battery operators may be required to limit their systems’ state-of-charge or restrict charge and discharge rates. These safety-driven derates can reduce a project’s effective capacity, creating a tension between safety compliance and market viability.
In parallel, regulators and grid operators are reevaluating how energy-limited resources – particularly lithium-ion batteries – are accredited in capacity markets. Given that these systems can typically discharge for only a few hours and may now face additional safety-based operating limits, the duration and magnitude of their capacity contributions could decline. For developers whose financial models rely on predictable capacity revenues, this introduces a new layer of revenue risk.
The implications for capacity markets are twofold: over the longer term, the new standards could incentivize innovation, favoring chemistries and technologies that enable safer, more flexible performance. In the near term, however, these same standards could reduce accredited capacity across the board, tightening supply and driving capacity prices higher.
By directly linking operational limits to safety protocols, the ACP’s March 28 framework signals a potential inflection point. The valuation of battery resources in capacity markets is evolving – one shaped increasingly by performance risk, regulatory scrutiny, and investor expectation.
