Location, Location, Substation? How Battery Energy Storage Systems (BESS) Can Create Value in Unexpected Places

The transition to renewable energy is a critical step in reducing global carbon emissions, yet it introduces new challenges for the aging electrical grid, particularly in urban areas. Battery Energy Storage Systems (BESS) are emerging as key infrastructure in this transition, capable of enhancing grid resiliency, managing peak loads, and facilitating the integration of renewable energy sources. Federal and state incentives and a recent sharp decline in the cost of battery cells have made BESS development economically viable. This thesis explores the potential of BESS to create public and economic value in underutilized urban spaces through the exploration of a hypothetical redevelopment proposal for the Alewife MBTA Complex in Cambridge, Massachusetts. The Alewife MBTA Complex presents significant challenges for redevelopment due to the high cost of demolishing the decaying existing structure. However, its proximity to a major substation and the increasing local demand for electricity make it an ideal candidate for a BESS project. This thesis demonstrates how integrating energy storage into the redevelopment of the site can enable an otherwise financially infeasible project. The paper provides an overview of the BESS development process, detailing each phase from creating a business strategy to disposition. It offers insights into the common challenges encountered, and how these might be navigated to optimize project outcomes. By breaking down the development timeline and key decision points, this thesis serves as a practical guide for real estate professionals to gain familiarity with Battery Energy Storage Systems. Through detailed financial modeling and analysis, including sensitivity testing, this research quantifies the expected financial performance of a BESS project at the Alewife site. The study concludes that BESS can unlock ‘found value’ in sites with little other economic potential. The findings suggest that incorporating BESS into real estate development projects can provide substantial public benefits, including enhanced grid resilience, lower energy costs, and increased property values, making it a strategic tool for urban planners and developers.

Name thesis:degree_name

Master

Department dc:contributor.department

Massachusetts Institute of Technology. Center for Real Estate. Program in Real Estate Development.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2024

Author dc:creator

• Schutt, Neal

Advisor dc:contributor.advisor

• Shen, Kairos

Statement dc:rights

• In Copyright - Educational Use Permitted
• Copyright retained by author(s)

Licence dc:rights.uri

• https://rightsstatements.org/page/InC-EDU/1.0/

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/157127

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/157127