Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders

Utility-scale battery energy storage systems (BESS) are becoming an increasingly important component of the electric grid throughout New Jersey, New York, and Pennsylvania. As renewable generation expands, electricity demand increases and grid operators seek greater flexibility, battery storage can help balance supply and demand while providing additional capacity and reliability.

For developers, battery storage presents a significant opportunity. For property owners, it can create a new revenue stream from land that may otherwise have limited development potential. At the same time, these projects also present a complicated combination of real estate, land use, energy, environmental, construction, and safety issues.

Unlike a conventional commercial development, a utility-scale battery project must satisfy requirements imposed by multiple levels of government and, often, an electric utility or regional transmission organization. The legal and regulatory framework also varies from state to state and municipality to municipality.

For anyone considering a utility-scale battery project in the Northeast, legal issues should be evaluated at the outset of the development process—not after the site has been acquired and substantial engineering costs incurred.

1. Site Selection and Land Use

The first question for a developer is whether the proposed property is suitable for a battery storage facility from both legal and engineering perspectives. In many cases, local zoning ordinances do not expressly address battery storage. A municipality may classify a BESS as a utility, industrial use, energy facility, or another type of use. That classification can determine whether the project is permitted as of right or requires a conditional use, special exception, variance, or other discretionary approval.

Developers should also evaluate setbacks, lot coverage, fencing, landscaping, noise, lighting, access, equipment height, and screening requirements. Existing easements, deed restrictions, conservation restrictions, and prior approvals may create additional limitations.

These site selection and zoning questions should be addressed during site due diligence. A property that appears ideal because of its proximity to a transmission line may ultimately be unsuitable because of zoning or other land-use constraints.

2. State and Local Permitting

Battery storage projects are subject to a combination of state and local requirements. Additionally, the permitting process differs substantially among New Jersey, New York, and Pennsylvania.

New York has developed particularly detailed guidance for local governments dealing with BESS projects. The New York State Energy Research and Development Authority’s (NYSERDA) Battery Energy Storage System Guidebook addresses permitting, inspections, siting, and safety, while updated state fire and building codes, adopted in 2025, strengthen requirements applicable to energy storage systems.

New Jersey’s regulatory framework is also developing rapidly. In 2026, legislation was enacted to modify the requirements for transmission-scale energy storage procurement under the New Jersey Board of Public Utilities’ (BPU) Garden State Energy Storage Program. The BPU’s program materials address, among other things, safety standards, professional-engineer certification, testing, and compliance with applicable codes.

Pennsylvania currently regulates BESS projects through local municipal codes, state fire and building standards, and evolving utility policies overseen by the Pennsylvania Public Utility Commission (PA PUC). As a result, developers should resist the temptation to use a single permitting strategy across all three states.

3. Interconnection and Grid Issues

A project may be fully approved from a land-use perspective and still be economically unworkable if it fails to obtain an acceptable interconnection. Interconnection can involve substantial engineering studies, transmission upgrades, financial commitments, and lengthy timelines. The applicable process depends on the project’s size, point of interconnection, and the entity responsible for the relevant transmission or distribution system.

Federal Energy Regulatory Commission (FERC) reforms have significantly changed the interconnection process. In 2023, FERC Order No. 2023 moved transmission providers toward a first-ready, first-served cluster-study process and imposed additional site-control and financial-readiness requirements. The reforms also specifically addressed the operating characteristics of electric storage resources.

Accordingly, developers should evaluate interconnection risk at the same time they evaluate zoning and site control. An attractive site without a viable interconnection may have little value as a storage development opportunity.

4. Real Estate and Site-Control Agreements

Battery projects also require carefully structured real estate arrangements. A typical ground lease may need to provide rights not only for battery containers, but also for inverters, transformers, substations, fencing, access roads, underground collection systems, and transmission facilities. Developers may also need easements extending beyond the primary project area.

The lease or option agreement should address development rights, assignment, financing, construction access, utility easements, insurance, indemnification, environmental obligations, taxes, casualty, and termination.

Decommissioning is particularly important. Property owners should understand who will be responsible for removing the battery equipment and restoring the property at the end of the project. Developers, meanwhile, must determine whether the decommissioning obligation could affect project financing or long-term economics.

Site-control documents should also be reviewed against interconnection requirements. A lease that works from a conventional real estate perspective may not necessarily satisfy the requirements applicable to an interconnection application or financing.

5. Fire Safety and Engineering Requirements

Battery storage projects raise safety concerns that do not arise in many conventional developments. Thermal runaway, fire propagation, and emergency response require careful consideration during both design and permitting. Additionally, technical standards, such as NFPA 855 and UL 9540 and UL 9540A testing, can become important components of project design and regulatory review.

New York’s current framework incorporates detailed energy-storage safety requirements and provides for peer review of certain larger BESS installations. NYSERDA emphasizes that local authorities retain permitting authority while providing technical resources to help them evaluate projects. Meanwhile, New Jersey’s current BPU materials similarly require qualifying transmission-scale projects to demonstrate compliance with applicable safety standards and testing requirements, as well as professional engineer certification and a detailed safety and code-compliance plan. These requirements make early coordination among developers, engineers, fire officials, building officials, and counsel particularly important.

6. Environmental and Site Conditions

Environmental due diligence is another critical component of site selection. Developers should evaluate wetlands, floodplains, stormwater, soil conditions, threatened or endangered species, historic resources, and prior industrial uses. Brownfield properties can be attractive because of their location and existing infrastructure, but they may also present contamination and remediation issues.

The allocation of environmental risk should be addressed in both the acquisition documents and the project agreements. A developer should understand existing conditions before assuming responsibility for the property. In contrast, a property owner should carefully consider the environmental obligations being imposed on it or shifted to the developer.

7. Project Contracts and Performance Risk

The legal structure of a BESS project extends well beyond the lease. Depending on the project, developers may enter into equipment supply agreements, engineering, procurement, and construction contracts, operations and maintenance agreements, tolling arrangements, and energy market agreements.

Those contracts should address issues specific to battery technology, including degradation, availability, capacity, efficiency, augmentation, warranties, software and controls, equipment replacement and performance guarantees.

Battery degradation is particularly important. A system’s performance can change over time, and contractual performance standards should account for that reality. Developers should also carefully allocate responsibility for delays caused by equipment shortages, interconnection work, permitting, and changes in applicable law.

8. Taxes, Insurance, and Financing

Tax treatment can materially affect project economics, particularly when the facility is located on leased property. Accordingly, the parties should determine how battery equipment and related improvements are likely to be treated for property-tax purposes and who will bear those obligations. Insurance also requires careful attention because conventional commercial policies may not adequately address the risks associated with large-scale battery installations.

Financing introduces another layer of requirements. Lenders and investors may require assignment rights, step-in rights, security interests, lender protections, and adequate decommissioning arrangements. Those requirements should be incorporated into the real estate and project agreements from the outset rather than negotiated after the project has already been structured.

9. Community and Municipal Relations

Finally, developers should not underestimate the importance of community relations. Battery projects can generate concerns about fire safety, noise, appearance, environmental impacts, and property values. Even when a project complies with applicable requirements, opposition can result in contested hearings, additional engineering requirements, and delays.

Early engagement with municipal officials, emergency responders, and neighboring property owners can help identify concerns before they become significant obstacles. Developers should be prepared to explain both the technology and the safety measures supporting the proposed facility.

Successful BESS Projects Require Early Legal Due Diligence

The legal issues surrounding utility-scale battery storage are interconnected. Zoning affects the site. The site affects interconnection. Interconnection affects project economics. The project economics affect the lease, financing, and contractual structure. And the technology itself affects permitting, fire safety, insurance, and community relations.

For that reason, legal due diligence should begin before a developer commits substantial capital to a site. A thorough initial review should address at least five questions:

• Can the property legally accommodate the proposed facility?
• Can the project obtain a viable interconnection?
• What state and local permits will be required?
• Who will bear construction, environmental, operational, and decommissioning risks?
• Are the real estate, engineering, financing, and project agreements structured consistently with one another?

The answers will vary depending on the project’s location, size, technology, and intended use. But identifying the issues early can help developers avoid costly surprises, give property owners a clearer understanding of their obligations, and allow engineers to design the facility with regulatory requirements in mind.

As battery storage deployment accelerates across New Jersey, New York and Pennsylvania, the legal framework governing these projects will continue to evolve. Developers, property owners, engineers, and other project participants should therefore treat regulatory and legal due diligence as an integral part of project development—not simply as a final step before construction.

How Scarinci Hollenbeck Can Help

At Scarinci Hollenbeck, LLC, our attorneys assist developers, property owners, engineers, and other stakeholders with the legal and regulatory issues that arise throughout the development of utility-scale battery storage projects. Leveraging the capabilities of a full-service law firm, we advise clients on site acquisition and due diligence, zoning and land-use approvals, ground leases and other site-control arrangements, interconnection and utility matters, environmental requirements, construction and project agreements, insurance and risk allocation, financing and tax considerations, and issues that arise during municipal and community review.

Because these issues are closely connected, we take a coordinated approach to help identify potential obstacles early, structure project documents appropriately, and address legal and regulatory requirements before they become costly problems. If you are evaluating a utility-scale battery storage project in New Jersey, New York, or Pennsylvania, contact our attorneys, and we can help assess the legal issues affecting the project and develop a strategy for moving it forward.