Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey

For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success.

Key Takeaways

The core questions for BESS site selection in New York and New Jersey:

• Confirm zoning before acquiring a BESS site. Determine whether the proposed use is permitted and what approvals may be required.
• Evaluate the usable footprint, not just the acreage. Setbacks, fire-safety requirements, access, and equipment spacing can significantly limit development potential.
• Account for noise, especially in populated areas. BESS inverters and cooling equipment run continuously and can be louder than expected; factor local noise limits and mitigation options into site selection.
• Address interconnection early. Utility upgrade costs and timelines can materially affect project feasibility and value.
• Understand state and local requirements. New York and New Jersey have different regulatory frameworks, and local approvals remain critical in both states.
• Build permitting risk into the transaction. Purchase agreements and leases should include appropriate due-diligence periods, contingencies, extensions, and termination rights.
• Property owners should protect themselves, too. A long-term BESS lease should address what happens if approvals are not obtained, how long the property can remain tied up, and who is responsible for permitting, operation, and decommissioning.

This article is Part 2 of our Battery Storage Legal Roadmap Series. If you missed it, start with Part 1: Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders. See all articles in the series here.

Is BESS Actually Permitted on the Property?

The first question is not simply whether the property is zoned for industrial or commercial use. It is whether the municipality considers a BESS facility to be a permitted use in that zoning district.

That distinction matters because many local zoning ordinances were written before utility-scale battery storage became a common land use. A municipality may have no specific BESS provision, may treat storage as a utility use rather than a traditional industrial use, or may require a conditional or special-use approval.

The answer can determine the entire entitlement strategy. If BESS is expressly permitted, the developer may primarily be dealing with site-plan and technical approvals. If it is a conditional use, the municipality may have greater discretion to impose conditions. If the use is prohibited, the developer may need a variance or zoning amendment, creating substantially greater entitlement risk.

New York has recognized this issue directly. NYSERDA’s Battery Energy Storage System Model Law helps municipalities incorporate BESS into existing zoning and land-use regulations, while allowing them to modify the model to reflect local conditions. NYSERDA’s current guidance also emphasizes that local governments have an important role in reviewing and permitting BESS projects.

New Jersey presents the same fundamental local-land-use question, even as the state promotes additional energy storage. Accordingly, a developer should not assume that a favorable state policy translates into an automatic right to build a BESS facility on a particular parcel.

Entitlement Risk Should Be Evaluated Before the Property Is Acquired

For a conventional commercial project, a developer may be willing to acquire property and work through the entitlement process afterward. BESS projects can make that approach considerably riskier.

The facility’s physical requirements can mean that a project that technically qualifies as a permitted use still may not fit comfortably on the property. Setbacks, equipment spacing, screening, access roads, fencing, stormwater infrastructure, noise buffers, and emergency-vehicle access can all consume valuable acreage. A developer may therefore discover that a 20-acre parcel does not provide 20 acres of usable BESS development area.

The permitting path matters as well. A project requiring a variance or substantial discretionary approval carries a different level of risk from one that can proceed through relatively straightforward site-plan review. That risk should be quantified before the developer becomes financially committed to the property.

Early discussions with municipal planning and zoning officials, review of the applicable ordinance, preliminary site plans, and consultation with fire-safety and engineering professionals can reveal problems that are difficult or expensive to solve later.

New York: A More Detailed State Safety Framework, But Local Review Remains Important

New York has continued to develop a comprehensive framework for energy-storage safety and siting. In July 2025, the State Fire Prevention and Building Code Council adopted updated energy-storage safety codes. The 2025 Fire Code of New York State contains specific provisions governing electrical energy storage systems. NYSERDA’s current materials also describe a peer-review process intended to help local authorities evaluate technical BESS permitting materials.

The significance for developers goes beyond fire-code compliance. Technical requirements can affect the project’s physical design and, consequently, the amount of land required.

NYSERDA’s current peer-review materials identify documents such as Hazard Mitigation Analyses, Failure Modes and Effects Analyses, and UL 9540A testing as important components of the permitting review. Under the 2025 Fire Code, peer review is required for projects above applicable capacity thresholds.

At the same time, New York’s state framework does not eliminate local involvement. NYSERDA’s Guidebook is specifically designed to help local governments manage BESS development, including permitting, inspections, zoning, and land-use issues. For developers, that means considering state compliance and local entitlement together rather than as separate stages of development.

New Jersey: State Incentives Do Not Eliminate Site-Specific Issues

New Jersey is also encouraging significant growth in energy storage. The Garden State Energy Storage Program provides incentives for grid-supply and distributed storage, and the state continues to modify the program to bring additional transmission-scale projects into development. In March 2026, legislation expanded the pool of projects eligible for the program’s second transmission-scale segment. The legislation also extended the deadline for New Jersey Board of Public Utilities (BPU) approval of certain incentive awards.

New Jersey has also started testing a permitting dashboard for major projects. The pilot specifically includes battery-storage projects capable of storing at least one megawatt of new power and is intended to give applicants greater visibility into permitting across multiple state agencies.

These initiatives may help facilitate development, but they do not eliminate the need for project-specific due diligence. A developer still must determine how the proposed BESS use fits within the municipality’s zoning framework and what approvals, technical reviews, and environmental permits the particular site will require. The practical point is that state support for storage and local land-use approval are separate considerations. Both need to be addressed before a developer makes a substantial investment in the property.

Fire Safety Can Become a Land-Use Issue

Fire safety is sometimes treated as a construction issue that can be addressed after selecting a site; for BESS projects, that can be a mistake. Applicable safety requirements may affect the location and configuration of battery containers, inverters, transformers, access roads, and other equipment. Emergency-response considerations can also affect site layout. As a result, fire-safety requirements can influence whether a particular parcel can accommodate the desired storage capacity.

This is another reason preliminary engineering should occur before the real estate transaction is finalized. A developer should understand the likely site configuration, not merely the property’s gross acreage, before determining what the land is worth to the project.

Noise Can Also Shape BESS Site Selection

Noise is another factor that developers sometimes underestimate during BESS site selection. BESS facilities are not silent: inverters, transformers, and especially the HVAC and thermal-management systems that keep battery cells within their operating temperature range run continuously, and the resulting sound levels are often higher than developers and neighboring property owners expect. Unlike a conventional commercial use, a BESS facility generates a steady, round-the-clock noise profile rather than noise limited to business hours.

Local noise ordinances vary widely and are typically measured in decibels at the property line, with lower thresholds common near residential zones. A site that is otherwise attractive from a zoning and interconnection standpoint may still require a dedicated noise study. In denser or mixed-use areas, proximity to residences can limit where equipment can be placed or how much capacity a parcel can support.

Developers have several tools available to mitigate noise impacts, including acoustic enclosures around inverters and cooling equipment, sound walls or berms, equipment orientation and placement away from property lines, additional setback distances, and landscaping or screening designed with sound attenuation in mind. Because these measures can affect the site plan and the usable footprint, noise mitigation is best evaluated alongside fire safety and other design requirements, before the site is acquired, rather than added after community concerns or permitting objections arise.

Interconnection Is a Real Estate Issue, Too

A BESS project cannot be evaluated solely on its land-use entitlement. The project also needs a viable path to the electric grid. In New York, the applicable interconnection process depends on factors including project size and location, and utility and NYISO processes may come into play. NYSERDA advises developers to determine the applicable interconnection requirements early in development. New Jersey projects likewise may need to navigate utility and PJM interconnection requirements.

This creates another reason not to treat the real estate acquisition as an isolated transaction. A site with favorable zoning may still be a poor investment if the interconnection process drives substantial upgrade costs, extends the schedule, or creates other constraints. Ideally, the developer’s real estate, engineering, and interconnection teams should evaluate the site together before the developer becomes obligated to purchase or lease it.

New York vs. New Jersey: Key BESS Site Selection Considerations

Although New York and New Jersey have different regulatory frameworks, the central due diligence question for developers is much the same: what approvals will be required, how much of the property can actually be developed, and who bears the risk if those approvals cannot be obtained?

Issue	New York	New Jersey
Zoning	Local zoning determines whether BESS is permitted or requires additional approvals.	Local zoning varies by municipality and should be reviewed before acquiring a site.
Safety	2025 state fire-code provisions establish specific requirements for energy-storage systems.	Fire and life-safety requirements must be addressed through applicable state and local approvals.
Site Design	Setbacks, access and equipment-spacing requirements can limit the usable footprint.	Similar requirements can affect the amount of storage capacity a site can accommodate.
Noise	Local noise ordinances and proximity to residential zones can limit equipment placement and site capacity.	The same siting and mitigation issues apply; noise studies may be warranted in denser or mixed-use areas.
Environmental Review	SEQR/SEQRA and other environmental requirements may apply.	NJDEP and other state or local environmental requirements may apply.
Interconnection	Utility and, where applicable, NYISO requirements should be evaluated early.	Utility and PJM interconnection requirements can affect cost and timing.
Incentives	State energy-storage programs support development but do not replace required approvals.	The Garden State Energy Storage Program provides incentives but does not create a land-use entitlement.
Transaction Risk	Purchase agreements and leases should address permitting and interconnection contingencies.	The same protections are important where approvals remain uncertain.

Protecting the Developer in the Purchase Agreement or Lease

Because BESS entitlement and interconnection risks can take months or years to resolve, the real estate agreement should account for those uncertainties. A developer acquiring a site may want sufficient time to complete zoning, environmental, engineering, and interconnection due diligence before closing. A long-term ground lease may require similar protections before the tenant becomes obligated to commence construction.

Depending on the transaction, those protections may include:

• A due-diligence period long enough to complete meaningful technical and regulatory investigations
• Access rights for surveys, environmental testing, geotechnical work and preliminary engineering
• Conditions to closing tied to zoning or other required approvals
• Termination rights if required approvals cannot be obtained
• Extensions tied to permitting or interconnection milestones
• Rights to pursue zoning amendments, variances and other governmental approvals
• Provisions addressing changes in law or applicable regulations
• Exclusivity while the developer pursues approvals
• Allocation of costs associated with permitting, studies and site improvements

The appropriate protections will depend on whether the transaction is a purchase, option, or ground lease and on how much entitlement risk the parties are prepared to accept.

For property owners, the analysis runs in the opposite direction. A long-term BESS lease should address what happens if the developer fails to obtain approvals, how long the property can remain tied up during the entitlement process, and who bears responsibility for permitting, construction, operation, and eventual decommissioning.

The Site Is Only as Valuable as the Project It Can Support

The rapid expansion of BESS development in New York and New Jersey creates opportunities for developers and property owners, but it also creates a more complicated BESS site selection process. The right parcel is not necessarily the one with the most acreage or the closest proximity to a substation. It is the parcel where the zoning, physical characteristics, safety requirements, environmental constraints, interconnection prospects, and transaction terms work together to support a viable project.

For developers, early legal and technical due diligence can identify entitlement problems before significant capital is committed and can provide leverage when negotiating purchase agreements and ground leases. For property owners, understanding the regulatory and operational requirements of a proposed BESS facility can help ensure that a transaction appropriately allocates the risks associated with a long-term energy-storage project.

Frequently Asked Questions

Is a BESS facility a permitted use on commercial or industrial land?

Not necessarily. The question is whether the municipality considers a BESS facility a permitted use in that zoning district. Many local ordinances predate utility-scale battery storage, so a municipality may have no specific BESS provision, may treat storage as a utility use, or may require conditional or special-use approval. If the use is prohibited, the developer may need a variance or zoning amendment.

How much of a parcel can actually be developed for a BESS project?

Often less than the gross acreage. Setbacks, equipment spacing, screening, access roads, fencing, stormwater infrastructure, noise buffers, and emergency-vehicle access can all consume valuable acreage, so a 20-acre parcel may not provide 20 acres of usable BESS development area. Preliminary engineering during BESS site selection should establish the likely site configuration before valuing the land.

Do New Jersey’s energy storage incentives mean a BESS project can be built anywhere?

No. The Garden State Energy Storage Program provides incentives, but it does not create a land-use entitlement. A developer still must determine how the proposed BESS use fits within the municipality’s zoning framework and what approvals, technical reviews, and environmental permits the particular site will require.

What should a BESS purchase agreement or ground lease include?

Protections that account for entitlement and interconnection risk: a due-diligence period long enough for technical and regulatory investigations, access rights for surveys and testing, conditions to closing tied to required approvals, termination rights if approvals cannot be obtained, extensions tied to permitting or interconnection milestones, and allocation of permitting and site-improvement costs.

How Scarinci Hollenbeck Can Help

As New York and New Jersey continue to encourage energy storage while refining their safety and permitting frameworks, developers that approach BESS site selection as a coordinated real estate, regulatory, and engineering exercise will be better positioned to identify problems before they become expensive.

Scarinci Hollenbeck’s Commercial Real Estate Group assists 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, our attorneys 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. Contact us today to discuss your BESS project, or reach out to Nicholas R. Wall directly.