2026 West Street Agreement — Regional Comparison and Underappreciated Risks
Comparable data for BESS PILOT agreements in Massachusetts is limited because utility-scale battery storage is still new to the region. ISO New England's first major standalone BESS facility only recently came online. Two reference points are now available, and the state's 5,000 MW procurement mandate (signed into law November 2024) means many more will follow.
Medway's 2026 rate ($10,463/MW/year) is within range of Carver's ($10,667/MW/year) but marginally lower — roughly $200/MW/year less. Over 300 MW and 20 years, that gap amounts to about $1.2 million in aggregate.
Both deals are flat, fixed-payment contracts with no inflation adjustment over 20 years. This is the most consequential feature they share — and the most consequential risk.
Industry sources (NREL, Ember, and market analysts) place utility-scale 4-hour LFP battery storage installation costs in the range of $800K–$1.2M per MW as of 2025–2026. For a 300 MW / 4-hour system:
These figures do not include the 2,755-foot 345kV overhead transmission line, substation, or land acquisition, which could add $30–80 million. A reasonable all-in capital cost estimate is $270–440 million.
In Year 1, before any depreciation, a $300 million assessed value at a hypothetical $18 per $1,000 tax rate would yield roughly $5.4 million — substantially more than the $3.14 million PILOT. The agreement explicitly states it is intended to reflect "full and fair cash value," yet the payment schedule implies an effective assessed value of approximately $170 million.
The argument for a lower initial payment is that it does not decline over time. Under ad valorem taxation, the assessed value would fall as equipment depreciates — potentially to near zero, since battery systems have a functional life of 10–20 years. The PILOT locks in a flat $3.14 million through Year 20.
This is a genuine benefit. But it is only a good deal if the flat rate fairly splits the difference between high early-year value and low late-year value. Whether $3.14 million achieves that balance depends on assumptions about depreciation schedules, replacement investment, and discount rates that neither the PILOT agreement nor public discussions appear to address.
At 3% annual inflation, the real value of Year 20 payments drops to 57% of Year 1. The cumulative real value is roughly $48.1 million, not $62.8 million. At 4% inflation, it drops to $44.4 million.
| Year | Nominal Payment | Real Value (2026 $) | Lost Purchasing Power |
|---|---|---|---|
| 1 | $3,138,982 | $3,138,982 | — |
| 5 | $3,138,982 | $2,789,000 | −$350,000 |
| 10 | $3,138,982 | $2,406,000 | −$733,000 |
| 15 | $3,138,982 | $2,075,000 | −$1,064,000 |
| 20 | $3,138,982 | $1,790,000 | −$1,349,000 |
A 2% annual escalator would bring the 20-year nominal total to approximately $76.3 million. A CPI-linked adjustment would track actual inflation. Either mechanism is standard in long-term commercial leases. The absence of any escalator is a choice that favors the developer.
Manufacturers typically guarantee no more than 2% annual capacity fade. After 15 years the system may retain only 70% capacity; after 20 years, roughly 65%. Replacement is likely during the PILOT term — potentially $50–150 million in reinvestment — but the flat PILOT captures none of it.
The capacity adjustment clause only triggers if the project expands beyond 305 MW. Replacing degraded batteries with newer modules that maintain 300 MW does not trigger a payment increase. The developer benefits from improved technology; the town does not.
Massachusetts model bylaws recommend requiring a surety bond at 125% of estimated removal cost, funded before construction begins. Decommissioning a 300 MW facility on 11 acres could cost $5–15 million.
If decommissioning requirements exist in the HCA or special permit, the PILOT's "independence" clause (Section 11) means default under the HCA does not affect the PILOT. If the developer defaults on decommissioning but continues PILOT payments, does the town have adequate leverage to compel site restoration?
Medway Energy Center, LLC is a single-purpose entity. Hecate Energy LLC (the parent) has a strong track record — over 12 GW developed since 2012, with Hecate Grid backed by InfraRed Capital Partners. But the PILOT does not bind the parent.
If the project becomes uneconomic, the LLC can be dissolved without exposing the parent company's assets. The town's remedy — reverting to ad valorem taxation — is meaningless if the LLC is insolvent or the facility is abandoned. The PILOT includes no parent company guarantee, letter of credit, or credit enhancement.
The prior Milford Street draft required DOR approval within 30 days. This agreement sets no deadline. If DOR delays or requests revisions, the agreement exists in a gray area — voted by Town Meeting, signed by the Select Board, but not legally effective.
During this period, the developer may proceed with permitting and construction that creates community expectations and political pressure. If DOR requires material changes, the town may be in a weakened negotiating position because the project is already underway.
Battery storage revenue is driven by energy arbitrage, capacity payments, and ancillary services in ISO-NE markets. These have significant upside potential as fossil fuel retirements accelerate and Massachusetts pursues 5,000 MW of storage by 2030.
If the project earns $80 million/year in market revenue, the town still receives $3.14 million. Some municipal agreements include modest revenue-sharing provisions (1–2% of gross revenue above a threshold). This PILOT has none.
Eleven acres of forest clearing and 47 acres of project footprint represent lost carbon sequestration, stormwater absorption, habitat, and aesthetic value. The PILOT includes no environmental mitigation component. Some HCAs include tree replacement ratios or conservation fund contributions — it is unclear whether Medway's HCA does.
The 2,755-foot overhead line is a permanent visual change, unlike the prior project's underground transmission. The PILOT includes no fund to compensate abutters for potential diminution in value. The line runs through Eversource parcels via easement — the town has no direct control over its maintenance or appearance.
Based on the risks identified above, a stronger PILOT for the town would include some or all of the following. None would make the project uneconomic. Many are standard in comparable public-private agreements.
2% annual increase or CPI-linked adjustment, applied to the base PILOT and CPA. Would bring 20-year nominal total to ~$76.3M vs. $62.8M.
If the developer invests more than a threshold (e.g., $20M) in battery replacement or capacity augmentation, the PILOT is recalculated based on updated investment.
Bond or letter of credit at 125% of estimated removal cost, funded before COD, updated every 5 years.
Hecate Energy LLC (or a creditworthy affiliate) guarantees the LLC's PILOT obligations.
60 or 90 days after Town Meeting vote, with automatic termination if not achieved.
A modest 1–2% of gross revenue above a defined threshold, payable annually.
One-time or annual contribution to a conservation or tree replacement fund, sized to acreage cleared.
Fund or abatement mechanism for abutting property owners who demonstrate diminution in value from the transmission line or facility.
Dollar figures for the Medway PILOTs are taken directly from the agreements. Construction cost estimates use NREL and industry ranges. Inflation calculations use standard compound discounting. The Carver per-MW figure is derived from publicly reported total payment and capacity.