Warranty and degradation terms have become the decisive commercial issue in battery storage projects in emerging markets, with lenders and offtakers scrutinising who stands behind capacity guarantees, how degradation is measured and how augmentation is funded over the contract term.

As tenders scale and contracts lengthen, the question is no longer whether batteries work but who bears the risk if they deliver less than promised in year eight or twelve.

What is being negotiated

Capacity retention guarantees and test procedures; cycle and throughput limits; augmentation obligations and reserves; the creditworthiness of the warranty provider; and remedies including liquidated damages. Buyers increasingly ask for third-party test data and for warranties backed by balance sheets, not just cell makers.

What it means for suppliers

System integrators and cell makers with strong balance sheets and transparent test data win; smaller vendors need insurance-backed warranties or partnerships. Local service capability underpins every warranty. Our BESS tender guide and storage section have more.

Background: why the warranty is a financing document

A grid-scale battery is financed on the assumption that it will deliver a defined amount of energy and power for 10 to 20 years. Cells degrade with every cycle and with time and temperature, so the developer’s revenue model rests on the manufacturer’s promises about capacity retention, round-trip efficiency and availability — and lenders read those promises line by line. In emerging markets, where many battery projects are the first of their kind for the utility and the local banks, warranty and degradation terms have become the centre of negotiation. Guidance from the World Bank’s ESMAP storage programme, the IEA and standards such as IEC 62933 and IEC 62619 shape what lenders expect.

What is being negotiated, in more detail

• Capacity guarantees: the retained energy at each year of operation, tied to a defined cycling and temperature profile.
• Augmentation: who pays to add cells over time to keep capacity at contract level, and how it is scheduled.
• Availability and performance guarantees: liquidated damages for downtime or under-performance, particularly where projects earn capacity or ancillary-service payments.
• Warranty backing: parent-company guarantees, escrow or insurance where the supplier or integrator has a short track record.
• Operating limits: cycling caps, depth-of-discharge and thermal envelopes that, if breached, void coverage — which matters as safety codes tighten.

What it means for suppliers to utilities and OEMs

Cell makers, integrators and PCS and EMS suppliers that can back their degradation curves with independent test data and field performance win bankability. Utilities running BESS tenders increasingly define minimum warranty terms in the RFP, and long-term service agreements with local support are becoming a scored criterion. Suppliers should expect due-diligence questions about cell chemistry sourcing, thermal management and monitoring data access. Our storage page tracks tender requirements as they evolve.

Quick answers

What is a battery degradation guarantee?

A manufacturer’s commitment that the system will retain a defined percentage of its energy capacity at each point in its life, subject to agreed operating conditions.

Why do lenders focus on battery warranties?

Because project revenue depends on capacity and availability over 10 to 20 years, and the warranty is the main protection against under-performance.

Sources and further reading

• ESMAP — Energy storage — World Bank guidance for storage procurement
• IEA — Batteries and Secure Energy Transitions — market outlook
• IEC 62933 and IEC 62619 — storage system and cell safety standards
• EnergiTech Media — What is a BESS tender? — procurement explainer

This article was researched and written by the EnergiTech Media editorial team and last reviewed in August 2026. We update country and sector guides as tenders, plans and regulations change. Spotted something out of date? Email support@energitechmedia.com.