The appeal of leasing battery storage or buying resilience through an Energy-as-a-Service agreement is straightforward. Instead of funding the equipment upfront, a company signs a long-term agreement with a provider that owns, operates and maintains the system. The U.S. Department of Energy describes this kind of arrangement as a pay-for-performance structure in which a third party assumes performance risk and typically manages the project and maintenance, and the EPA similarly identifies leases and power purchase agreements among the structures that let a third party construct, own, operate and maintain an energy system. For finance, that can change how a project competes for capital. For procurement, it can replace equipment purchases, maintenance agreements and portions of operational responsibility with a contracted service. But batteries purchased specifically for resilience create a harder question: what happens when the company does not own the battery, but still depends on it?
Ownership Risk and Performance Risk Are Not the Same Thing
A third-party owner may carry the cost of replacing defective equipment, but the customer's business can still carry the consequences if the system is unavailable during an outage. That difference is increasingly important as batteries move beyond demand management and renewable-energy integration into resilience applications. A system installed to reduce peak charges can underperform and create a financial shortfall; a system built into a facility's backup-power strategy can underperform at precisely the moment the facility expected another source of electricity. The contract therefore has to answer more than who repairs the equipment. It has to establish what level of service the provider actually owes.
Current storage contracts increasingly address this through measurable requirements for capacity, availability and round-trip efficiency, and long-term service agreements can backstop those requirements with warranties, performance guarantees and, in some cases, obligations to augment the battery as it degrades. Those provisions turn an engineering expectation into a contractual obligation. They do not necessarily make the customer whole.
A Performance Guarantee Is Only as Valuable as Its Remedy
Performance guarantees are common in storage contracts, and public filings from storage suppliers show agreements containing liquidated damages when systems fail to meet guaranteed thresholds, either at completion or during the service period. Duke Energy's 2026 South Carolina Battery Resource Procurement, filed with the state Public Service Commission this year, illustrates how specific these terms can get: it requires a Guaranteed Storage Energy Capacity Rating tied to the technology's degradation profile, with damages owed when a seller fails to deliver the contracted minimum.
For a commercial buyer, the important number is not simply the guaranteed percentage itself. It is the relationship between the contractual remedy and the buyer's actual exposure. A service credit or liquidated-damages payment can compensate a company for contracted underperformance, but it may bear little relationship to lost production, spoiled inventory, interrupted computing, missed deliveries or another consequence of losing power. That creates an important procurement distinction: a guarantee that pays when the battery fails is not necessarily a guarantee against the business consequences of failure, and companies buying resilience as a service need to understand that difference before the agreement is signed.
Battery Degradation Creates a Second Risk Transfer
The problem becomes more complicated over a 10-, 15- or 20-year contract, because battery capacity deteriorates with use and time. Morgan Lewis's 2026 guidance on utility-scale storage procurement notes that augmentation, adding capacity back to a project to restore its original performance as cells degrade, has become a standard part of how contracts allocate long-term risk, and recommends defining obligations around outputs such as capacity, availability and response characteristics rather than around specific equipment that will eventually need replacing.
That matters particularly in a third-party-owned model. If the customer is buying a promised level of resilience rather than a battery, maintaining enough capacity to provide that service should be addressed explicitly in the agreement. Otherwise, a company can avoid the capital expenditure associated with battery ownership while retaining exposure to a system whose performance changes over time. The question for procurement becomes less about who owns the cells and more about who pays to maintain the contracted capability, which can mean specifying capacity thresholds, testing protocols, augmentation requirements and the party responsible for replacement costs years before those costs arise.
The Counterparty Becomes Part of the Resilience System
Even a well-written performance guarantee has another dependency: the company standing behind it. Morgan Lewis has identified counterparty creditworthiness as a key consideration for lenders financing storage projects, noting that guarantees from equipment and service providers with weak financial positions may provide limited real protection, which is why lenders often seek letters of credit or guarantees from stronger parent companies before relying on a warranty at face value. The same principle applies to companies outsourcing battery ownership: a 15-year resilience agreement effectively asks the customer to rely on the provider's ability to operate, maintain, augment and potentially replace the system for much of the asset's useful life.
That turns vendor diligence into part of resilience planning. A company may have avoided owning a depreciating battery asset, but it has acquired long-duration exposure to the provider's balance sheet, its equipment suppliers, its service organization and potentially its financing structure. The stronger the operational dependence on the battery, the more consequential that exposure becomes, particularly for organizations already weighing how much of their broader backup-power strategy should sit on someone else's balance sheet in the first place.
Finance and Procurement Need to Underwrite the Same Promise
The attraction of third-party ownership is that it moves several burdens away from the customer: the provider can finance the equipment, manage maintenance and assume portions of technology and performance risk. But the transaction should not be evaluated solely by comparing a service payment against the cost of purchasing a battery outright. Procurement needs to know what performance has actually been purchased. Finance needs to know what happens financially when that performance is not delivered, a version of the same due-diligence gap already showing up in how companies underwrite contracted versus reliable supply in other resource-dependent contracts.
That means examining availability thresholds, degradation assumptions, augmentation responsibilities, testing methods, cure periods, damages, liability caps, insurance requirements, termination rights and the financial strength of the entities backing those commitments. The fundamental question is simple: if the battery is unavailable during the event it was purchased to protect against, who absorbs the loss? If the answer is still the customer, the company may have transferred ownership of the battery without transferring the risk it was paying the battery to solve.
