⚡ 40 MILLBURY RD

MEMORANDUM

TO: Development Committee, Sunland America Corp.
FROM: Senior BESS Site Evaluation Analyst
DATE: October 26, 2023
SUBJECT: Comprehensive Site Diligence Analysis for 40 Millbury Rd, Oxford, MA (APN: 16_D03)

This report provides a comprehensive due diligence analysis for the potential acquisition and development of a Battery Energy Storage System (BESS) project at the subject property in Oxford, Worcester County, Massachusetts. The analysis covers key site attributes, constraints, and opportunities to inform a go/no-go decision.

1. Site Access & Topography

Road Access & Equipment Delivery: The property is located at 40 Millbury Road. Initial desktop review indicates Millbury Road is a two-lane, local road. The quality and load-bearing capacity of this road are unknown and Requires Verification through a site visit and consultation with the Oxford Department of Public Works. The primary concern is the parcel's direct frontage and access point. Satellite imagery suggests the parcel is heavily wooded and may be effectively landlocked or possess only a very narrow, undeveloped access point from the main road. This is a critical risk.

Terrain & Buildability: Worcester County is characterized by rolling hills and forested terrain. The subject property appears to be undeveloped, heavily wooded, and may feature moderate elevation changes. A formal topographic survey is required to confirm site gradients. The presence of significant slopes or rock outcroppings could substantially increase civil engineering and construction costs.

Heavy Equipment Feasibility: The ability to deliver and stage heavy equipment, such as a 100-ton crane, multi-ton transformers, and prefabricated battery containers, is highly questionable. The potential lack of a clear, wide, and stable access path from Millbury Road to a suitable project pad location is a potential fatal flaw. The feasibility of constructing an adequate access road must be assessed.

Easement Concerns: If direct access from Millbury Road is not feasible, an access easement would need to be negotiated and acquired from an adjacent landowner. This introduces significant cost, timeline, and legal risks. The current access status is a primary unknown that must be resolved immediately.

2. Environmental Constraints

FEMA Flood Zone: The FEMA flood zone designation is currently unknown. This is a critical data gap. Any designation other than Zone X (minimal flood risk) would likely require elevating all equipment above the Base Flood Elevation (BFE), adding significant cost and complexity. Development within a designated floodway is typically prohibited.

Wetlands: The presence of wetlands is unknown but considered highly likely given the undeveloped, forested nature of the site in this region of Massachusetts. A formal wetlands delineation is mandatory. The Massachusetts Wetlands Protection Act and local Oxford Conservation Commission bylaws will impose significant setbacks (typically 100 feet or more) from any delineated wetland resource areas, which could severely restrict the buildable envelope of the 12.58-acre parcel.

Critical Habitat / Endangered Species: The initial screen shows no designated critical habitat on the parcel. However, a state-level review with the Massachusetts Natural Heritage & Endangered Species Program (NHESP) is required to confirm the absence of state-listed rare species or priority habitats that could trigger further studies or mitigation requirements.

Brownfield/Superfund Status: The site is not located near a known brownfield or superfund site. This eliminates potential contamination risks but also means the project is ineligible for the 10% IRA brownfield bonus tax credit.

Pipeline Proximity: No significant gas transmission pipelines are located within a 3-mile radius, mitigating risks associated with pipeline-related setbacks or safety protocols.

3. Grid Infrastructure & Interconnection

Nearest Substation & Transmission: The nearest major substation is North Oxford, located 1.5 miles from the site, with a maximum voltage of 115 kV. A 345 kV transmission line is also present 0.9 miles away. These are both transmission-level assets.

Recommended Interconnection Voltage: For a distribution-scale project (≤5MW), interconnecting at transmission voltage (115 kV or 345 kV) is economically infeasible. The cost of a new high-voltage switchyard and line extension would be several million dollars, far exceeding a viable project budget. The primary objective must be to identify a suitable 3-phase distribution feeder (e.g., 13.8 kV) adjacent to or crossing the property. The presence and capacity of such a feeder is the single most important unknown for grid access.

Interconnecting Utility & Process: The interconnecting utility is Requires Verification but is likely National Grid, the incumbent utility for this area. National Grid's interconnection process in Massachusetts is managed under ISO-New England (ISO-NE) rules. Queue times for studies can be lengthy (18-24+ months), and the queue is currently congested with solar and storage applications.

Estimated Costs & Timeline:

• Distribution Interconnection (Ideal Scenario): If a viable 3-phase feeder with available capacity is at the property boundary, costs could be in the range of $500k - $1.5M for protection upgrades and a line tap.
• Transmission Interconnection (Unlikely Scenario): Costs would likely exceed $5M - $10M, making the project non-viable.

Feeder Configuration: The configuration of any nearby distribution feeders is unknown. We must identify the feeder's voltage, phase, and current hosting capacity through a formal pre-application report with the utility.

4. Regulatory & Zoning Analysis

Authority Having Jurisdiction (AHJ): The Town of Oxford, Massachusetts, is the primary AHJ for zoning and permitting.

Zoning Compatibility: The parcel is zoned R-1 (Residential) and designated as "Private Preserve, Open Space-Vacant Land." This is a significant barrier. BESS is an industrial/utility use and is fundamentally incompatible with a residential or open space designation. It is highly unlikely that BESS is a permitted use "by-right" in this zone.

Permitting Pathway: The most likely pathway would be to seek a Use Variance from the Oxford Zoning Board of Appeals (ZBA). A Use Variance is extremely difficult to obtain in Massachusetts, requiring the applicant to prove a unique hardship related to the land itself that prevents any reasonable use under the current zoning. A Special Permit or Special Exception might be an alternative if the town's bylaws have specific provisions for public utilities, but this is unlikely in a residential zone. This presents a major entitlement risk with a low probability of success.

Setback Requirements: Specific BESS setbacks are unknown, but standard R-1 setbacks for structures would apply at a minimum. Additional, more stringent setbacks (e.g., 200+ feet from property lines) are often imposed on utility-scale equipment through the special permit process due to noise and safety concerns.

Moratorium Risk: The risk of a municipal moratorium on BESS development is a growing concern in Massachusetts. We must verify if the Town of Oxford has discussed or enacted any such restrictions.

5. IRA/ITC Incentive Analysis

The project's eligibility for key Investment Tax Credit (ITC) adders under the Inflation Reduction Act (IRA) is poor.

• Opportunity Zone: No. The site is not in a designated Opportunity Zone. (0% adder)
• Energy Community: No. The site does not qualify based on the coal closure or statistical area unemployment criteria. (0% adder)
• Low-Income Community: No. The site does not appear to qualify under current guidance. (0% adder)

Potential Cumulative ITC: The project would only be eligible for the base 30% ITC (assuming prevailing wage and apprenticeship requirements are met). The lack of any location-based adders (10-20% potential) places this site at a significant economic disadvantage compared to projects in more favorable locations.

6. BESS Score & Rationale

Overall BESS Suitability Score: 18 / 100

• Location (5/20): The site is in a high-value ISO-NE market, but its specific location presents major access challenges. Proximity to major infrastructure is a mixed bag (transmission is close but not useful).
• Grid Access (3/25): The only known interconnection points (115kV/345kV) are unsuitable for a distribution-scale project. The viability of this site is entirely dependent on the unconfirmed presence of a suitable distribution feeder. The score is critically low due to this uncertainty.
• Environmental (5/15): The high likelihood of wetlands and the unknown flood risk present significant potential constraints that could render the site undevelopable. The lack of other major constraints (brownfield, critical habitat) provides a few points.
• Regulatory (1/15): The R-1 zoning is a fundamental flaw. Securing a Use Variance is a low-probability, high-cost, and high-risk endeavor. This is the single greatest non-grid-related risk.
• Incentives (2/15): The site is ineligible for any of the key IRA location-based adders, limiting its potential ITC to the 30% base rate and weakening project economics.
• Buildability (2/10): Severe concerns regarding physical site access for construction, coupled with potentially challenging topography and likely environmental constraints, result in a very low buildability score.

7. Key Risks & Mitigants

1. Risk: Fatal Zoning Flaw. The R-1 zoning makes BESS an incompatible use, requiring a difficult-to-obtain Use Variance.
   • Mitigant: Schedule a pre-application meeting with the Oxford Planning Department to gauge their receptiveness. Review zoning bylaws for any clauses related to public utility exemptions. If feedback is negative, this is a go/no-go decision point.
2. Risk: Lack of Viable Interconnection. The known grid infrastructure is transmission-level and economically infeasible for a ≤5MW project.
   • Mitigant: Immediately commission a desktop utility analysis or submit a pre-application report to National Grid to identify the location, voltage, and available capacity of any 3-phase distribution feeders on or near the parcel.
3. Risk: No Physical