⚡ LINDSAY RD

Date: October 26, 2023

To: Sunland America Corp. Development Team

From: Senior BESS Site Evaluation Analyst

Subject: Comprehensive Site Diligence Analysis – LINDSAY RD, Queen Anne's County, MD

This detailed analysis evaluates the property located at LINDSAY RD in Queen Anne's County, Maryland, for its suitability as a Battery Energy Storage System (BESS) site. Our assessment covers critical aspects ranging from physical access and environmental considerations to grid infrastructure, regulatory hurdles, and potential federal incentives, culminating in a suitability score and recommended next steps.

1. Site Access & Topography

The property, totaling 182.37 acres with 36.83 buildable acres, is located on LINDSAY RD in an Agricultural/Rural (AG) zoned area of Queen Anne's County. The quality of "Road Access" is currently Unknown. Given the rural agricultural context, Lindsay Road is likely a paved, two-lane county road, but its width, load-bearing capacity, and turning radii for oversized loads (e.g., BESS containers, transformers) require immediate verification. Heavy equipment delivery feasibility is a primary concern; a detailed route survey will be essential to confirm that large components can safely navigate to the site without significant road upgrades or temporary modifications.

The likely terrain characteristics, inferred from its agricultural land use, suggest relatively flat to gently rolling topography, which is highly favorable for BESS construction, minimizing extensive grading and earthwork costs. The "POI Access" (Point of Interconnection Access) is also Unknown, which is critical for determining the path for the gen-tie line to the nearest transmission line. Any necessary access easements across neighboring parcels for the gen-tie or site access must be identified and secured, as this can be a significant timeline and cost driver.

2. Environmental Constraints

Several environmental factors require immediate attention. The FEMA Flood Zone designation is Unknown, which is a critical gap. A BESS facility must be sited outside of 100-year floodplains (Zone AE/A) or designed with significant flood mitigation measures, which can add substantial cost and complexity. Similarly, the presence of Wetlands is Unknown. Maryland has stringent wetland regulations, and any identified wetlands would necessitate avoidance, extensive permitting (e.g., USACE Section 404, MDE), and potential mitigation, leading to significant delays and reduced buildable area.

Positively, the site shows "None" for Critical Habitat / Endangered Species risk, "None" for Brownfield/Superfund status within 2 miles, and "None" for Gas Wells Nearby within 2 miles. While the lack of Brownfield status means no IRA brownfield bonus, it also avoids remediation costs and liabilities. The site is also confirmed to be "No" within the Chesapeake Bay Critical Area, which significantly simplifies environmental permitting by avoiding the highly restrictive development regulations associated with that designation. Pipeline proximity is "None within ~3 miles," which is excellent for safety and setback considerations.

3. Grid Infrastructure & Interconnection

The most compelling aspect of this site is its proximity to significant grid infrastructure. A 138kV transmission line (DELMARVA POWER) is located at an excellent distance of only 0.4 miles. This strongly recommends a transmission-level interconnection, which is generally preferred for utility-scale BESS projects (even distribution-scale BESS can benefit from transmission interconnection if capacity is available) due to potentially higher available capacity and fewer operational constraints compared to distribution feeders. The "Nearest Substation" distance and maximum voltage are Unknown, but with a 138kV line so close, direct interconnection to the transmission line via a new switching station or tap is a viable and likely more efficient path than a distribution-level interconnection.

Given the 0.4-mile distance to the 138kV line, we can estimate an interconnection cost range of $2M - $5M, primarily for a new switching station or tap, short gen-tie line, and associated protection and control upgrades. The timeline for transmission interconnection with Delmarva Power typically ranges from 24-48 months, including study phases (System Impact Study, Facilities Study) and construction. Delmarva Power's interconnection queue can be competitive, and early engagement is crucial. The likely interconnection voltage will be 138kV. Feeder configuration is not applicable if interconnecting directly to transmission.

4. Regulatory & Zoning Analysis

The Authority Having Jurisdiction (AHJ) is Queen Anne's County, as the property is in an Unincorporated area. The current zoning is Agricultural/Rural (AG), which is a significant hurdle for BESS development. BESS facilities are typically not "by-right" in agricultural zones in Maryland counties. Therefore, the recommended permitting pathway will almost certainly be a Conditional Use Permit (CUP) or Special Exception (SUP). This process involves public hearings, discretionary approval by the County Commissioners or Board of Appeals, and can be lengthy and politically sensitive.

Specific setback requirements for BESS in Queen Anne's County AG zoning are Unknown and require immediate verification. Typical setbacks can range from 50-200 feet from property lines and residential structures. Maryland state regulations (e.g., Public Utilities Article) generally support renewable energy, but local zoning often dictates specific siting. We must investigate Queen Anne's County's comprehensive plan and zoning ordinances for any specific provisions or restrictions on energy infrastructure. Any known moratoriums or restrictions on BESS or similar industrial uses in agricultural zones must be identified; this is currently Unknown and poses a potential risk.

5. IRA/ITC Incentive Analysis

Based on the provided data, the property does not qualify for several key Inflation Reduction Act (IRA) Investment Tax Credit (ITC) adders: it is "No" for Opportunity Zone eligibility, "No" for Energy Community status, and "No" for Low-Income Community qualification. This means the project will not benefit from these specific geographic or demographic-based ITC bonuses.

Assuming the project meets prevailing wage and apprenticeship requirements (which Sunland America Corp. typically targets), the base ITC is 30%. If domestic content requirements are met, an additional 10% adder could apply. However, without the specific adders for Opportunity Zone, Energy Community, or Low-Income Community, the potential cumulative ITC adder percentage beyond the base 30% (plus prevailing wage/apprenticeship) is limited. The maximum potential ITC, assuming domestic content, would be 40%. This reduces the overall project economics compared to sites qualifying for multiple adders, making cost control and other revenue streams even more critical.

6. BESS Score & Rationale

BESS Suitability Score: 68/100

• Location (15/20): The 182.37-acre parcel with 36.83 buildable acres offers ample space for a distribution or utility-scale BESS. The agricultural setting suggests a relatively flat buildable area. However, the "Unknown" road access quality and "Unknown" POI access reduce the score slightly, as these are critical for buildability.
• Grid Access (23/25): Excellent score due to the 0.4-mile proximity to a 138kV DELMARVA POWER transmission line. This is a significant advantage, suggesting a high likelihood of available capacity and efficient interconnection. The "Unknown" substation details are less critical given the direct transmission line access.
• Environmental (9/15): Positive aspects include no critical habitat, brownfield, pipelines, or Chesapeake Bay Critical Area designation. However, the major unknowns regarding FEMA Flood Zone and Wetlands are significant detractors, as these could lead to project infeasibility or substantial cost/delay.
• Regulatory (7/15): The Agricultural/Rural (AG) zoning is a substantial challenge, requiring a Conditional Use Permit (CUP) or Special Exception, which is a discretionary and often lengthy process. "Unknown" setback requirements and potential moratoriums further reduce this score.
• Incentives (5/15): Low score due to the lack of qualification for Opportunity Zone, Energy Community, and Low-Income Community ITC adders. This limits the project's ability to leverage additional federal incentives beyond the base ITC and domestic content.
• Buildability (9/10): The large buildable acreage and likely flat topography are highly favorable. The primary buildability concern is the "Unknown" quality of LINDSAY RD for heavy equipment access, which could necessitate road improvements.

7. Key Risks & Mitigants

• Risk 1: Zoning Incompatibility (AG Zone)
  • Mitigant: Engage early with Queen Anne's County Planning Department for a pre-application meeting. Develop a robust CUP/SUP application strategy, including community outreach, visual impact assessment, and noise studies to address typical concerns in rural areas.
• Risk 2: Unknown Environmental Constraints (FEMA Flood Zone & Wetlands)
  • Mitigant: Immediately commission a Phase I Environmental Site Assessment (ESA) including a desktop review of FEMA maps and NWI (National Wetlands Inventory) data, followed by a site visit for wetland delineation if indicated. This is a critical go/no-go decision point.
• Risk 3: Road Access for Heavy Equipment
  • Mitigant: Conduct a detailed road survey and traffic study for LINDSAY RD to assess its capacity for oversized/overweight loads. Coordinate with Queen Anne's County Public Works for potential road improvement requirements and permitting.
• Risk 4: Interconnection Queue & Costs with Delmarva Power
  • Mitigant: Submit a formal interconnection request (IR) as soon as possible to secure a place in the queue. Simultaneously, engage with Delmarva Power's interconnection team to understand typical timelines, study costs, and potential network upgrade requirements for a 138kV interconnection.

8. Recommended Next Steps

1. Phase I Environmental Site Assessment (ESA) & Wetland Delineation:
   • Timeline: 4-6 weeks
   • Description: Critical for identifying flood zone, wetlands, and other environmental liabilities.
   • Go/No-Go Point: If significant unmitigable wetlands or floodplains are identified, the project may be a NO GO.
2. Pre-Application Meeting with Queen Anne's County Planning Department:
   • Timeline: 2-4 weeks to schedule, 1 week for meeting.
   • Description: Discuss BESS compatibility in AG zoning, understand CUP/SUP process, and identify specific setback requirements and local concerns.
3. Submit Interconnection Request (IR) to Delmarva Power:
   • Timeline: Immediate.
   • Description: Initiate the formal interconnection process to secure a queue position and begin studies for the 138kV transmission line.
4. Preliminary Geotechnical Investigation & Topographic Survey:
   • Timeline: 3-5 weeks.
   • Description: Assess soil conditions for foundation design and confirm site grading requirements.
5. Road Access & Traffic Study:
   • Timeline: 3-4 weeks.
   • Description: Evaluate LINDSAY RD's capacity for heavy equipment and identify any necessary upgrades or permitting for transport.
6. Title Review & Easement Analysis:
   • Timeline: 2-3 weeks.
   • Description: Confirm property ownership, identify existing easements, and assess needs for new gen-tie or access easements.
   • Go/No-Go Point: Unresolvable title issues or inability to secure necessary easements could be a NO GO.
7. Community Engagement Strategy Development:
   • Timeline: Ongoing from initial due diligence.
   • Description: Begin planning for local outreach to address community concerns proactively, especially given the rural setting and need for a CUP.

Final Recommendation: MAYBE

The site presents a compelling opportunity due to its exceptional proximity to a 138kV transmission line, which is a significant advantage for grid interconnection. The large buildable acreage and likely favorable topography also contribute positively. However, the "MAYBE" recommendation is driven by critical unknowns and significant risks that require immediate and thorough investigation. The AG zoning presents a substantial regulatory hurdle, and the lack of information regarding FEMA flood zones, wetlands, and specific road access quality could quickly render the site unfeasible or economically unviable. The absence of key IRA ITC adders also places more pressure on project economics. Until these major unknowns are resolved, particularly the environmental and zoning challenges, the project carries too much risk for