5 Steps to Maximize the Value of Battery Energy Storage Systems

5 Steps to Successfully Operating a BESS

Introduction

In this article, we set out five steps to successfully operating a BESS. We’ll explain how BESS analytics tools like data monitoring, smart algorithms, and simulations can maximize economic returns. We’ll also show how battery intelligence technology can minimize risk across multiple revenue streams throughout the lifetime of a BESS.

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The modern world is rapidly transitioning to renewable energy sources. This shift is causing a significant need for energy storage systems (ESS). Increased demand for ESS has lowered overall associated costs and expanded deployment options.

A popular and efficient storage solution is provided by lithium-ion batteries (LIBs). LIBs are relatively low cost with high power and good energy density. However, companies are now releasing that there are considerable difficulties in profitably operating a battery energy storage system (BESS) over its lifetime.

To ensure BESS ventures are profitable and can operate optimally over their lifetime, companies need to find solutions to a range of problems. They must identify the best BESS deployment option and calculate the upfront and operating costs. The longevity of a BESS is crucial to its profitability, so issues such as battery aging and ongoing maintenance requirements must be addressed. Immediate and potential safety risks must be identified and then mitigated or eliminated.

Overcoming the operational challenges posed by BESS requires sophisticated technological solutions. By employing battery intelligence and smart algorithms, stakeholders can gain valuable insights to enable more informed decision-making.

Taking a BESS from the design stage to operation is a highly complex process that can take years. While it’s an impossible task to anticipate all the issues that may arise on this journey, companies can act to protect their investment by leveraging advanced BESS analytics tools.

Step 1: Focus On Planning and Procurement

The journey toward creating a BESS begins in the planning and procurement phase. To secure investment and funding, a BESS concept must be proven fit for its application. The right battery chemistry must be decided upon and there has to be a realistic estimate of the profitability of the entire system over its lifetime.

A project developer needs to identify opportunities, conduct feasibility studies, develop a comprehensive project plan, and manage the regulatory process. The system integrator must analyze project requirements, assess the impact of the load profile on battery factors, and design an ideal battery configuration. Asset managers work to minimize financial and technical risks and ensure the BESS is properly maintained and operates at peak performance throughout its lifetime.

Choose the Appropriate Battery Cell

The right battery cell choice is crucial. Today, companies can choose from a variety of different battery cell types and styles from various manufacturers.

Nickel Manganese Cobalt (NMC) cells and Lithium Iron Phosphate (LFP) cells are commonly used in stationary energy storages. NMC cells are the more established technology and are widely used in the automotive industry and for portable electronic goods. NMC cells are competitively priced with good overall performance. They provide high energy density and are considerably lighter than LFP cells.

However, NMC batteries are not as thermally stable as LFP cells, making them a riskier choice for stationary energy storage systems. NMC batteries also have significant environmental costs, especially if they contain cobalt.

Batteries with LFP cathode chemistry have demonstrated their suitability for battery energy storage systems due to their extended lifespan and reduced susceptibility to failure. LFP cells are also cheaper and have lower operating costs than NMC cells.

More information on LFP cells in the context of energy storage systems can be found here.

Battery simulation models can provide valuable data on the optimum cell choice. Different battery models can be tested with specific load profiles to gain insights into the degradation of these battery cells during operation. This results in an accurate estimate of the safe operational lifespan of the system.

Test Various Operation Strategies

The optimal operation strategy will ultimately depend on a range of factors. These include where the BESS is located and what market it serves. A BESS may be a stand-alone system or may be situated next to a solar or wind farm as part of a larger renewable energy project. It may need to provide power for US markets like ERCOT, CASIO, or MISO or serve European markets such as Nord Pool, EPEX SPOT, or UKPX.

Employing a multi-purpose operating strategy can increase the overall profitability of a BESS. Profitability considerations often focus solely on daily monetary profit. However, battery degradation and capacity loss should be evaluated for all operation modes over time.

Knowing when to run operating strategies such as energy arbitrage, frequency regulation, demand response, and peak shaving is crucial.

In determining the most promising option for a BESS, various load profiles and scenarios can be tested using battery simulation models. The operating strategy can be adjusted to compare its impact on battery degradation and lifetime - all before the actual system is built.

Step 2: Use Digital Commissioning During Deployment

Once a suitable battery cell has been chosen, the system must be deployed. Commissioning in the energy storage context refers to the process of ensuring that a newly installed energy storage system functions as intended and meets the specified performance requirements. This involves testing and verifying all components and systems, as well as fine-tuning the settings to optimize performance and efficiency.

Digital technologies can play a significant role in the commissioning process. With digital commissioning, asset owners can proactively identify potential issues before deployment. The initial status of a BESS can be ascertained at the Beginning of Life (BoL) with minimal effort. Digital commissioning only requires an internet connection. It supports the on-site commissioning process as it pin-points where issues could occur, providing vital input to on-site teams.

The Benefits of Digital Commissioning

Digital commissioning is a fast, dependable, and effective approach for evaluating the performance of energy storage systems and confirming the details provided by the integrator. It ensures consistent outcomes across diverse energy storage systems, allowing for more efficient asset management.

As BESS expand, digital commissioning processes can be scaled accordingly at very little additional cost and without requiring additional time. This contrasts with the cost of conventional commissioning which increases with plant size and takes more time to accomplish the larger the BESS grow.

Identifying and fixing faulty cells during the deployment stage reduces the risk of downtime later during the storage lifetime, helping to avoid penalties and costs associated with downtime. Using digital commissioning, a BES system can be ready for operations in less time than traditional commissioning.  

De-risking BESS Deployment with Digital Commissioning

The KPIs and information provided by digital commissioning allow asset owners to verify the information provided by the integrator and can serve as benchmarks for future reporting. Gathering information at the BoL stage makes it easier for an asset owner to make warranty or deficiency claims.

Digital commissioning can be used to analyze a massive amount of data. This cannot be done on-site or with additional hardware measurements. Manufacturing failures or other issues can be precisely located. Weak modules can be replaced before operations begin.

There must be a continuous data connection to the BESS during the entire digital commissioning process. The digital commissioning system calculates the initial Discharge- and Charge Energy Capacity, DC-DC Roundtrip Efficiency (RTE), and the DC Resistance (DCR) for the BESS. These complex calculations are based on string-level data and aggregated on the inverter level.

Onsite commissioning is unlikely to identify defects that occur at more granular levels than the inverter level. Since defects are more prevalent at finer levels, digital commissioning can identify a greater number of issues than what would be possible using only on-site measurements.

Step 3: Optimize Operation and Maintenance

The next step is to ensure the BESS can sustain optimal performance over an extended lifespan. Although many potential issues can be identified and solved during the deployment stage, a BESS must be closely monitored while in operation. The health of the BESS needs to be constantly assessed and maintained to maximize performance capabilities and accurately predict battery life.

Every BESS is regulated by an energy management system that controls battery current, voltage, and temperatures to maintain safe conditions. This is done by using physical sensors to measure real-world variables and employing models and smart algorithms to estimate the state of charge and health of each battery.

Using Analytics to Keep an Energy Storage System Healthy

Energy storage health analytics can be used to efficiently monitor the health of an entire BESS portfolio. With the right software, asset owners can access comprehensive overviews of the health of their systems on one dashboard. Crucial insights can be provided on a per-asset basis.

A centralized cloud-based analytics platform can provide battery health data in real-time. Data from multiple locations across the globe can be analyzed with powerful AI tools.

In this way, dedicated energy storage health analytics software can deliver detailed root-cause analysis and provide more detailed insights into predicted aging behavior. This data enables stakeholders to take immediate steps to avoid issues and extend the lifetime of the BESS.

Challenges with BESS Monitoring Systems

The larger a BESS is, the more difficult it is to keep it in good health. Without efficient tools, monitoring the health of an entire portfolio of systems is incredibly complicated. Manufacturers’ KPI calculations can differ, and each manufacturer may provide different monitoring software.

While an asset owner may have access to large amounts of data, many energy management systems have inadequate processing and analyzing capabilities. Often, these systems only provide limited insights into how to optimize battery health or extend the lifetime of the BESS.

Step 4: Minimize Technical and Financial Risks

Now that the system is operational, steps must be taken to mitigate risks associated with underperformance, failures, and critical safety issues such as burning battery storage.

Asset owners need to eliminate short- and long-term risks to batteries over the lifetime of a BESS. The longer a BESS can remain operational, the more profit it will generate. The actual usage of the batteries determines the longevity of a BESS as does preventing safety issues such as battery failures or worst-case scenarios like fires.

Risks can be minimized by ensuring that a BESS operates within its warranty constraints and by leveraging battery analytics to identify safety issues and predict future risks.

Be Aware of Warranty Constraints

Performance warranties indicate the number of cycles until the battery reaches a specific capacity loss. In most cases, a multi-use BESS operating strategy won’t conform to the load profile of these specific cycles.  

Performance warranties also contain operating constraints such as optimum temperature, average State of Charge, C-rate, and others. Although energy management systems (EMS) can limit the current, voltage, and temperature of batteries, they are not fail-safe. An EMS cannot analyze historical data and so cannot show long-term trends or anomalies.

Dedicated warranty trackers can show if storage systems and racks are being operated within warranty agreement thresholds. Teams can be instantly alerted to deviations and strategies can be changed to prevent voiding warranties or incurring penalties.

Maintaining the quality of individual components enhances the performance, lifetime, and safety of a BESS. If the required manufacturing standards are not adhered to this can create safety issues that lead to financial risks for asset owners and integrators

Minimize Safety Risks Via Battery Analytics

Battery analytics provide a second layer of safety. They give teams more time to react, provide accurate root-cause analysis, and enhance risk prevention. Battery analytics use intelligent algorithms to recalculate equivalent full cycles and provide insights into the actual BESS health status based on thousands of data points. Safety risks can be detected months before they become critical.

Step 5: Grow Revenue Potential

Finally, asset owners want to maximize the profit potential of their BESS. Ensuring a satisfactory return on investment (ROI) requires the system to always be operating at maximum availability.  

Typically, the performance of batteries is judged by key performance indicators (KPIs) like state of charge (SoC) and state of health (SoH). However, most monitoring systems don’t provide granular insights into factors that impact availability.

Implementing a cloud-based monitoring system can maximize the revenue potential of a BESS. A sophisticated monitoring system can identify issues, enhance availability, increase output, and drastically decrease downtime.

Understand the System and Automize Report Generation

A BESS can last for many years, even decades. As the lifespan of the BESS increases, so too does the value of historical data. A cloud-based monitoring system can track and collect data and issue automated reports. This can identify areas of improvement and ensure the BESS consistently operates at the highest possible availability.

Customized monitoring systems can provide detailed information on storage performance and round-trip efficiency. They can provide immediate data on issues that impact performance, such as voltage spreads, temperature spreads and DC resistance, and module imbalance. This enables a deeper understanding of issues that affect availability.

Increase ROI By Optimizing Operating Strategies

Finding an optimum operating strategy for a BESS isn’t an easy task. Each battery should be assigned an operating strategy that takes into account arbitrage, frequency regulation, demand reduction, peak shaving, and frequency.

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Annually, an average of 35,000 decisions about how and when to charge or discharge batteries are made by complex algorithmic trading systems. However, algotraders make decisions on the revenue potential of a strategy without the benefit of historical insights.

Integrating battery analytics ensures that factors like the degradation effect of each operating strategy are considered. Decisions must consider the effects of degradation, as battery aging can impact the overall lifespan of the battery and so affect long-term profitability.

Conclusion

Considerable costs and resources are involved in designing, deploying, maintaining, and operating a BESS. The use of predictive analytics software can ensure that a BESS delivers maximum availability and profitability throughout its lifetime. Following the steps in this article will help stakeholders protect their investments and get the most out of their energy assets.

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In the transition towards a more sustainable and resilient energy system, battery energy storage is emerging as a critical technology. Battery energy storage enables the storage of electrical energy generated at one time to be used at a later time. This simple yet transformative capability is increasingly significant. The need for innovative energy storage becomes vitally important as we move from fossil fuels to renewable energy sources such as wind and solar, which are intermittent by nature. Battery energy storage captures renewable energy when available. It dispatches it when needed most – ultimately enabling a more efficient, reliable, and sustainable electricity grid. This blog explains battery energy storage, how it works, and why it’s important.

HOW BATTERY ENERGY STORAGE WORKS

At its core, a battery stores electrical energy in the form of chemical energy, which can be released on demand as electricity. The battery charging process involves converting electrical energy into chemical energy, and discharging reverses the process. Battery energy storage systems manage energy charging and discharging, often with intelligent and sophisticated control systems, to provide power when needed or most cost-effective. The components of a battery energy storage system generally include a battery system, power conversion system or inverter, battery management system, environmental controls, a controller and safety equipment such as fire suppression, sensors and alarms.

THE IMPORTANCE OF BATTERY ENERGY STORAGE

For several reasons, battery storage is vital in the energy mix. It supports integrating and expanding renewable energy sources, reducing reliance on fossil fuels. Storing excess energy produced during periods of high renewable generation (sunny or windy periods) helps mitigate the intermittency issue associated with renewable resources. Different applications of energy storage also provide grid stability and resilience, as they can respond quickly to grid demand and supply changes.

Here are some of the more prominent reasons that make battery energy storage critically important:

Enabling Renewable Energy

As mentioned, renewable energy sources such as wind and solar are intermittent, producing energy only when the wind blows, or the sun shines. The periods when these sources generate energy do not always align with when energy demand is highest. A battery energy storage system (BESS) allow storing energy when production is high, which can then be used later when demand is high. Integrating renewable energy with storage enables a more significant proportion of energy to come from renewable sources.

Grid Resiliency and Reliability

As we shift to a renewable energy future, our electrical grid must adapt to handle increased variability and decentralization. A BESS can help stabilize the grid by absorbing excess power during periods of high production and releasing it during periods of high demand. Utilizing a BESS in this way can help reduce blackouts and enable a more consistent grid power supply. This resilience is especially crucial during extreme weather events, which we see more of worldwide.

Reducing Emissions from Peaker Plants

Peaker plants operate only when there is a high demand for electricity, or “peak” demand. These plants usually run on fossil fuels and are less efficient than other power generation sources as they emit more greenhouse gases. A BESS can reduce reliance on these plants by storing energy during periods of low demand and supplying it during these peak demand periods.

Supporting Electrification

The electrification of many industries currently powered by fossil fuels is needed to achieve a zero-emissions future. These industries include transportation and heating, moving away from internal combustion engines and gas boilers to electric-powered equivalents, such as electric vehicles and heat pumps. The transition to electrification will increase electricity demand and put further strain on the grid. A BESS can help manage the increased demand and smooth out consumption, enabling the integration of these electric loads into the energy mix without significantly expanding power generation capacity.

Energy Independence

On a more localized level, a BESS allows homes and businesses with solar panels to store excess energy for use when the sun isn’t shining. Using a battery energy storage system in this way increases energy independence. It reduces reliance on the grid, reducing emissions associated with energy production and transmission.

Battery energy storage is essential to enabling renewable energy, enhancing grid reliability, reducing emissions, and supporting electrification to reach Net-Zero goals. As more industries transition to electrification and the need for electricity grows, the demand for battery energy storage will only increase.

THE BENEFITS OF BATTERY ENERGY STORAGE SYSTEMS

A battery energy storage system (BESS) offer several compelling benefits that make them an increasingly important part of our energy landscape. These include:

Grid Stabilization

A BESS can absorb or release electrical power almost instantly, providing valuable services in balancing power supply and demand, stabilizing the grid, and maintaining a steady frequency.

Renewable Energy Integration

A BESS can store excess energy produced from renewable energy sources like wind and solar when production exceeds demand and then release it when demand exceeds production, such as when the sun is not shining, or the wind is not blowing. This helps deal with the intermittent nature of these energy sources and makes them more reliable and usable.

Peak Shaving

By storing energy during low-demand periods and releasing it during high-demand periods, a BESS can help to reduce electricity demand on the grid during peak periods. This ‘peak shaving‘ can reduce the need for peaker plants, which are expensive and often powered by fossil fuels, leading to both cost and environmental benefits.

Energy Arbitrage

With the capability to store energy when prices are low and dispatch it when prices are high, a BESS facilitates energy arbitrage, potentially creating significant financial savings or generating additional revenue streams.

Backup Power

A BESS can provide backup power during a power outage, increasing energy resilience and reliability for homes, businesses, and critical infrastructure.

Grid Independence and Self-Consumption

A BESS enables greater energy self-sufficiency for homes and businesses with their own renewable energy generation (like solar panels on the roof). They can store excess power generated from on-site sources for use when needed, reducing their reliance on the grid and allowing more efficient use of the generated power.

Support for Electric Vehicle Charging

With the rise of EVs, a battery energy storage system integrated with charging stations can ensure rapid charging without straining the power grid by storing electricity during off-peak hours and dispensing it during peak usage. Adding a BESS to an EV charging station installation can also stretch the available capacity and help drastically reduce demand charges.

Utilizing a BESS represents a solution to many of the challenges facing the current energy mix today.

TYPES OF BATTERY ENERGY STORAGE

There are several types of battery technologies utilized in battery energy storage. Here is a rundown of the most popular.

Lithium-Ion Batteries

The popularity of lithium-ion batteries in energy storage systems is due to their high energy density, efficiency, and long cycle life. The primary chemistries in energy storage systems are LFP or LiFePO4 (Lithium Iron Phosphate) and NMC (Lithium Nickel Manganese Cobalt Oxide).

Why Lithium-Ion is the Preferred Choice

Lithium-ion batteries have a high energy density, a long lifespan, and the ability to charge/discharge efficiently. They also have a low self-discharge rate and require little maintenance. Lithium-ion batteries have become the most commonly used type of battery for energy storage systems for several reasons:

High Energy Density

Lithium-ion batteries have a very high energy density. The high energy density means the batteries can store a large amount of energy in a small space footprint, making them ideal for applications where space is at a premium, such as in electric vehicles or energy storage systems.

Efficiency and Charge/Discharge Rates

Lithium-ion batteries are efficient at both charging and discharging, and they can handle relatively high rates for both processes. This makes them excellent for applications where energy must be rapidly discharged or put into storage.

Long Lifespan and Cycle Durability

Lithium-ion batteries have a relatively long lifespan compared to many other battery technologies. They can handle a lot of charge-discharge cycles. This long cycle life makes them cost-effective over their lifetime.

Proven Technology

Lithium-ion technology is mature and well-understood, which makes it a less risky choice than newer, less-proven technologies.

Despite these advantages, lithium-ion batteries have some challenges, such as sophisticated battery management systems to prevent overheating and maintain optimal battery health. Choosing the right supplier when looking at lithium-ion-based energy storage systems is important. EVESCO’s battery energy storage systems utilize an intelligent three-level battery management system and are UL certified for ultimate protection and optimal battery performance.

Lead Acid Batteries

Lead acid batteries are a mature technology that has been around for a very long time. They are often used in applications where the battery isn’t cycled frequently, such as starting cars or emergency backup power.

They are reliable, relatively inexpensive, and widely available. They can also deliver high power. However, lead acid batteries have a lower energy density compared to lithium-ion batteries and a shorter usable lifespan, particularly under deep cycling use. They also require regular maintenance to maintain performance and can harm the environment if not properly recycled.

Lead Carbon Batteries

Lead carbon batteries are a type of lead acid battery but include a layer of carbon in the negative electrode that enhances their performance.

They combine the high C rate capabilities of lead acid batteries with the super-capacitive properties of carbon, enabling them to deliver or absorb bursts of energy quickly. Adding carbon also helps mitigate the detrimental effects of the partial state-of-charge operation, improving the cycle life compared to traditional lead acid batteries. They can be affordable for grid-scale energy storage systems, which are not restricted by space, due to their lower cost and deemed acceptable performance characteristics.

While they offer improved cycle life compared to traditional lead acid batteries, they still don’t match the lifespan of lithium-ion batteries. They also share the environmental concerns of lead acid batteries, requiring careful disposal to avoid lead contamination. Additionally, while including carbon improves their performance, they still have lower energy density than lithium-ion batteries.

Flow Batteries

In flow batteries, rechargeability comes from two chemical components dissolved in liquids inside the system. The most common type is the Vanadium Redox Flow Battery.

Flow batteries can store large amounts of energy and are less sensitive to temperature variations. They have a long lifespan, and their energy capacity (kWh) can be easily increased using larger electrolyte storage tanks. Flow batteries are more complex and expensive to install and maintain than the likes of lithium-ion. The rarity and price volatility of vanadium can also be a concern.

Sodium-Sulfur (NaS) Batteries

Sodium-Sulfur batteries operate at high temperatures and are capable of daily deep cycling. They can typically used for grid storage applications. Due to their high operating temperatures (typically around 350°C), they require significant safety measures and thermal management systems. Due to their size and complexity, they are more suitable for large-scale applications (multiple MWhs) rather than smaller-scale commercial or residential use. NaS batteries are not currently a widely popular choice in the market.

Solid-State Batteries

Solid-state is an emerging battery technology that utilizes solid electrodes and a solid electrolyte instead of the liquid-based electrolytes found in other batteries. They promise significantly higher energy density, improved safety (due to the non-flammable solid electrolyte), and longer lifespans. They also have the potential for faster charging times. However, as of now, they are still in the early stages of development and are yet to be commercially available on a large scale. The manufacturing process is also currently complex and costly. 

Each of these battery types has its advantages and disadvantages. The best choice of technology will depend on the specific needs of a given project, including factors like cost, required capacity, discharge duration, and physical space available.

COMMERCIAL, RESIDENTIAL & UTILITY SCALE BATTERY ENERGY STORAGE

Battery energy storage systems can be found in applications across residential, commercial, and utility scales. Each with different needs, capacities, and applications.

Residential Battery Energy Storage

For individual households, residential battery storage usually ranges from 5 to 15 kWh – enough to offset peak usage periods or provide backup during power outages. They’re typically paired with rooftop solar installations, allowing homeowners to store excess solar power for use during the night or cloudy days. A residential battery energy storage system can provide a family home with stored solar power or emergency backup when needed.

Commercial Battery Energy Storage

Commercial energy storage systems are larger, typically from 30 kWh to kWh, and used in businesses, municipalities, multi-unit dwellings, or other commercial buildings and applications. These systems can reduce energy costs by lowering demand charges (fees based on the highest rate of energy use during a billing period), load shifting (from high on-peak electric prices to lower cost off-peak prices), providing backup power, and allowing businesses to participate in demand response programs. An example is EVESCO’s 500 kW 500 kWh battery storage system installed at Power Sonic in Nijkerk, The Netherlands, which can integrate with on-site solar and intelligently manage energy use across the building and commercial loads, reducing peak demand and generating energy cost savings.

Utility-Scale Battery Energy Storage

At the far end of the spectrum, we have utility-scale battery storage, which refers to batteries that store many megawatts (MW) of electrical power, typically for grid applications. These large-scale systems can provide services such as frequency regulation, voltage support, load leveling, and storing excess renewable energy for later use. A prominent example of this is the Hornsdale Power Reserve in South Australia. This 150 MW/194 MWh installation has brought stability to the region’s grid and saved millions in grid maintenance costs.

A battery energy storage system’s capacity and specific applications can be customized to fit the user’s needs, whether a single-family home, EV charging stations, or a national electric grid.

If you want to learn more, please visit our website Storage Battery Solution.