What is a Battery Energy Storage System (BESS)?

A Battery Energy Storage System (BESS) is a system that uses batteries to store electrical energy. They can fulfill a whole range of functions in the electricity grid or the integration of renewable energies. We explain the components of a BESS, what battery technologies are available, and how they can be used.

Table of contents

Definition

Possible applications and trading options for BESS

What are the main components of a BESS?

Which Factors Influence the Economic Viability of a Battery Storage System?

Which battery storage technologies are available?

Definition

Battery energy storage systems (BESS) are commonly referred to as stationary accumulators that can store and release electricity very flexibly. Depending on their design and size, they can be used and commercialized in very different ways.

In the energy industry, BESS are used for a variety of purposes such as balancing the supply and demand of energy in the grid, providing ancillary services, and enabling the integration of renewable energy sources.

Battery storage systems come in completely different scales - from fridge-sized residential battery storage systems to so-called battery storage power stations, large utility-scale systems that take up entire streets or industrial areas. Their storage capacity (the amount of energy that can be stored or released) and power capability (the speed at which the energy can be released) vary accordingly.

Possible applications and trading options for BESS

Technically, batteries of any size can be used for a wide range of applications. However, BESS must fulfill different regulatory requirements according to the area of application.

Depending on the specifications, they can be used for ancillary services such as grid stabilisation (frequency control) and peak shaving (load shedding), but also for load shifting and to increase the self-consumption of fluctuating renewable energies (wind and solar power).

Accordingly, their services can also be offered on various markets such as markets for ancillary services (e.g. the balancing energy market), capacity markets, or wholesale markets.

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What are the main components of a BESS?

When talking about battery energy storage, people usually think of the battery cell where the energy is stored. Of course, this is the core component, but many more devices are required to ensure technically and economically sound use:

Power electronics: This component consists primarily of power converters that generate alternating or direct current in different strengths and voltages as required. On the one hand, it converts the supplied power so that it can charge the batteries. Secondly, it converts the stored energy into electricity that can be used directly by the respective grid or other loads such as machines, cold stores or charging stations for electric cars.
Battery management system: The battery management system (BMS) controls the charging and discharging of the battery. It ensures the optimum current in or out of the battery protecting the battery system on one side and the grid or load on the other.
Metering and communication: This component measures the energy flowing into and out of the BESS and communicates that information to the grid operator or other entities.
Modules for market participation: These components link the battery storage system with the energy market the BESS are brought to. They signal to the BMS when to store or release how much electricity. If the battery storage system is used for arbitrage transactions on the wholesale market, these signals come from software that analyses and forecasts electricity prices. If a BESS provides ancillary services, it is activated through a highly secure communication device used by the trader who again receives the activation signal from the control room of the transmission system operator.

Which Factors Influence the Economic Viability of a Battery Storage System?

The economic viability of a battery storage system is influenced by a variety of factors.

Acquisition and Installation Costs (CapEx): The purchase and installation costs of a battery storage system are important factors that affect its economic viability. Although battery storage prices have decreased in recent years, the initial investment remains substantial.
Lifespan and Degradation: The lifespan of a battery storage system and the rate at which it degrades over time directly impact its economic viability. A storage system with a longer lifespan and lower degradation rate will be more profitable over time.
Efficiency and Losses: The efficiency of the inverter and the losses that occur during the charging and discharging processes affect the amount of energy that can actually be used. Higher efficiency means fewer losses and thus better economic viability.
Maintenance and Repair Costs: The costs associated with maintaining and repairing the battery storage system must also be considered. Typical maintenance and repair issues include checking battery connections (corrosion or loose connections can affect performance), inspecting the cooling system (such as coolant levels and fans), replacing defective battery cells, and performing software updates.
Electricity and Flexibility Prices: The potential revenue from large-scale storage systems in electricity markets naturally depends on price trends in various electricity and flexibility markets. For example, trading in the spot market benefits from high price spreads (differences between peak and off-peak prices) throughout the day, which increases the economic viability of a battery storage system.
Self-Consumption: If there is an option to use the battery storage for self-consumption of self-produced solar power that is stored in the battery, this enhances the system's viability—as long as the cost of grid-sourced electricity is higher than the costs associated with generating and storing solar power.

Which battery storage technologies are available?

Various storage technologies are available on the market. This refers to the technology of the battery cells themselves. What they all have in common is that they store energy electrochemically. However, the technological differences bring different strengths and weaknesses with them. The choice of battery technology depends on the specific application and market conditions.

Lithium-ion batteries: LIBs have a long expected service life and high efficiency as they release approximately 95% or more of the stored energy. However, their most outstanding feature, perhaps, is their high volumetric energy density; no other available battery technology stores more energy in such small cells. That's why they are almost irreplaceable in electric vehicles and mobile phones, at present. However, they are also being used in grid-scale energy storage projects and nowadays heavily dominate the large-scale battery market in most countries. One of their disadvantages is that the scarce raw materials sometimes are mined under difficult humanitarian and ecological conditions.
Sodium-ion batteries: The structure is analogous to lithium-ion batteries, but sodium-ion batteries require less or no critical raw materials and are even safer to operate. The energy density - volumetric and gravimetric - is slightly lower than that of lithium-ion batteries. Hence, they are more suitable for stationary applications than for e-mobility. As sodium-ion batteries are already cheaper than their lithium competitor though, Chinese car companies already use the technology in electric cars when the range is less important than the price. As mass production is only starting, the costs of sodium-ion batteries are expected to drop further.
Lead-acid batteries: These batteries have proven themselves in a variety of applications for decades and are still widely used today. One reason is their low price and the fact that the raw materials are uncritical and readily available. However, lead batteries are significantly heavier and larger than comparable LIBs. They also have a shorter lifespan (measured in charge and discharge cycles) than modern lithium-ion batteries and a lower efficiency (approx. 80 %).
Sodium-sulfur batteries: NaS batteries are considered very reliable, safe to operate, and long-lasting. On top, they have a high energy density. Yet, being relatively expensive and requiring special operating conditions, they are particularly suitable for large-scale energy storage.
(Redox) flow batteries: Unlike lithium-ion batteries, flow batteries use liquid electrolytes to store energy. Another special feature: the electrolytes are located in tanks outside the actual cell which converts electrical into chemical energy and vice versa. Therefore power capability and capacity can be selected almost independently to achieve the perfect configuration for the respective application. They also have an even longer expected service life than LIBs. However, this technology is far less mature and widespread than the previously mentioned technologies. Various electrolytes are currently being researched: organic electrolytes based on lignin are considered to be particularly sustainable. In economic terms, vanadium redox batteries are considered particularly promising. As they are suitable for both short and long-term storage, they can be used flexibly.

Many research centres and companies around the world are working on optimising existing BESS technologies and developing even more sophisticated ones. Solid-state batteries, for example, could revolutionise electromobility with even higher energy densities and shorter charging times than lithium-ion batteries.

As seen, all these technologies have different advantages and disadvantages - in terms of ecological, economic and technical specifications such as raw materials, investment and maintenance costs, or capacity, capability and expected lifespan. The specific requirements of every use case are key to the right choice.

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