A guide to Battery Energy Storage Systems (BESS)

Battery energy storage systems (BESS) can address intermittency issues and contribute to a more reliable and sustainable power supply, while leveraging decentralization. BESS are a must for the clean energy transition as we evolve and integrate more renewable generation assets into the market. It is a promising investment to scale up, as most renewable energy sources cannot increase production to match demand and they can store energy to dispatch it later at more advantageous time periods. With respect to BESS installations, we can expect a worldwide deployment that will surpass 400 gigawatt-hours in 2030 by growing at a compound annual rate of 33% yearly, as stated by the Statista Research Department (2024).  

What are the applications of BESS?

The benefits and cost implications of BESS vary according to different parameters, inter alia, the location, the power and energy capacity, and the management process. Multiple market participants can benefit from the services provided by batteries, like power system operators; utilities; and commercial, industrial and residential customers.

A few out of multiple grid services that BESS can provide are short-term balancing, operating reserves, ancillary services for grid stability, long-term energy storage, and restoration of grid operations after a blackout. BESS are innovative technologies that are crucial when it comes to demand response programs and flexibility, as they can improve system utilization and drive economic growth. In addition, hybrid energy storage systems can be used to optimize performance, efficiency and increase cost-effectiveness. But what are some of the applications of Battery Energy Storage Systems? 

In front-of-the-meter (FTM)

Often referred as utility-scale battery storage, large-scale battery storage or grid-scale batteries, in front-of-the-meter battery storage systems can store excess generated energy and supply it directly back to the grid when it is more advantageous, such as when no solar power is available or during a disrupt on electricity generation.  

The combination of storage systems with renewable energy generation sources – like wind, solar or hydro – can unlock the full potential of our assets by providing more reliability and reducing costs. Utility companies and grid operators are increasingly deploying large-scale BESS to enhance grid stability, manage peak demand, and integrate more renewable energy sources. FTM battery storage systems can also reduce congestion management, control voltage and provide reserve and ancillary services.

As stated by the IEA, the global installed grid-scale battery storage capacity in what they define as the "Net Zero Scenario" will reach up to 967 GW in 2030, as shown in the graphic below.

When referring to manufacturing capacity, in the case of Lithium-ion batteries, the IEA foresees a progressive and substantial increase from 1,57 TWh in 2022 to 6,75 TWh in 2030, as demonstrated on the following graphic:

Behind the meter (BTM)

Behind-the-meter batteries are smaller than grid-scale battery storage systems. They are defined as stationary batteries that are installed on the customer's side and connected through electricity meters; therefore, they are not controlled by the distribution network.

Commercial, industrial and residential customers can decrease their electricity bill thanks to BTM batteries and demand-side management. With BTM storage systems you can participate in the ancillary service market through an aggregator and be financially compensated.  

Co-located batteries

Co-location is the combination of a battery storage system and another renewable energy generation asset, like solar. Co-located batteries offer dynamic pairing between multiple systems, and they can save costs and generate new revenue streams through the participation in the balancing and ancillary service market.  

There are two common ways to integrate Co-located batteries: AC and DC coupling. The main difference is that through AC-coupling, both the storage asset and the renewable energy asset have their own inverter connected to the grid; while DC-coupling connects them through a single inverter. In the first case, clipping problems may arise, that occurs when there is a mismatch in the inverter capacity.  

Energy demand management

Battery storage systems are winning predominance as they can be installed anywhere and provide a wide range of capacities. Particularly, they are essential to handle the hourly and seasonal variations in renewable electricity output and to face growing demand. BESS can balance loads by storing power during off-peak periods and discharging during peak times, which contributes to reducing electricity costs.  

Arbitrage

During off-peak times, you can also store purchased power and use it later when the prices to import power are higher. Besides, you can trade the stored electricity in multiple markets to generate new incomes. For example, you can participate in the ancillary service market, the energy market, and/or the capacity market.

Frequency response

BESS can provide frequency response services when we need to quickly and automatically adjust generation or consumption to keep the grid’s frequency at an acceptable range. They contribute to the grid stability and reliability by offering voltage support and balancing the supply and demand.  

Are you interested in managing peak demand charges by shifting energy consumption to off-peak hours? Would you like to participate in grid services or demand response programs?

Energy management systems and software solutions can optimize the operation and performance of BESS, facilitating grid integration and saving costs. Virtual Power Plants can aggregate distributed energy resources and optimize their capabilities. Therefore, aggregators can effectively manage BESS, using innovative IT solutions to control many individual assets together to maintain grid stability and monetize flexibility.