Battery Energy Storage Systems (BESS): Benefits & Energy Transition

Over the upcoming three decades, battery energy storage will be the fastest growing source of power system flexibility in all scenarios. Due to their fast pace of growth, Battery Energy Storate Systems are going to play a key role in reinforcing electricity security and facilitating the transition to renewables. Therefore, besides learning why they are growing so fast, it is important to understand what they are, which advantages they yield and why they are crucial for the renewable revolution.

Table of Contents

  1. BESS: trends & growth
  2. What is Battery Energy Storage?
  3. How does Battery Energy Storage make power systems more flexible?
  4. Why is Battery Storage Crucial?

According to the International Energy Agency, installed battery storage, including both utility-scale and behind-the-meter systems, amounted to more than 27 GW at the end of 2021. Since then, the deployment pace has increased. And it will grow even further in the next thirty years.

  • According to Stated Policies (STEPS), global battery storage capacity increases almost 50-fold by 2050, reaching more than 1,000 GW.
  • Based on Announced Pledges (APS), it doubles to more than 2,000 GW by 2050, accomplishing 400 GW of installed capacity already by 2030.
  • In the Net Zero Emissions Scenario (NZE), global battery storage capacity will reach 780 GW by 2030 and more than 3,500 GW by 2050.

Les US saw a 1,789% growth in battery storage capacity from 2017 to 2022. In Europe alone, this is expected to grow from 4.5 GW in 2022 to 95 GW by mid-century.

Share of battery energy storage in total dispatchable capacity and share of variable renewables in electricity generation for selected regions by scenario, 2021-2050
Source: World Energy Outlook 2022 (IEA, 2022)

As countries deploy greater quantities of BESS, their costs steadily decline thanks to learning effects, innovation and economies of scale.

What is Battery Energy Storage?

In simple terms, battery energy storage refers to a system capable of storing electrical energy in batteries for later use. The batteries charge by drawing electricity from the public grid or from renewable energy sources. They perform this task during periods of low demand or high power generation. In periods of high demand or when renewables are underperforming, they discharge the electricity into the grid.

Solar PV and Battery Energy Storage is the perfect combination for the generation and efficient management of clean energy.

The beauty of Battery Energy Storage Systems lies not only in their long operational life (30 years on average) and high degree of efficiency (up 98%). But it also stands in their high level of flexibility, which shows why their growth is so staggering.

Firstly, they are compatible with many renewable energy sources, including solar photovoltaic, wind power, hydropower and others. But they also match with the conventional grid, where power plants generate electricity by burning coal and natural gas.

Secondly, they are quick to deploy and do not require any major upgrades in the distribution and transmission infrastructure.

Thirdly, they are a modular technology. This means they are easily and rapidly scalable, and in almost every location. This allows investors to align battery deployment with gradual increases in power consumption or generation. Furthermore, it grants them gradual capital commitment.

Fourthly, BESS can be relocated to new areas when no longer needed in the original location.

Now, let’s consider which categories of battery energy storage exist. Overall, we can identify three different groups based on size and purpose.

We can identify three different types of battery energy storage by size and purpose. They include behind-the-meter systems, industrial battery storage and utility-scale battery storage

1. Behind-the-meter systems

These systems are installed with solar panels on the customers’ side of the utility meter. They mainly serve households as well as small and medium businesses.

By storing renewables’ electricity generated in excess or during periods of low demand, these batteries shift consumption from peak to peak-off hours. What does it mean? They charge during periods of the day in which electricity from the grid is cheaper, because consumers don’t use large amounts of it . Then, they immediately discharge electricity into the building in hours where this is more expensive due to high volumes of demand.

As a consequence, families and businesses maximize the efficiency of their solar PV system and increase their degree of self-sufficiency. In fact, the batteries allow them to become even more independent from the utilities, especially in periods of peak demand. Consumers can avoid high and volatile prices of electricity markets. This results in lower electricity bills and more stable and predictable energy budgets.

Concomitantly, behind-the-meter systems enhance energy security and independence by providing backup during power outages.

Solar Energy & Battery Storage for your House

2. Commercial / Industrial Battery Energy Storage

Commercial and Industrial Battery Storage can be installed either on the customer or utility side of the meter. This depends on the size and purpose of the project. Commercial battery systems usually provide on-site energy management for industrial and commercial operations. But they can also exercise relevant grid services, such as ancillary activities and demand response.

This type of battery energy storage includes large batteries, hybrid inverters, and control systems designed to balance the load and provide backup power during periods of high demand or supply fluctuations (see peak shaving). It performs the same function of behind-the-meter systems, but at a larger scale in industrial settings.

Accordingly, companies can benefit from lower energy costs, as well as more predictable and stable operating expenses. They can take advantage of a reliable ROI (10-20% on average), increase the value of their estate and obtain green certificates. Additionally, they can generate additional revenues by letting their BESS perform energy trading or ancillary services for the power grid.

The environmental benefits can be substantial. Commercial battery storage, in combination with solar PV, can decrease carbon emissions by up to 80% compared to using grid electricity from fossil fuels.

Solar Energy & Battery Storage for your Business

3. Utility-scale Battery Storage

Utility-scale battery storage systems are installed at the utility side of the meter. They are larger than the commercial version as they serve the public grid, including utility providers and entire communities. These batteries thus have to store and manage electricity flows for households, commercial businesses, manufacturing facilities and public infrastructure.

It is very common to see grid-scale BESS storing and managing the electricity generated by large solar parks or wind farms. Indeed, when integrated with renewables like solar PV at the utility or community level, these batteries decrease the overall electricity costs of the grid. This means that families and businesses can benefit from the advantages of solar energy without having to install individual PV systems on their roof.

Nonetheless, grid-scale BESS are deployed even without renewables, as they perform the same tasks with the electricity generated by coal and natural gas power plants.

Utility-scale Solar & Battery Storage

Grid-scale battery storage is integrated into the public grid and performs the same basic function of storing and discharging electricity. But it also undertakes many other crucial services to the power network. For example, it stabilizes the grid through ancillary services, minimizes the risk of grid congestions and disruptions, and defers or circumvents costly upgrades to the transmission and distribution grid. It helps balance loads and reduce the need for additional power plants, improving overall efficiency and resiliency.

Simultaneously, these batteries provide backup power during emergencies, ensuring reliable energy supply for entire populated areas. They also offset the variability of renewables, smoothing and speeding their deployment on a large scale. This helps the transition to sustainable power grids.

Grid-scale BESS is mostly owned by utility providers, governments, and a variety of investors. In case of community solar, each community member owns a stake.

How does Battery Energy Storage make power systems more flexible?

Power system flexibility is the ability of power system to effectively manage unpredictable and unstable fluctuations in electricity supply and demand over varying time intervals, preventing disruptions and radical increases in costs. As a result, this reinforces electricity security and facilitates the transition to renewables. Battery energy storage, especially at the industrial and utility-scale level, enhances this ability by providing a diverse array of advantages.

1. Making the Grid more Efficient by Balancing Electricity Supply & Demand

BESS shift electricity from when it is generated to when it is needed. When a renewable energy source like solar PV produces electricity during off-peak periods, the battery system stores this energy. When periods of peak electricity demand come along or when renewable energy sources are not generating enough power due to climate conditions, the battery storage system discharges electricity into grid.

By storing energy during off-peak periods and supplying it during period of peak demand, battery storage is able to balance electricity supply and demand, making the public grid more efficient. As a result, peak demand declines drastically. Furthermore, this decreases the need for building additional power plants, thus saving money for other investments. Concomitantly, it also reduces the reliance on unsustainable peak power plants that are often based on coal and used solely during periods of high demand.

2. Improving Grid Resiliency & Reliability through Backup Power

Energy battery storage provides immediate and reliable backup power in the event of outage or other forms of disruption. This improves grid resiliency and reliability. Companies, households, public infrastructure and entire communities can carry on their activities without having to worry about any lack of power. As a result, they can strengthen their energy security and independence.

During power outages, households can remain connected and benefit from the comfort of having their appliances running normally during blackouts. Businesses, including especially industrial facilities, can maintain operations as usual, avoiding delays, disruptions and additional costs. Critical infrastructure like hospitals and health-care centres can ensure the functioning of life-saving equipment during outages. Schools, universities, train stations, airports and many other buildings can ensure back up power for their visitors and activities. Finally, entire communities are able to maintain operations and stay connected during periods of crisis brought about by natural disasters and other emergencies.

Additionally, BESS reduces the need for costly backup power generation (e.g., diesel generators).

3. Reducing Transmission Congestion & Avoiding Costly Investments

By storing energy on-site, BESS reduce the amount of electricity that needs to be transmitted over long distances. This alleviates grid congestion and reduces the need for costly upgrade and investments in new transmission and distribution infrastructure.

4. Providing Ancillary Services

BESS can help balance the power grid by providing ancillary services such as frequency regulation, spinning, non-spinning & supplemental reserves, voltage support, load-following and load-ramping. This stabilizes the power grid and helps balance supply with demand.

5. Integration with Demand Response

Battery energy storage combines effectively with demand response programs, thus yielding additional flexibility to the power system. For example, during periods of high demand, utilities can incentivize customers to use their stored energy rather than drawing electricity from the grid.

6. Distributed Storage

Battery storage can be deployed in a geographically distributed manner. As a consequence, multiple small-scale storage systems can be located throughout the power grid. This results in increased power system flexibility. This because electricity is stored and discharged independently in multiple locations according to where it is most needed. Additional flexibility can be achieved by relocating BESS to new areas when no longer needed in the original location.

7. Black Start Capability

In the event of a blackout, the electricity stored in the BESS becomes a source of black start capability. This means that BESS provides startup power for power plants in case of an outage or other disruptions.

8. Integration with Electrical Vehicle Charging

Electric vehicles are becoming increasingly popular and new legislations, especially at the European level, incentivize their deployment. EV charging infrastructure will be increasingly required at a residential, commercial and public level. As a consequence, charging stations will progressively draw more electricity in order to power EVs, especially in commercial and public EV charging. Consequently, battery storage can be used to store excess energy and provide it to electric vehicles, thus reducing the demand on the grid during peak charging times.

Why is Battery Storage Crucial?

The answer is simple: to facilitate the energy transition and ensure electricity security in a world powered by renewables. In fact, the rise of battery storage deployment is correlated to the increasing share of renewable energy sources.

It is clear that the power sector must pursue electrification in order to achieve decarbonization. Electricity will become a major playor in the energy sector. By 2050 it will account for 30-50% of final energy consumption, compared to a mere 20% in 2021.

According to the International Energy Agency, renewables are set to be the largest source of electricity worldwide already by 2030. Only in 2022, they met 92% of global electricity demand growth. By mid-century, they will make up 75-80% of electricity capacity additions worldwide. According to three different scenarios, they will generate 65%, 80% and 88% of world’s electricity. And wind and solar together will account for 60-70%.

Global solar PV cumulative capacity exceeds the one of hydropower by 2024, natural gas by 2026 and coal by 2027.

Source: World Energy Outlook 2022 (IEA, 2022)

Now, renewables are variable (or intermittent) sources of energy. They generate energy at varying intensity levels depending on the time of the day, weather conditions and seasons. This augments the variability of the load and makes it more difficult to match supply with demand. As a result, it increases the risk of grid congestion, disruptions and power outages.

Battery storage systems can quickly adjust for these fluctuations by storing electricity in periods of low demand and releasing it in periods of peak demand or when renewables are underperforming. Accordingly, BESS can easily smooth the daily cycle of the electricity generation produced by solar photovoltaic or wind turbines.

If we want a world where renewable energy sources increasingly replace fossil fuels, we must use battery energy storage to enhance power system flexibility and ensure that the green transition does not undermine our electricity security.

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IEA (2022), World Energy Outlook 2022, IEA, Paris, License: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A)

This is a work derived by time2ENERGY from IEA material and time2ENERGY is solely liable and responsible for this derived work. The derived work is not endorsed by the IEA in any manner.

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