What is BESS and How Does it Work?

Battery Energy Storage Systems (BESS) are advanced energy storage units capable of storing surplus energy and releasing it on demand. These systems store energy during peak production periods and dispatch it bi-directionally to stabilize supply when needed. This ability to release stored electricity rapidly makes BESS ideal for grid balancing, enhancing grid stability, and maximizing renewable energy usage.

What Challenges Does The Shift Towards RES Bring?

The global energy landscape is changing rapidly, and analysts and industry observers are noting a surge in ambitious projects to decarbonize.

Major renewable energy storage projects are being launched daily, accelerating the shift toward sustainable power sources. However, this transition brings new challenges, particularly in managing the nature of wind and solar energy power production. The two primary challenges are:

• Sustainability and reliability of supply
• Reduced economic value during peak production (overproduction leading to negative prices)

Due to the inherent volatility of weather-driven electricity, the industry is investing heavily in digitalization and data integration. Predicting supply and demand has become crucial for optimizing both trading and production, given that electricity—unlike many other commodities—cannot be easily stored for later use. Maintaining a constant balance between power production and consumption is crucial.

Additionally, revenue planning for renewables has grown more complex. Benchmarking against liquid baseload prices is less reliable as the spread between peak and base prices widens. Battery Energy Storage Solutions (BESS) are emerging as a key tool to mitigate these issues.

The Role of Large-Scale Battery Energy Storage Systems (BESS)

Given these dynamics, large-scale, industrial BESS is gaining traction. The main advantages of BESS include:

1. Store Renewable Energy (RES) Surplus: BESS units offer flexibility by dispatching electricity bi-directionally, providing reserve capacity for grid balancing. During peak production periods, when excess energy often leads to negative prices, BESS can store this surplus and dispatch it later when economically feasible.
   In this way, BESS enables multiple revenue-generation options, either as a traditional storage facility or as a balancing energy source. However, commercial optimization of battery assets is complex and can be further affected by regulatory requirements. For example, in some US states, batteries may only be used in one of these two roles.
2. Cost Savings: Leveraging BESS allows operators to purchase electricity at off-peak rates and use it when prices are higher, maximizing cost efficiency.
3. Enhanced Grid Reliability: BESS helps maintain a balanced power supply by redistributing excess energy, enhancing grid resilience.

With that being said, it is worth noting some main disadvantages of BESS:

1. High Initial Costs: BESS requires substantial investment in installation and infrastructure.
2. Limited Capacity and Lifespan: With an operational lifespan of 5–15 years, battery systems require periodic replacement.
3. Safety and Environmental Concerns: Material sourcing and disposal pose environmental risks, particularly with lithium-ion batteries.
4. Recycling Challenges: Recycling technologies for lithium-ion batteries are still developing, leading to potential waste concerns.

IT Landscape Challenges with Battery Storage Integration

The integration of BESS into energy operations introduces significant IT challenges. The decision whether to curtail production during a given period now has a new option available—to store. Such decisions are, to a large degree, automated via asset steering platforms, which would now require integration to consider additional complexity. Additionally, if BESS provides grid balancing services, this also needs to be considered.

From a financial perspective, BESS impacts asset planning. Storage availability influences the “capture price” (the planned average selling price for asset production), adding a new layer of complexity to revenue management and reporting.

As the battery storage market grows, these challenges will inevitably impact large-scale energy traders and producers. BESS’s impact on the existing IT landscape will likely include:

1. Risk and Revenue Reporting for battery assets: Accurate revenue forecasting and reporting for battery storage assets requires new data frameworks to account for fluctuating capture prices.
2. Impact on renewable assets with collocated batteries: When batteries are deployed alongside renewable assets, such as wind or solar farms, IT systems must manage data and dispatch impacts for both asset types simultaneously.
3. Requirements for asset steering platforms to handle increased complexity: These platforms must be updated to account for BESS, balancing supply and demand in real time while optimizing revenue potential.

Preparing for the Future of Battery Storage Market Growth

To meet the demands of this new asset type, comprehensive analysis and preparation are necessary—particularly as BESS projects continue to grow in economic viability.

By addressing these technical and operational challenges, battery energy storage systems can unlock further potential within the renewable energy sector, enhancing sustainability and stability for the future of energy.

Author: Georgi Chapanov

Editor: Hristina Tankovska