BATTERY STORAGE SYSTEMS BESS: These factors are driving the growing demand

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This article discusses the trends and factors affecting the battery energy storage system market. It should provide a useful background for visitors to the PCIM Europe 2022: Batteries & More – Energy Storage Pavilion.

The PCIM Europe exhibition and conference for power electronics and its applications takes place in Nuremberg, 10 – 12 May 2022. One highlight will be the Batteries & More - Energy Storage Pavilion. This will include a special focus on batteries, and presentations of the latest power quality and energy storage electronic products.

This article offers some useful background to this exhibition highlight, by reviewing the factors driving the growing demand for stable energy storage systems.

Battery energy storage systems (BESSs) are fulfilling ever more applications, all around the globe. In 2020, for example, over 31,000 and 100,000 BESSs were installed by Australian and German households respectively; on a larger scale, a BESS fleet comprising nearly 500 MW is being deployed across the Philippines to make the national grid more stable.

One obvious driver for BESS growth is the increasing adaptation of solar or wind generated renewable energy (RE) – and the more RE is added to a system, the more energy storage will be needed for stabilization and time-shifting between supply and demand. However, BESS applications are wider than just buffering and time-shifting. Energy storage is first and foremost a technology for making the grid work better – improving power quality, reducing outages and volatility, and enabling generation assets to perform at more optimal set points.

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Because a BESS can be connected at either the AC or DC level, projects can be sited where they will provide the most benefit. And unlike more infrastructure-heavy flexibility assets like pumped hydro storage or gas generation, BESS projects have a small footprint, faster deployment timelines, charge from the regional grid, have no risks from water availability, and only require a grid connection - no pipelines or huge civil works needed.

Once installed, a BESS can charge and discharge electricity from the grid and ramp up and down at split-second speeds that traditional generators like gas or diesel cannot match. This ability to balance distribution networks is useful anywhere, but particularly so in parts of the world that suffer from both poor distribution infrastructure and lack of capacity, meaning BESS projects can really accelerate global electrical infrastructure growth for years to come.

Mitigating the insurance risk

Perhaps counter-intuitively, another growth factor relates to risk. With a track record of several high-profile losses, BESSs have been seen as risky propositions. Thermal runaway, fire and possibly explosion are the biggest and most damaging threats, but mechanical and electrical breakdowns can occur as well. For example, the inverter used to generate an AC output from the batteries’ DC power is a vital component, and a single point of failure.

BESSs can also be vulnerable to damage arising from poor handling by installers inexperienced in their relatively new technology. Yet the technology is no longer entirely new, and there is growing confidence in the insurance market as it becomes better understood. There are also safety standards such as the USA’s NFPA 855 that BESS suppliers can implement to demonstrate that their installations are safe for insurance and use.

All of this means that, for BESS suppliers who follow the right procedures, barriers to sales have become less formidable.

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Lithium-ion and other battery technologies

Although there are some countertrends and pressures, lithium-ion battery prices have continued to fall. From above USD1,200 per kWh in 2010, they have fallen by 89 % in real terms to USD132/kWh in 2021. This is also a drop of 6 % from USD140/kWh in 2020. These continuing cost reductions favor BESS growth, as, according to the US Energy Information Administration (EIA) over 90 % of large-scale BESS systems in the US use lithium-ion batteries - and these figures are closely reflected globally.

However, the impact of rising commodity prices and increased costs for key materials such as electrolytes has put pressure on the industry in the second half of 2021.

Prices continued to fall in 2021 as the adoption of the low-cost cathode chemistry known as lithium iron phosphate (LFP) increased, and as the use of expensive cobalt in nickel-base cathodes continued to slide. On average, LFP cells were almost 30 % cheaper than nickel manganese cobalt oxide (NMC) cells in 2021. However, even low-cost chemistries like LFP, which is particularly exposed to lithium carbonate prices, have felt the bite of rising costs throughout the supply chain. Since September, Chinese producers have raised LFP prices by between 10-20 %.

Yet, based on historical trends, Bloomberg’s New Energy Finance’s (BNEF’s) 2021 battery price survey predicts that by 2024 average process should be below USD100/kWh, although achieving this could be delayed by higher raw material prices.

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A couple of other battery technologies offer opportunities for BESS builders in specific applications. Sodium-sulfur (Na-S) offer high energy and power density, a long lifetime, and stable operation under extreme ambient conditions. However, they operate at high temperatures (at least 300°C) and are sensitive to corrosion. Also, sodium is a hazardous, highly flammable, and explosive substance. Therefore, Na-S batteries are best suited for standalone energy storage applications integrated with renewable power sources.

Unlike conventional rechargeable batteries in which energy is stored in solid electrode material, flow batteries store energy in liquid electrolyte solutions. The most common flow battery type is the vanadium redox battery (VRB). The other types consist of zinc-bromine, zinc-iron, and iron-chromium chemistries. Despite their low energy capacity and low charge/discharge rate, flow batteries have several important advantages, allowing them to hold a large market share in on-grid and off-grid energy storage systems, including large-scale applications. These benefits involve an extremely long lifespan (up to 30 years), high scalability, fast response time, and a low risk of fires because flow batteries contain non-inflammable electrolytes.

Wide range of applications

The motivation to make BESSs easily accessible, efficacious, cost-effective, and safe is powerful, because they make valuable contributions to so many aspects of power generation and distribution:

• Load and energy demand management – balancing on-peak and off-peak loads

• Energy time-shift (Arbitrage) – to manage electricity price fluctuations

• Backup power – A BESS can act as an uninterruptible power supply (UPS) and eliminate downtime during an electricity grid failure

• Black-start capability - A BESS can replace a diesel or natural gas generator used by power plants to restore power generation after blackouts by leveraging its black-start capabilities.

• Frequency control - Battery storage systems can regulate frequency in the grid, ensuring that its value lies within the required range.

• Renewable energy integration - Integrating battery energy storage systems with intermittent renewable energy sources makes inexpensive electricity continuously available to on-grid, off-grid, and hybrid systems.

• Transmission and distribution (T & D) deferral - battery energy storage can eliminate the need to build new transmission and distribution systems or update existing T&D assets that lack capacity or become obsolete.

• Microgrids – Standalone microgrids in remote regions can rely on battery storage systems integrated with intermittent renewable energy sources. Such solutions enable smooth power generation and help avoid heavy expenses and air pollution associated with diesel generators.

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Many vendors around the world now offer off-the-shelf BESS solutions in a wide variety of capacities, prices, and intended uses, and they are becoming more affordable to consumers. However, despite their plug & play implications, purchasers still need expertise and qualifications to be sure of the quality and completeness of the system they are buying. While sourcing an off-the-shelf BESS will save time if the purchase is successful, the alternative of developing a custom battery energy storage system is also worthy of consideration.

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