Battery Energy Storage: Powering the Future with Smart Solutions
In recent years, renewable energy has been transforming the way power markets operate and dispatch their generation resources. However, one of the challenges with renewable energy, in particular wind and solar, is the intermittent nature of each energy resource. We all know that the sun doesn’t shine and the wind doesn’t blow 24/7. This is where Battery Energy Storage Systems (BESS), simply known as battery energy storage, come into the mix. In this blog post, we’ll explore how battery energy storage systems work, their benefits, applications, and their role in transforming how power markets worldwide operate.
What is Battery Energy Storage?
Battery energy storage, also known as a battery storage system or energy storage system, is a newish technology that uses rechargeable batteries to both store and later distribute the electricity it stores. The batteries act as an energy reservoir, similar to pumped storage, for the excess electricity that is generated by renewable energy resources but can’t be used at that moment in time. Later, when it makes sense to use the stored electricity, the battery dispatches it for use by the electrical grid or end user.
How Does Battery Energy Storage Work?
Image the solar panels installed on your roof are producing more electricity than your home can currently use. In a traditional setup, the excess power generated by your solar panels would be sent back to the electrical grid, assuming the utility allows you to export power. Instead, with battery energy storage, the surplus energy generated from the solar panels on your roof flows from your solar panels into the batteries to be stored for later use. The beauty of the concept is in its simplicity.
Here's a simplified explanation of the process
Charge: When the sun is shining or the wind is blowing, the battery energy storage system captures the sun’s rays or the wind that’s blowing, and stores that energy in the batteries.
Optimize: Advanced software analyzes the production of your battery system, your historical energy usage, your utility rate structures, and weather patterns. The software then determines when best to dispatch the stored electricity in the batteries ensuring maximum efficiency and potential revenue generated by the battery energy storage system.
Discharge: When your energy demand exceeds the production of the solar panels on your roof or when the grid is experiencing peak demand events, the stored energy in the batteries is discharged from the battery to meet that demand.
Benefits of Battery Energy Storage
Battery storage paired with a renewable energy resource, like solar or wind, can offer an array of benefits in the power markets including:
Grid Stability: Battery energy storage can help balance the supply and demand on the electrical grid by providing a steady flow of power supply during peak demand events, which reduces the strain on the electrical grid.
Energy Independence: Battery storage can make the end user, whether that be a business or residential customer, less reliant on the electrical grid by having the ability to tap into stored electricity when the supply of solar or wind can’t meet their current demand.
Emergency Backup: Extreme weather events, like hurricanes, or power outages due to peak demand events put strain on the power grid. Battery storage can be an ideal energy resource to step in as a reliable backup power source, keeping essential services like hospitals up and running.
Cost Savings: Buying power during peak demand is expensive no matter which way you slice it. Ask any retail energy provider in ERCOT and they’ll tell you war stories of what happens when resources in Texas can’t meet the state’s demand. By storing excess renewable energy when electricity rates are low and then dispatching that stored electricity during peak demand events, you as a homeowner or business can defer the costs you’d otherwise pay during these expensive energy-buying hours.
Applications of Battery Energy Storage
Battery energy storage is a Swiss army knife with applications in different environments including:
Residential: Homeowners with access to battery energy storage paired with onsite solar can reduce their reliance on the main electrical grid, hedge their cost exposure to buying power during peak demand pricing, and have access to electricity supply during grid outages caused by natural disasters or power outages.
Commercial: Similar to homeowners, businesses with access to solar plus storage can utilize peak shaving to manage their electricity cost exposure during peak demand hours which translates to energy savings impacting their bottom line.
Microgrids: Grid outages or emergency events put a premium on the ability to access the electricity supply. Microgrids are one answer to this scary scenario by ensuring a continuous supply of electricity when the grid is unable to supply reliable power supply.
The Battery Storage Market
The battery storage market continues an upward installed capacity trajectory with tailwinds from incentives baked into federal policy like the Inflation Reduction Act. That, in addition to the downward pressure of build costs, is allowing end users to tap into the benefits of battery storage. The same can likely be said of utilities and independent power producers whose fleets continue to age. One question likely asked in utility and independent power producer boardrooms is what are the cost savings associated with adding battery storage to their generation portfolio versus the costs of running peaker plants to meet demand?
Battery Storage Costs
It’s no secret that investing in any energy resource, including battery energy storage systems, comes at an upfront cost. Battery systems in particular tend to require more capital as the technology cost curve hasn’t come down yet to the level you see in more mature renewable energy technologies like solar and wind. However, when you factor in the potential long-term savings offered by battery storage, in addition to new revenue streams battery storage may open up like ancillary services in some markets, you can walk yourself into a situation where the long-term savings and revenue upside outweigh the initial investment.
Conclusion
Battery energy storage systems can be great at storing excess renewable energy when it’s not needed and dispatching that energy when it makes the most economic sense. As the battery storage market continues to expand, the market can and should expect to see even more innovative use cases and applications to further drive down costs as well as open up new sources of revenue for project owners.
