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Jackson, MI 49201

Jul 10, 2024

Battery Energy Storage Systems (BESS) are revolutionizing the energy landscape by unlocking the full potential of renewable resources.

Author: Lake Lund, Business Development Manager at Commonwealth Associates

Discover how Commonwealth Associates provides expert engineering and consultative services that enable a more reliable and resilient power system.

Introduction to BESS

Whether you are a titan in the renewable energy space, or have a background in oil and gas, batteries have surely been an emerging topic for discussion. In the United States, Battery Energy Storage Systems (BESS) have been rapidly increasing since 2021. According to the Energy Information Administration (EIA), in 2024 alone, BESS capacity is expected to increase by 89%, which would amount to adding and commissioning more than 15 gigawatts nationally. This drastic increase in BESS adoption is spearheaded by renewable energy developments in solar and wind. These storage systems are the antidote to unlocking the true potential of renewable energy.

Why are batteries a crucial part of renewable energy? A battery stores excess power produced from renewable sources, such as wind or solar. The system can store the renewable energy until the grid needs a boost. Think of it like saving water in a storage tank during the rainy season, only to be utilized upon necessity.

Among the many battery technologies available, the battery chemistry typically used for utility-scale and residential practices is Lithium-ion (Li-ion). Li-ion batteries are known for their high energy density, low maintenance and cost effectiveness compared to alternative chemistries. This technology works great for residential storage, which typically ranges from 3 kWh to 13.5 kWh. In commercial and utility-scale projects, these batteries can individually store a few megawatt-hours (MWh) to a few hundred MWh. The sheer size difference between these batteries is immense, but their functionality is very similar.

Generating power from renewable resources is remarkable, but challenges lie in the intermittent nature of solar and wind generation. When energy production from solar is low, such as nighttime, batteries can be deployed to discharge power to the grid. BESS assets not only prove to be a necessary component of renewable energy production, they are also the linchpin for fully realizing the transformative impacts solar and wind provide.

Debunking the Misconceptions

A misconception frequently echoed in the energy industry is pricing related to battery technology. There is an industry wide misconception that BESS is not economical. This may have been true in the past. Fortunately, innovation in technology, coupled with improvements in lithium mining and the diversification of supply chains, have made batteries cost-effective. Commercial and residential use cases offer the ability for peak shaving, which is the deployment of stored power during peak (higher cost) hours. Also, the ability to sell excess power back to the power grid is another added benefit BESS offers. The overall cost of incorporating BESS into a project has decreased, while the potential to monetize these investments has increased significantly.

A final misunderstanding surrounds grid integration and permitting for battery energy storage systems. Historically, securing permits and commissioning rights for BESS was challenging. However, Texas, an industry giant in oil and gas, debunks this myth. Excluding interconnection, the lone star state boasts relatively relaxed permitting requirements comparatively, which leads to the streamlined commissioning of small-scale BESS projects. Texas has emerged as a force in renewable energy and BESS, rivaling California. This is noteworthy since California has a much longer history of renewable-friendly policies. States like Texas are progressively easing restrictions, streamlining interconnection processes, and expediting the commissioning of BESS projects statewide. The federal government will continue to improve policies surrounding this issue, which will lead to many states replicating Texas’s successes.

Benefits of BESS

Now we have covered the battery basics and debunked some common myths. Let us transition into the benefits that batteries bring to the table.

Batteries provide grid stability and in certain use cases, frequency regulation, by offering rapid response capabilities that balance supply and demand fluctuations in the power grid. When generation from renewable sources like solar or wind exceeds demand, batteries can store the excess energy. This prevents overloading and allow for stabilization of the grid. Conversely, during periods of high demand or low renewable output, stored energy can be quickly dispatched to meet the shortfall, maintaining a steady supply. Certain applications help regulate grid frequency by absorbing or discharging power, counteracting deviations from frequency caused by sudden changes in electricity consumption or generation. This abrupt response is critical for preventing frequency-related issues that could lead to blackouts or equipment damage.

When implemented as a microgrid, these crucial puzzle pieces also enhance energy security and resilience by providing reliable backup power during grid outages and emergencies. Batteries store energy from renewable sources, ensuring a continuous power supply even when traditional power plants fail or are unavailable. This capability reduces dependence on fossil fuels and centralized power systems, making energy systems more resilient to disruptions and blackouts.

Batteries also enabling residential home electrification. Many homeowners have purchased or will be purchasing their first electric vehicle within the next few years. Many of these individuals will be adding a home charging unit to their homes, which is typically going to be the largest load for many households. Since many people charge their cars at night, battery power will be crucial for maintaining this massive power draw felt across the grid. On top of electric vehicles, many people are beginning to fully electrify their homes. This includes solar and home battery, heat pump HVACs, heat pump water heaters, smart home devices, and even lawn care equipment. In the coming years, home electrification will become more standard, and batteries will be key to keeping up with this new demand.

Batteries play a crucial role in Energy-as-a-Service (EaaS) models by enabling monetization opportunities. Through EaaS, batteries provide ancillary services such as peak shaving, spinning reserve, and frequency response. By storing excess energy during periods of low demand and supplying it during peak times, batteries help utilities and power producers manage electricity demand without interruption. Utilizing battery power for energy supply might account for 20% of the revenue stream, as the battery may only be discharging for one hour per day. The remaining 80% of revenue could be generated from other services, such as spinning reserve and frequency response. Although this might result in lower payouts compared to power generation, the battery can provide spinning reserve and frequency response services for up to twenty-two hours per day, compared to just two hours for power generation. These ancillary revenue streams make batteries a profitable asset, promoting their widespread adoption and integration into both residential and commercial ecosystems.

BESS also significantly contributes to overall cost savings by reducing the need for peaker plants. Peaker plants, which are activated during periods of high electricity demand or emergency situations, are typically less efficient and more expensive to operate and maintain. Batteries, on the other hand, require little maintenance once operational. According to PV Magazine, batteries are 17% (two-hour) and 30% (four-hour) cheaper than a traditional peaker plants when comparing the levelized cost of energy delivered by a new 250 MW gas peaker plant with 250 MW four-hour and two-hour grid-scale batteries. 

Moreover, the investment opportunities battery systems present are robust. As the cost of battery technology continues to decline, the economic feasibility of BESS improves, attracting investors in both the private and public sectors. Investors are particularly drawn to the many revenue streams offered by BESS, including peak shaving, frequency regulation, spinning reserve, and participation in energy markets. Continuing to use Texas as an example, it echoes the economic power batteries unlock. The cash flow opportunity these investments provide outshine the underlying political field and proves to be compelling enough to sway from traditional party values. Additionally, government incentives and policies aimed at reducing carbon emissions further boost the attractiveness of battery investments. The Inflation Reduction Act provides an investment tax credit (ITC) with a direct pay option, bonus credits for different scenarios such as the use of domestic products, and even research and development funding. These incentives from the government, coupled with the diverse revenue stream opportunities, offer significant long-term returns for investors.

Now, let us focus on the foundational principle driving BESS and renewable energy – Decarbonization. Deeply rooted at the intersection of politics and capitalization, decarbonization is still the driving force behind BESS. Batteries provide positive environmental impacts by enhancing the use of renewable energy and reducing reliance on traditional power plants. By storing excess power from renewable sources like solar and wind, BESS ensures a consistent supply of clean power, even when these sources are not actively producing. For instance, research suggests that deploying BESS can reduce carbon emissions by up to 70% compared to traditional power producers. BESS also helps to minimize energy waste, as stored energy can be used during peak times instead of generating new power from less efficient and more polluting sources. Additionally, BESS spearheads the decentralization of energy systems, promoting local renewable energy generation and reducing transmission losses. These benefits collectively contribute to a significant reduction in carbon emissions, air pollution, and overall environmental footprint, leading to a more sustainable and cleaner future.

BESS(t) Practices

To transform concepts into reality, one should familiarize themselves with Commonwealth Associates, Inc. Commonwealth has been a mainstay within the energy landscape dating back to 1888. Our current company format dates to 1988. In addition to our impressive history, we boast over 260 employees across 8 office locations which are strategically placed nationwide. Our team offers a unique blend of innovation, precision, and an unwavering drive for success, trailblazing towards a future where energy resilience is not just a goal, but a reality.

At Commonwealth, we are a nationally recognized leader that boasts hands on experience with BESS projects. We have completed numerous projects in eight different states, with capacities ranging from 2 MW/8 MWh – 250 MW/500MWh. Our subject matter experts, across all disciplines, will handle every detail of your project. Further, we aid in the selection of battery chemistry that best suits your needs and we have ample experience integrating BESS into your renewable energy source. At Commonwealth, we are setting the standard toward the path for battery technology, unlocking more renewable energy sources like solar and wind.

With all the benefits of BESS in mind, implementing BESS provides federal incentives and a potentially massive ROI, while unlocking the key to decarbonizing the energy industry. Batteries enable the integration of renewable energy sources while enhancing energy security. This underscores battery technologies importance in our transition towards a cleaner, more resilient energy landscape. Battery technology will play a pivotal role in our stewardship of the planet. Allow Commonwealth to empower your implementation of this amazing technology.

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