Battery Energy Storage Systems have seen increasing volumes of deployment largely due to decreasing system costs, extended warranties and new markets for BESS services, even for longer duration systems above four hours. This expansion has brought key risks to the BESS operators, investors and lenders to evaluate and forecast performance (particularly in relation to battery degradation estimates) due to ambiguity in terminologies, specification and operation of batteries. Battery performance risks are typically managed through warranties, however warranties can be difficult to specify due to variation in battery technology and use cases. To mitigate these challenges, warranties should include definition of all key project parameters, properly referenced standards and independent testing requirements.
The increasing demand of Battery Energy Storage System (BESS) has enabled grid operators to take advantage of these systems due the faster-response frame when compared to other renewable technologies. Smarter and automotive grids have allowed BESS (particularly Li-ion type) to access new markets. As different markets/services for BESS are integrated onto the system, the batteries have to perform in different (dis)charging rates having an uncertainty factor in battery degradation and consequently the lifespan of the system.
Most battery Original Equipment Manufacturers (OEM) provide warranties that cover product defects and guarantee performance. Guarantee performance warranties are currently not well standardised, and in times not well defined, across OEMs, the lack of fundamental guarantee performance definitions in the industry leads to not having one warranty that appropriately manages performance risk across the lifetime of the system.
There are three main objectives behind most standard battery performance warranties (for BESS Li-ion type). Firstly, it attempts to frame the life cycle economics of the battery from beginning to end of life (BOL/EOL) based on one particular mode of use. Secondly, warranties tend to guarantee performance based on performance metrics defined, and most of the time, by only the available energy capacity (kWh) at a particular year, depending on a number of cycles which do not necessarily have a true reflection in battery degradation.
Additionally, these warranties tend to exclude any other main component such as the power conversion system/inverter. Thirdly, the battery industry is also lacking a robust and independent testing program shadowed by the ambiguity within national and international standards; strengthening these limitations is fundamental to the future of the industry.
Whilst system cost declines have been the most critical trend in energy storage economics in the past years, BloombergNEF estimates showed that improving systems durability is the critical driver in the cost of storing energy in 2020. The capex of building grid-scale battery storage plants has dropped 38 % in two years, from $471 to $293 per KWh for four-hour systems, before prices spike due to difficulties sourcing row material and volatility in the mineral market late in 2021. One possible way to further reduce costing on BESS and increasing confidence in the market is by securing longer battery durability throughout clearly defined and standardised warranties across OEMs
Although, this is an important indicator, longer warranties still do not create technical transparency to how the guaranteed performances are projected. Warranties based only on number of cycles do not reflect the true correlation with battery BOL capacity, aging and energy holding close to EOL. Therefore, a potential solution is to implement energy throughput securities (MW/MWh or often referred as MWh) as the main performance metric across all OEMs.
As briefly introduced in above, Energy Throughput (or sometimes referred in warranties as the minimum capacity retained by the battery at a particular year) is a comprehensive metric that evaluates the total energy an a OEM expects the battery to deliver throughout its lifetime. The critical limitation could arise that new services/usage for BESS are appearing changing the original intent of use and therefore compromising warranted capacity. Nevertheless, due to the lack of standardisation, the end user is still digesting major performance risks in evaluating these warranties.
The summary below shows the summarises relevant parameters (covered and not) in warranty performance that need better clarity from OEMs to understand (and possibly validate) the impact in the degradation of the batteries.
Energy Capacity and Degradation
State of Charge SOC
Round-Trip Efficiency (RTE)
Network Connectivity Access
When comparing to different type of projects in the renewable energy industry such as solar or wind technologies, one can realise that standards for battery performance are less specific. This can be argued due to the immaturity of the technology, or chemistry used, and the fast changes it must adapt in a short timeframe. However, it can be disputable that the OEMs are taking clear advantages. When improving degradation models, there should be room for review and implementation of procedures, as suggested below:
Warranties can help create a level playing field for guarantee performances based on transparency and good practice from OEMs. Good practices of warranty performance can be summarised as follow:
About the author:
Andres Blanco – Project Consultant | Managing Director at Blanboz, I’m an engineer with almost 15 years of experience in the renewable energy field, with the last seven to eight of these years fully dedicated to BESS through the full project life cycle. I am also passionate about explosion and fire prevention and suppression’s implementation in BESS. Electricity for all - Batteries lead the charge. Further information at www.blanboz.com , if you want to contact me, please do so at email@example.com , www.linkedin.com/in/andresblanco77
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