Introduction to Industry Best Practice for Battery Performance Warranties

Summary  

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.

Introduction  

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.

Battery Energy Storage Performance Warranties  

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.

Economics  

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.

Performance Metrics 

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.  

Covered by Warranties - Suggested Improvement

Energy Capacity and Degradation 

• Clarification of sensitivity of energy throughput against degradation (SOC over C-rate, vice versa or optimal combination)
• Technology is evolving fast; clarification is needed to how test parameters and environments are relevant to the predicted degradation when implemented
• Clear definition of gain of energy throughput against internal battery losses induced

State of Charge SOC

• Definition of batteries operation to find optimum SOC rate, depending on the type of use (weather at low, medium, or high SOC windows)
• Benefits/impact when integration to the rest of the system in a BESS
• Clarification on impact of calendar aging vs used is predicted
• Clarification in how high DC voltage, while battery storing energy for long period of time, impact SOC

Cell Temperature

• Benefits of different types cells cooling (air-cooling and liquid-cooling systems)
• Understanding of temperature conditions in degrading battery cells versus different uses
• STC temperatures (Tamb=~25 °C) do not represent temperatures where most of operational BESS are located
• Tolerance against colder or hotter climates
• Impact on different SOC against RTE and degradation
• Mitigations against harsh environment conditions (i.e. humidity, dust, ambient temperature)
• Impact of climate change in ambient temperature when designing the sizing of the HVAC how humidity is detected in the battery cells within battery modules

Power Capacity

• Some OEMs do not guarantee power capacity (i.e. excluding the PCS components)
• Clarifications in how to optimally operate batteries at particular power rates
• Clarifications of how different rated powers impact C-rates (or current density- flux, on the cell) accelerating degradation

C-rate

• C-rate is a misleading term. Allows to false performance interpretation which can highly benefit the OEMs
• Clarification in how C-rates (currently defined) are impacted by points beforementioned points

Not Covered by Warranties - Suggested Improvement

Round-Trip Efficiency (RTE)

• Definitions of how burst discharge and fast charging impact the C-rate and therefore the RTE in the BESS as whole
  • OEMs take advantage in passing this risk to the end user (and end user to the EPC)
  • OEMs should be taken into account
• Better understanding of how BESS idle mode, in the whole system, affects the RTE and therefore apports to degradation

Auxiliary Load

• Particularly important for HVAC (air-cooling) system (impacting all points mentioned above), if the LV supply comes from the LV winding of the transformer after the PCS
  • Major risk passed to the end user
  • Not clear parameter to prevent voiding the battery warranty if HVAC performance is not adequate

Network Connectivity Access

• A limited number of OEMs are providing comprehensive warranties, flexible to analyse usage to adapt a system's energy capacity warranty to fit the end use profile
  • Limited to location with access to network
  • National and international regulation required to protect end user
• Lack of clarity how OEMs recalculate energy capacity warranties and how this represents a fair approach
• Original predicted performance by end user can dramatically change by voiding the warranty due connectivity issues

Improvement on Independent Testing Review and Standardisation  

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:

• Review of existing OEM tests and independent validation of the test results
• National and international standardisation for testing of the main parameters impacting degradation such as the ones listed on in above
• Access to independent and true third-party testing
• Extension of protocol testing during FATs and validation through SATs

Conclusion

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: 

• Clear definition and standardisation of key parameters across OEMs such as Energy Capacity, SOC, Cell Temperature, Power Rate and C-rate and how impact degradation, by combination of individual parameter
  • This will increase consumers’ confidence at the stage of battery evaluation enabling them to have a better understanding of project performance
  • Energy Throughput should replace number of cycles (as it is currently defined) as performance metric
  • C-rate definition should be treated carefully
• Increasing battery durability alongside longer contracted warranties had an impulse on levelised costs reduction. Increasing end-user confidence (and investors) through clarity on the performance warranties will additionally have a positive impact on the industry
• The above will be only possible if national and international test procedures are established, in which OEMs must adhere to.
  • Independent test validation and results for current data from OEMs (including data for further technology development)

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 a.blanco@blanboz.com , www.linkedin.com/in/andresblanco77

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