Understanding

Battery Energy Storage Systems

P-31 Resources & Education

Understanding Battery Energy Storage Systems

Battery Energy Storage Systems (BESS) are becoming an increasingly important component of modern electrical infrastructure. For commercial, industrial and critical-facility customers, properly designed energy storage can provide greater control over electricity consumption, reduce exposure to peak demand charges, improve power resilience and support integration with renewable energy.

P-31 Energy provides this resource center to help facility owners, operators, engineers, energy managers and decision-makers understand the fundamentals of battery energy storage and determine whether a BESS solution may be appropriate for their facility.

Whether you are beginning to explore energy storage or are already evaluating a specific project, the resources below provide a foundation for understanding the technology, economics, system design considerations and potential applications.

What Is a Battery Energy Storage System?

A Battery Energy Storage System, commonly referred to as a BESS, is an integrated system that stores electrical energy and makes that energy available when it is needed.

At its most basic level, a battery stores energy during charging and releases that energy during discharge. A commercial or industrial BESS, however, consists of considerably more than batteries. A complete system can include battery modules, battery racks, battery management systems, power conversion equipment, thermal management, protection equipment, controls, monitoring and an Energy Management System (EMS).

The system is designed to operate as an integrated electrical asset that can respond to facility load requirements, utility conditions and programmed operating strategies.

Battery storage can be used in front-of-the-meter utility applications or behind the meter at commercial and industrial facilities.

For a facility evaluating BESS, the objective is not simply to purchase batteries. The objective is to develop an appropriately sized and engineered energy storage system that addresses the facility's electrical and operational requirements.

How Does Battery Energy Storage Work?

A BESS typically operates through two fundamental processes: charging and discharging.

During charging, electrical energy is supplied to the battery and converted into stored chemical energy. During discharge, the stored energy is converted back into electrical energy and delivered to the facility or electrical grid.

The system's power electronics control the conversion between the battery's DC electricity and the AC electricity used by most facilities.

A typical BESS may include:

Battery Cells and Modules

Individual battery cells are combined into modules and larger assemblies to achieve the required voltage and energy capacity.

Battery Management System

The Battery Management System, or BMS, monitors and manages battery operating conditions, including parameters such as voltage, temperature and state of charge.

Power Conversion System

The Power Conversion System, or PCS, converts electrical energy between the battery's DC architecture and the facility's AC electrical system.

Energy Management System

The Energy Management System, or EMS, determines when and how the system charges and discharges based on programmed operating strategies and facility requirements.

Thermal Management

Battery systems require appropriate thermal management to maintain operating conditions and support system performance and safety.

Protection and Safety Systems

BESS installations incorporate electrical protection, monitoring and safety systems appropriate to the technology, installation and applicable requirements.

A properly engineered system brings these components together into a coordinated energy management platform.

Understanding BESS Power and Energy

One of the most important concepts when evaluating battery storage is the difference between power and energy.

Kilowatts — kW

Kilowatts measure the rate at which electrical power is being delivered or consumed.

For example, a facility may have a peak electrical demand of 2,000 kW.

Kilowatt-hours — kWh

Kilowatt-hours measure the amount of energy stored or consumed over time.

A battery with a nominal capacity of 2,000 kWh theoretically contains enough stored energy to deliver 2,000 kW for one hour under idealized conditions.

Megawatts — MW

One megawatt equals 1,000 kilowatts.

Large commercial, industrial and utility-scale projects are commonly described using MW for power capacity and MWh for energy capacity.

Megawatt-hours — MWh

One megawatt-hour equals 1,000 kilowatt-hours.

A BESS described as a 10 MW / 40 MWh system has a nominal power capacity of 10 MW and an energy capacity of 40 MWh, corresponding to a four-hour duration at full rated output under simplified assumptions.

Actual usable capacity and operating duration depend on system configuration, operating limits, state of charge, environmental conditions, degradation and other engineering factors.

What Is BESS Duration?

Battery duration describes approximately how long a battery can deliver its rated power before its usable energy is depleted.

For example:

10 MW ÷ 40 MWh = 4-hour duration

Duration is an important design consideration because different applications require different combinations of power and stored energy.

A system designed primarily for short-duration peak shaving may have very different characteristics from a system intended for longer-duration backup or renewable energy shifting.

The correct duration should therefore be determined from the facility's electrical load profile and intended operating strategy rather than selected simply because a particular battery configuration is available.

Peak Shaving

Peak shaving is one of the most important commercial applications for behind-the-meter battery energy storage.

A facility's electrical demand can vary significantly throughout the day. When electrical demand reaches a high point, the battery can discharge to supplement the facility's electrical supply and reduce the amount of power being drawn from the utility.

The objective is to reduce the facility's measured peak demand.

This can be particularly important for customers whose utility tariffs include demand charges. NREL research has identified demand charges as an important factor in the economics of behind-the-meter battery storage for commercial customers.

A BESS operating in a peak-shaving strategy may monitor facility load continuously and discharge when demand approaches a predetermined threshold.

The actual economic benefit depends on the customer's utility tariff, load profile, battery system characteristics, operating strategy and project economics.

Demand Charge Reduction

Electric utility bills can contain several different components. One of the most important for many commercial and industrial customers is the demand charge.

Energy charges generally relate to the amount of electricity consumed over a period, measured in kWh.

Demand charges relate to the customer's maximum or measured electrical demand, typically measured in kW during a defined interval.

For facilities with significant demand charges, reducing the facility's measured peak demand can potentially reduce electricity costs.

A BESS can discharge during periods of high facility demand to reduce the amount of electricity drawn from the utility.

However, not every facility will achieve the same economic benefit. Utility tariffs and facility load characteristics must be analyzed individually.

P-31 Energy recommends evaluating historical electricity usage, demand charges, tariff structures and load profiles before determining whether battery storage can provide an attractive economic return.

Load Shifting

Load shifting involves moving electricity consumption from one period to another.

A battery can charge during a lower-cost or lower-demand period and discharge during a higher-value period.

Depending on the utility tariff and facility operating schedule, this strategy can potentially reduce energy costs or improve the economic value of stored electricity.

Load shifting can also work alongside peak shaving and other BESS operating strategies.

The appropriate dispatch strategy should be determined using actual facility load data and utility rate information.

Energy Arbitrage

Energy arbitrage involves charging a battery when electricity prices are relatively low and discharging when electricity prices are relatively high.

The potential value of energy arbitrage depends on the applicable electricity market or utility tariff, price differential, battery efficiency, degradation, operating costs and system availability.

Energy arbitrage can be one component of a broader BESS operating strategy rather than the sole purpose of a system.

Battery Storage for Manufacturing Facilities

Manufacturing facilities often have substantial and highly variable electrical loads.

Large motors, compressors, production equipment, HVAC systems, furnaces, refrigeration and other industrial equipment can create significant electrical demand.

Battery storage may be evaluated for manufacturing applications including:

  • Peak shaving

  • Demand charge management

  • Load management

  • Backup power

  • Microgrid applications

  • Renewable energy integration

  • Energy cost management

  • Power resilience

Every manufacturing facility has a unique electrical profile. The appropriate BESS configuration should therefore be based on actual facility data rather than a generic system size.

Battery Storage for Data Centers

Data centers place unusually high demands on electrical infrastructure and power continuity.

Battery energy storage can potentially support data center applications including:

  • Power resilience

  • Backup power architectures

  • Load management

  • Peak demand management

  • Renewable energy integration

  • Microgrid operation

  • Grid-support applications

Data center BESS design requires careful consideration of critical loads, redundancy requirements, electrical architecture, transfer requirements, power quality, operating duration, controls and applicable codes and standards.

For mission-critical facilities, the BESS should be evaluated as part of the facility's overall electrical infrastructure rather than as an isolated battery installation.

Battery Storage for Commercial Facilities

Commercial buildings can use battery storage for a variety of applications.

Potential applications include:

  • Demand charge reduction

  • Peak shaving

  • Load shifting

  • Backup power

  • Solar integration

  • EV charging support

  • Energy management

  • Grid resilience

Facilities with significant electrical demand, variable load profiles or high demand charges may warrant a detailed BESS feasibility analysis.

Battery Storage and Renewable Energy

Battery storage can complement solar and other renewable generation.

Solar generation does not necessarily coincide with a facility's highest electricity demand. Energy storage can allow some of the electricity generated during one period to be used later.

For example, a facility may generate substantial solar energy during the middle of the day while experiencing significant electrical demand later in the afternoon or evening.

A BESS can provide a mechanism for shifting stored energy to a different period.

Energy storage can therefore help increase the flexibility and usefulness of on-site renewable generation.

Microgrid Energy Storage

A microgrid is an electrical system capable of operating with a defined group of loads and distributed energy resources.

Battery storage can serve as an important component of a microgrid by providing energy storage, power management and rapid response capabilities.

A BESS may be integrated with:

  • Utility power

  • Solar photovoltaic systems

  • Generators

  • Critical loads

  • Switchgear

  • Energy management systems

  • Other distributed energy resources

Microgrid design should be based on the facility's critical loads, generation resources, operating objectives, electrical infrastructure and required operating scenarios.

Backup Power and Resilience

Battery energy storage can be incorporated into systems designed to support critical loads during grid interruptions.

The appropriate configuration depends on the required load, transfer architecture, operating duration, available generation and desired level of redundancy.

A battery system intended for backup power should not be evaluated solely by its total MWh capacity.

The critical questions include:

  • What loads must remain operational?

  • What is the required power level?

  • How long must those loads operate?

  • How quickly must the system respond?

  • Is a generator available?

  • Is islanded operation required?

  • What level of redundancy is required?

  • What electrical infrastructure is already available?

These factors determine the appropriate system architecture.

What Is an Energy Management System?

An Energy Management System (EMS) is the control platform responsible for coordinating energy resources and operating strategies.

For a BESS, the EMS may use information such as:

  • Facility electrical demand

  • Battery state of charge

  • Utility rates

  • Operating schedules

  • Solar generation

  • Grid conditions

  • Power limits

  • Battery operating constraints

The EMS can then determine when the battery should charge or discharge according to the system's programmed objectives.

Advanced control strategies may coordinate multiple energy resources rather than treating the battery as an independent asset.

What Is a Battery Management System?

The Battery Management System (BMS) operates at the battery level.

Its functions can include monitoring and managing battery operating conditions, identifying abnormal conditions and maintaining the battery within defined operating parameters.

The BMS is fundamentally different from the EMS.

BMS: manages the battery.

EMS: manages the energy system and operating strategy.

Both systems can be essential components of a properly engineered BESS.

AC-Coupled vs. DC-Coupled Battery Storage

Battery systems can be integrated with electrical generation and facility systems using different architectures.

AC-Coupled

In an AC-coupled configuration, the battery system and other generation resources connect through the AC electrical system using appropriate power conversion equipment.

This configuration can provide flexibility when integrating storage into an existing electrical system.

DC-Coupled

In a DC-coupled configuration, battery storage may share a DC electrical architecture with resources such as solar photovoltaic generation before conversion to AC.

The appropriate architecture depends on the project objectives, existing infrastructure, equipment selection and system design.

There is no universal architecture that is best for every project.

How Is a BESS Sized?

BESS sizing is one of the most important steps in developing an energy storage project.

A system should not be sized simply by selecting a desired number of batteries.

Proper sizing may require analysis of:

  • Historical electricity consumption

  • Facility load profile

  • Peak demand

  • Demand charge structure

  • Energy rates

  • Utility tariff

  • Critical loads

  • Required backup duration

  • Operating schedule

  • Solar generation

  • Existing generation

  • Available electrical capacity

  • Site limitations

  • Expansion plans

  • Desired operating strategy

  • Battery degradation

  • Environmental conditions

  • Interconnection requirements

The appropriate system may ultimately be expressed as a combination of power capacity in MW or kW and energy capacity in MWh or kWh.

P-31 Energy's BESS Needs Assessment is designed to help collect the information required to evaluate these factors.

Why Load Data Matters

A facility's electrical load profile is one of the most valuable sources of information when evaluating energy storage.

Monthly utility bills provide useful information, but interval load data can provide substantially greater insight into how a facility actually consumes electricity.

Depending on the utility and facility, interval data may reveal:

  • Daily demand patterns

  • Peak demand events

  • Seasonal changes

  • Production-related peaks

  • Overnight loads

  • Weekend loads

  • Demand duration

  • Opportunities for peak shaving

This information can help determine whether a BESS is technically and economically appropriate.

BESS Economics

The economic case for battery storage is highly project-specific.

Potential value streams may include:

  • Demand charge reduction

  • Energy cost management

  • Peak shaving

  • Load shifting

  • Backup power value

  • Renewable energy integration

  • Grid services

  • Resilience

  • Avoided infrastructure costs

Project economics can also be affected by:

  • Battery system cost

  • Installation cost

  • Electrical infrastructure

  • Interconnection costs

  • Utility tariffs

  • Financing

  • Incentives

  • Battery degradation

  • Maintenance

  • System efficiency

  • Project life

  • Operating strategy

A credible financial analysis should therefore use actual facility data rather than relying on generic savings percentages.

BESS Safety

Safety is a fundamental consideration in battery energy storage system design, installation and operation.

Modern BESS installations incorporate multiple layers of monitoring, controls and protective systems.

Depending on the technology and installation, these can include:

  • Battery monitoring

  • Temperature monitoring

  • Electrical protection

  • Thermal management

  • Fire detection

  • Fire protection systems

  • Ventilation

  • Gas detection

  • Emergency response procedures

  • System isolation

  • Monitoring and alarms

BESS safety requirements depend on the technology, installation configuration, site conditions and applicable codes and standards.

NFPA 855 addresses stationary energy storage system installation requirements and includes provisions concerning areas such as fire protection, detection, suppression, ventilation and emergency response.

The U.S. Environmental Protection Agency also identifies installation and emergency-response considerations that should be addressed when planning BESS facilities.

P-31 Energy recommends that every project be evaluated against applicable federal, state and local requirements, electrical codes, fire codes and Authority Having Jurisdiction (AHJ) requirements.

What Is an AHJ?

AHJ stands for Authority Having Jurisdiction.

The AHJ is the organization or official responsible for enforcing applicable codes, regulations, permits and approvals for a particular project.

Depending on the location and project, the AHJ may include:

  • Local building authorities

  • Fire departments

  • Electrical inspectors

  • Planning departments

  • Utility authorities

  • Other regulatory agencies

BESS projects should be evaluated early against applicable AHJ requirements because permitting, site design, fire protection, electrical infrastructure and interconnection requirements can materially affect project design and schedule.

BESS Monitoring and SCADA

SCADA stands for Supervisory Control and Data Acquisition.

SCADA systems allow operators to monitor and control industrial equipment and electrical infrastructure.

Depending on the project, a BESS may interface with SCADA, building management systems, industrial control systems or other facility-level monitoring platforms.

Potential monitored parameters can include:

  • Battery state of charge

  • Power output

  • Energy flow

  • Voltage

  • Current

  • Temperature

  • System alarms

  • Equipment status

  • Grid conditions

The appropriate control and communications architecture depends on the project requirements and equipment selected.

BESS Degradation

Battery performance can change over time as the battery is charged and discharged.

Battery degradation can be influenced by factors including:

  • Number of cycles

  • Depth of discharge

  • Operating temperature

  • Charging and discharging rates

  • State-of-charge range

  • Calendar age

  • Operating strategy

Because battery performance changes over the life of a system, project modeling should consider expected degradation rather than assuming that a battery will maintain its initial capacity indefinitely.

Battery Energy Storage: Frequently Asked Questions

How much does a BESS cost?

There is no single price for a battery energy storage system.

Project cost depends on battery chemistry, power and energy capacity, system architecture, controls, electrical infrastructure, installation, site conditions, interconnection, safety systems and other project-specific requirements.

A meaningful estimate requires project-specific information.

How long does a BESS last?

System life varies according to technology, operating conditions, cycling, environmental conditions, maintenance and other factors.

Battery degradation should be considered when evaluating project economics and long-term performance.

How long can a battery provide power?

The answer depends on the system's power capacity and usable energy capacity.

For example, a 5 MW / 20 MWh system has a nominal four-hour duration at full rated output under simplified conditions.

Actual operating duration depends on system limits and operating conditions.

Can a BESS replace a generator?

Not necessarily.

Battery storage and generators serve different functions and can also complement one another.

A BESS can provide rapid response and stored energy, while generators can provide longer-duration energy when fuel is available.

For critical facilities, the appropriate architecture may involve batteries, generators and other distributed energy resources working together.

Can batteries reduce my electricity bill?

They can potentially reduce certain electricity costs, but the financial benefit depends on the utility tariff, facility load profile, battery system and operating strategy.

Demand charge reduction and energy cost management are two potential sources of value.

Is every commercial facility a good candidate for BESS?

No.

The economics and technical suitability of battery storage vary significantly between facilities.

A detailed evaluation should consider the facility's electrical demand, tariff, load profile, operating schedule, critical loads, site conditions and project objectives.

Can BESS work with solar?

Yes.

Battery storage can be integrated with solar photovoltaic systems to store energy and make it available at a different time.

The appropriate configuration depends on the electrical architecture and project objectives.

What information is needed to evaluate a BESS project?

Useful information can include:

  • Utility bills

  • Interval load data

  • Peak demand

  • Utility tariff

  • Facility operating schedule

  • Critical load information

  • Electrical one-line diagrams

  • Existing generation

  • Solar information

  • Available site area

  • Interconnection information

  • Backup requirements

The more accurate the information, the more meaningful the initial evaluation can be.

BESS Glossary

BESS - Battery Energy Storage System.

BMS - Battery Management System.

EMS - Energy Management System.

PCS - Power Conversion System.

kW - Kilowatt, a unit of electrical power.

kWh - Kilowatt-hour, a unit of energy.

MW - Megawatt, equal to 1,000 kilowatts.

MWh - Megawatt-hour, equal to 1,000 kilowatt-hours.

State of Charge - The amount of energy currently stored in a battery, generally expressed as a percentage of usable capacity.

Peak Shaving - Using energy storage or another resource to reduce a facility's peak electrical demand.

Demand Charge - A utility billing component based on a customer's measured electrical demand.

Load Shifting - Moving electricity consumption from one period to another.

Energy Arbitrage - Charging energy storage when electricity has a lower value and discharging when it has a higher value.

Behind-the-Meter - An energy storage system located on the customer side of the utility meter.

Front-of-the-Meter - Energy storage located on the utility or grid side of the customer meter.

Microgrid - An electrical system consisting of interconnected loads and energy resources capable of operating according to defined control and operating strategies.

SCADA - Supervisory Control and Data Acquisition.

AHJ - Authority Having Jurisdiction.

Thermal Runaway - A condition involving uncontrolled heat generation within a battery cell or battery system that can lead to rapid temperature escalation and potentially hazardous conditions.

Round-Trip Efficiency - The ratio of energy delivered by a storage system to the energy required to charge it, accounting for losses.

Depth of Discharge - The percentage of a battery's usable energy capacity that has been discharged.

Degradation - The gradual reduction in battery performance or usable capacity over time and operating cycles.

How to Determine Whether Battery Storage Is Right for Your Facility

The best way to determine whether a BESS is appropriate is to start with the facility's actual electrical requirements.

P-31 Energy recommends beginning with five fundamental questions:

1. What is the facility's electrical demand?

Understanding the facility's peak and average demand provides the foundation for evaluating storage requirements.

2. How is the facility charged for electricity?

Utility tariff structures can significantly affect the potential value of energy storage.

3. When does the facility consume the most electricity?

Understanding the timing and duration of demand peaks helps determine whether peak shaving or load shifting may be appropriate.

4. What loads are critical?

If resilience or backup power is an objective, the facility's critical loads must be identified.

5. What is the desired business outcome?

A BESS may be designed for one primary objective or several simultaneously.

Potential objectives include:

Lower operating costs

Peak demand management

Backup power

Grid resilience

Renewable energy integration

Microgrid operation

Energy flexibility

The right system begins with the right questions.

Start Your BESS Evaluation

Battery energy storage is a significant investment in electrical infrastructure. The most important step is understanding what the facility actually needs before selecting a system.

P-31 Energy works with customers to evaluate their energy storage requirements and identify BESS solutions appropriate to their operational and electrical objectives.

Request a BESS Needs Assessment

Our BESS Needs Assessment helps identify the technical and operational information required to begin evaluating a potential energy storage project.

If you are evaluating battery energy storage for a commercial, industrial, manufacturing, data center, critical infrastructure or other large-scale facility, contact P-31 Energy to discuss your requirements.

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IMPORTANT NOTICE

The information provided in this resource center is intended for general educational purposes and should not be considered engineering, legal, financial, electrical or regulatory advice.

BESS performance, economics, safety requirements and applicable codes vary by project, technology, location and operating conditions.

Project-specific engineering, financial analysis, permitting and regulatory review should be performed by appropriately qualified professionals.

P-31 Energy recommends evaluating each proposed installation based on actual facility data, applicable utility requirements, project-specific engineering considerations and the requirements of the applicable Authority Having Jurisdiction.