Period
1960 1970
1970 1980
1980 1990
1990 2000
2000 2010
2010 Today
Researching the Department of Energys Global Energy Storage database sheds some light into
the state of the industry. We can see the that the 60s, 70s, and 80s where dominated by the
deployment of pumped hydro plants. It wasnt until the 90s when the first electrochemical
energy storage system deployment was recorded. Within the context of modern energy storage
this marks the beginning of what we see today in the industry. Significant research and
development took place during this period as well as in the 2000-2010 period. As it can be seen
from Figure 1 deployments have really taken traction in the 2010-Today period. While this is a
relatively short amount of time to think that standardization and harmonization of requirements
is under way some key trends have become clear.
It is clear from the database that the majority of systems deployed in the 2010-Today are
electro-chemical systems. The footprint, modularity, project execution risks and capex
requirements of these systems are such that the market has reacted positively to a wide variety
to chemistries. While there are other technologies that are very promising and/or have clear
advantages for certain use cases batteries are here to stay.
Figure 2 reveals another key trend, Lithium-ion batteries have dominated the deployment of
battery energy storage systems. Also, based on recent project announcements Lithium-ion
continues to gain momentum and its poised to be the most deployed technology over the next 3
to 5 years. This trend is resulting in the consolidation of opportunities and projects around a
technology. This in turn is enabling costs to decrease by reusing designs from project to project
as well as improved costs due to economies of scale. As a word of caution Lithium-ion is not the
perfect battery technology, but its mature in comparison to other chemistries. The intricacies of
deploying systems including sizing, performance, fire suppression, permitting, etc. have been
worked out by several project developers and the technology is starting to be recognized and
understood. This is a huge advantage as we expect the industry to grow as previously
mentioned.
Figures 3 and 4 depic another trend where certain use cases and value streams are becoming
predominant. In the category of grid support services bulk frequency and voltage regulation are
2 of the main use cases for battery energy storage systems. This has mainly been enabled by
the market structure in PJM (regional transmission organization in the north east and mid
atlantic of the US). In PJM these grind support services are compensated at a rate in which not
only the power capacity and provided kWhr are taken into consideration but performance too.
The performance and flexibility of energy storage systems enables them to capture this market
enabling profitable deplooyments. This compensation structure is expected to roll out into other
regional transmission organizations in the US, expanding the available market for these use
cases. While there are many technologies that have gone into this market, Lithium-ion is one
that has gained significant traction for such use cases. From a technical requirements
perspective these systems need to provide fast discharge rates (provide high power for
seconds) and very precise reaction times to market signals. In addition, these systems will
typically support multiple charge and discharge cyles per day. These items ultimately yield
systems that have specific cells for the use case (higher C discharge rate), higher capacity
thermal management systems to deal with the heat disipated during high power discharge
cycles, larger conductors to support the required currents and minimizing losses, as well as
battery packs that are tailored to provide high amounts of power for short durations of time. This
clarity is enabling manufacturers to aim their designs to cater to very specific set of
requirements enabling standardization and repeatibility.
Figure 3. Grid tied energy storage system installations by grid support applications
Use cases related to bulk energy utilization are described in Figure 4. Time of use shifting and
renewables capacity firming are the dominant use cases in this category. In contrast to the
requirements of grid support services applications these systems store energy in bulk and their
discharge rate is rather slow in the order of hours. Technical requirements in turn are different,
with battery packs engineered to support 1 to 2 cycles per day, low C rates, and low current
carrying capability when compared to systems engineered for grid support services.
Consequently, the thermal management system and power connectivity is engineered to deal
with lower amounts of heat dissipation and current carrying capability respectively. Providers
supplying solutions capture these use cases have the opportunity to standardize their designs
driving repeatability and reducing overall costs. The volume projections in the industry should
provide enough motivation to invest in this optimization since the expected cost reductions
obtained through this standardization of designs in the balance of the system is significant.
Figure 4. Grid tied energy storage system installations by power plant support applications
Accessories
All of these sub components are closely interrelated and are designed and engineered to
support the system requirements and intricacies of the battery chemistry selected. The
mounting solution of the batteries is not trivial; it influences structural integrity as well as the
performance of the thermal management system. It also rules the layout of the batteries within
the container which in turn limits the amount of kWhr one can fit. Major battery manufacturers
typically provide their own solution and standard EIA racks are used by several of them. These
racks are then used as standard building blocks for the BESS. The batteries together with their
mounting solution represent the largest cost driver. Market price of this portion of the scope
ranges from 150 600 USD/kWhr with flow batteries being in the lower side of that range,
Lithium-ion right in the middle, and specialized batteries offering better life expectancy, number
of cycles, and performance in the upper end of the range. One item to take into consideration
when evaluating costs is the fact that not all manufacturers package their product in the same
manner, as a result not all USD/kWhr figures one comes across are directly comparable. Some
manufacturers include racking, battery monitoring system, cable connections, and short circuit
protection in their stated figure while others do not. Having a clear understanding of the scope of
supply relative to the USD/kWhr figure of a particular manufacturer is very important when
evaluating vendors since the items mentioned above are needed in the system.
The second largest cost driver in containerized solutions is the container itself. Based on the
size, complexity, source of the structure, and volumes costs range between 25k 85k USD.
Beyond materials, these structures are costly due to their engineering and labor content.
However, there is typically significant cost reduction potential when driving volumes up. There 2
main reasons for this; commodities utilized to build the structure can be purchased in bulk and
stocked, also, volumes enable the possibility of investing in a manufacturing environment where
production line layout and automation work together to dramatically reduce the number of
manual labor ours required to produce one unit this is only possible with scale. Another
element that should not be disregarded is logistics. Transportation and rigging of the unit can
also be a surprisingly expensive item. Adhering to ISO standard container dimensions is critical
to ensure cost effective solutions for transportation and rigging. This becomes a significant
challenge when designing manned enclosures due to NEC workspace requirements. With most
manufacturers utilizing standard EIA racks it becomes a challenge to fully utilize the space
within the container. Space underutilization within the container will ultimately result in a less
competitive solution from a USD/kWhr perspective.
The thermal management system is another intricate aspect of the design of these solutions. It
ensures the environment has the adequate temperature and humidity maximizing the life
expectancy of the battery pack. The battery chemistry and use case determine the
requirements, the solutions range from passive ventilation, force air (fans), and air conditioning.
Costs vary greatly from solution but overall they range from 2 to 7 USD/kWhr.
While most installations require fire detection, some battery chemistries have a risk of thermal
runaway and may require a fire suppression system. The requirements are not 100% clear in
the US from jurisdiction to jurisdiction and NFPA is expected to provide guidance and
recommendations in the 2017 version of the NEC. In the meantime, most installations using
chemistries with a risk of thermal runaway are being equipped with fire detection and
suppression systems. In containerized solutions the costs of this system is in the range of 6-12
USD/kWhr.
The rest of the components are summarized in Tables 2 and 3. These tables present a high
level reference point for 20 and 40 containerized battery energy storage systems based on 0.8
and 2 MWhr energy capacity respectively. Figure 5 and 6 illustrate the proportion of each
component as a system cost driver. From this point it can be seen that the balance of system
costs in the DC building block is around approximately 20% for a 20 BESS and 16% for a 40
BESS. While the batteries are the bulk of the costs in a system it is clear the balance is not
insignificant, as such, finding a clear path for cost reduction in this area is critical to improve
overall system costs.
Improving
balance
of
system
costs
modularization, standardization, and scale
through
With the US utility scale market expected to reach 2.4 GWhr by 2020 the industry is expecting
to ramp up to 600-1200 containerized BESS per year. To achieve this while curbing the balance
of system costs system designs should be modularized and standardized. Flex has been
following this approach by collaborating with technology providers and aggregating customer,
system, and performance requirements. Such requirements in combination with the different
possibilities offered by vendors have enabled a standard platform that is versatile enough to
accommodate a wide variety of electro-chemistries yet common enough to leverage volumes
across different project opportunities. This in turn is driving scale and resulting in cost reductions
in several of the aforementioned component in balance of the system. One example is the
modified container. By having a platform approach, we are able to consolidate volumes around
a single design which in turn can be manufactured at volume taking advantage of the cost
reduction opportunities that we mentioned previously. This is similar to the automotive industry,
were different and unique car models are built from the same common platform. An analysis of
this effect reveals great opportunity and perhaps a clearer roadmap toward addressing the costs
of the balance of the system as seen in Table 4. This particular example is for a 40 2 MWhr
battery energy storage system. There is a double digit cost reduction opportunity in all sub
systems when reaching volumes of 50 units per year as an example. Another item to note is
lead times, today most systems require 20-24 weeks to be built approximately. With scale and
standardization system modules can be stocked, pre-assembled and staged reducing lead
times and integration hours.
The energy storage industry has come a long way and we are starting to see the signs of
consolidation in use cases around particular technologies which are driving volumes up for
some vendors at the battery level. For those that are willing to invest the time and effort to
harmonize their offering there is great opportunity to achieve efficiencies and cost reductions in
the balance of the system. We have some exciting times ahead of us as we rapidly transition
from pilot and custom deployments to repeatable solutions.
Alejandro worked for ABB Inc. where he held a variety of technical roles including Global lead
product manager for the HV protection, automation, and control business. Alejandro holds a BS
and MS in electrical engineering from Florida International University and the University of Idaho
respectively.