Demand for electricity is rising along with the need for cleaner energy production. Renewable energy sources such as wind and solar PV are green, proven and scalable, however their variable output and reliance on weather conditions creates challenges when integrating them into the power grid.

Battery energy storage systems (BESS) offer a potential solution to these issues, but they also come with their own set of risks to understand, manage and mitigate.

Need for change

Electricity demand is set to double over the next 25 years. In 2020, the global grid-connected electricity supply was 27 PWh/yr and is forecast to reach 62 PWh/yr by 2050. Coal- and gas-fired power stations currently account for about 70% of electricity generation with an accelerating shift to green alternatives.

Forecasts predict that variable renewable energy sources such as wind and solar PV will overtake fossil-based electricity generation by 2035. By 2050, solar PV’s share of the power supply will be 38%.

Why BESS?

Variable renewable energy sources cannot deliver on the demand for clean electricity on their own. They need the wind to blow and the sun to shine to generate electricity and this creates peaks and troughs in the amount of electricity they generate.

These variations do not match the demand for electricity. For example, solar PV production peaks in the middle of the day – hours after the morning spike for electricity and long before demand ramps up again in the early evening.

When illustrated as a graph, the delta between production and demand, or net demand, when using variable renewable energy sources to supplement electricity grids, takes the shape of a duck. As more solar capacity is added, the curve becomes more pronounced. The challenge is to ‘flatten the duck’ by using more of the energy produced by variable renewable energy sources and so reduce reliance on fossil-based electricity generation.

This is where BESS come into play. Storing unused energy from variable sources during their peak hours of production, enables it to be used later in the day when needed, and to provide BESS operators with a source of income.

There four key areas to optimise to generate the maximum benefits from BESS:

• Arbitrage

In short, this entails charging the battery storage system during periods of low demand, when energy prices are reduced, and then discharging the energy when demand and prices are high. This helps to ensure the maximum amount of power from variable energy renewable sources is used, rather than curtailing their output during periods of excess production. Charging batteries during periods of excess generation and discharging them while demand peaks also provide system managers with load-levelling capability.

• Capacity

System operators need sufficient generation capacity to reliably meet peak demand. In many instances, this peak demand requirement is met by the use of higher-cost generators, such as gas plants. In some situations BESS can be used to ensure adequate generation capacity at peak times.

• Operating Reserve and Contingency

The ability to charge and discharge in exceptionally short timeframes means BESS can play an important part in maintaining reliability in power systems and exactly matching electricity demand with supply at all times.

• Defer Grid Upgrades

Even though peak demand may only for a few hours in the course of a year, an electricity grid’s transmission and distribution capabilities must be able to match this level of need. If they are anticipated to fall short, this necessitates upgrades and these come at a hefty cost. BESS offer an alternative option and can provide the extra capacity needed without the need to upgrade. Another plus is the mobile nature of BESS installations. When no longer needed in one location, they can be moved to another, increasing their value and shelf-life.

BESS technologies and typical architecture

There are four main electrochemical battery energy storage technologies available for grid-scale applications – lithium-ion, flow, lead-acid and sodium sulphur. Lithium-ion chemistries currently dominate grid-scale battery storage.

A BESS is a compound system and comprises various hardware and software components. These include:

• A battery system – comprises single battery cells that convert chemical energy into electrical energy.

• A battery management system – by monitoring the condition of the battery cells, it gives warnings if

there are developing safety concerns.

• An inverter or power conversion system – this enables the conversion of the direct current

produced by batteries into an alternating current for supply to the grid. Bi-directional inverters enable BESS to charge and discharge.

• An energy management system – this oversees and manages the energy flow within a BESS.

BESS safety systems include:

• Fire control

• Smoke detectors

• Temperature control

• Cooling

• Heating

• Ventilation

• Air conitioning

These systems have their own monitoring and control units to ensure their efficacy.

Common loss scenarios and mitigation measures

Fire is the predominant hazard for BESS, especially in their construction phase and initial years of operation. Insurer data shows that 15% of losses occur during construction and that 63% of losses occur within the first two years of operation.

There are a number of common root causes of BESS fires. First is thermal runaway. Damage, dampness and temperature changes can cause batteries to short-circuit, generate heat and develop into a self-sustaining reaction. This can release toxic gas and lead to fires and explosions.

Second is a lightning strike on the inverter, and third is a leak of transformer oil coolant in the MV transformer or the HV transformer.

To control internal temperatures, BESS have either air-cooled or liquid cooled systems. Air-cooled systems need to deliver a high volumetric flow of air to be effective. Fans can get blocked and the system can induce condensation, which can cause problems.

Liquid cooled systems are pressurised and can be prone to leaks. They also need to undergo regular pressure testing to optimise performance.

Gas sensing systems can detect trace amounts of hydrogen, enabling operators to identify and prevent potential thermal runaway scenarios developing. Venting systems enable explosive gases to be dispersed, if required, and in-built fire extinguishing systems help prevent deflagration events.

Spacing is also an important aspect of loss mitigation and helps isolate fires and prevent catastrophic loss scenarios.

Conclusion

The size of the global battery energy storage market is forecast to rise from $10.9bn in 2022 to $31.2bn in 2029. The growth of infrastructure projects involving BESS will continue to attract more companies into the sector as it also attracts more attention from insurers, brokers and claims professionals.

“Electricity demand is set to double over the next 25 years. Coal and gas-fired power stations currently account for about 70% of electricity generation with an accelerating shift to green alternatives.”

Chris Brown

Managing Director
Green Energy, Natural Resources
chris.brown@charlestaylor.com