Overview This handbook serves as a guide to the applications, technologies, business models, and regulations that should be considered when evaluating the feasibility of a battery energy storage system project. The integration of distributed energy resources into traditional unidirectional electric power systems is challenging because of the increased complexity of maintaining system reliability caused by the variable and intermittent nature of wind and solar power generation. In addition, keeping customer tariffs affordable while investing in network expansion, advanced metering infrastructure, and other smart grid technologies is challenging as well. The key to overcoming such challenges is to increase power system flexibility so that the occasional periods of excessive renewable power generation need not be curtailed or so that there is less need for large investments in network expansion that lead to high consumer prices. A battery energy storage system, also known as BESS, offers one possible source of flexibility. Several applications and use cases of BESS, including frequency regulation, renewable integration, peak shaving, microgrids, and black start capability, are explored. Battery, a game changer Batteries have already proven to be a commercially viable energy storage technology. Battery energy storage systems (BESS) are modular systems that can be deployed in standard shipping containers. Until recently, high costs and low round-trip efficiencies prevented their mass deployment. However, increased use of lithium-ion batteries in consumer electronics and electric vehicles has led to an expansion in global manufacturing capacity, resulting in a significant cost decrease that is expected to continue over the next few years. The low cost and high efficiency of lithium-ion batteries has been instrumental in a wave of BESS deployments in recent years for both small-scale, behind-the-meter installations and large-scale, grid-level deployments. Battery systems can be used to overcome several challenges related to large-scale grid integration of renewables. First, batteries are technically better suited to frequency regulation than the traditional spinning reserve from power plants. Second, batteries provide a cost-effective alternative to network expansion for reducing curtailment of wind and solar power generation. Similarly, batteries enable consumer peak charge avoidance by supplying off-grid energy during on-grid peak consumption hours. Third, as renewable power generation often does not coincide with electricity demand, surplus power should be either curtailed or exported. Surplus power can instead be stored in batteries for consumption later when renewable power generation is low and electricity demand increases. The financial viability of a battery energy storage project for renewable integration will depend on the cost–benefit analysis of the intended application. Economic viability of using batteries The business case for BESS differs by application and by use case. “Prosumers” (producers–consumers) can calculate the payback period of a home energy storage system from the spread between the cost of producing and storing rooftop solar power and the cost of purchasing electricity from the local utility. Industrial consumers and distribution network owners benefit from a reduction in peak capacity charges and network expansion deferral because of peak shaving and load leveling. The business case for using batteries for frequency regulation depends on revenue forecasts and competition for ancillary services. Various business models are possible, depending on how ownership and operations responsibility is divided between utility customers or prosumers and the utility or network operator. For example, while the charge and discharge cycles of home energy storage systems are set by the home owners themselves, industrial battery systems could be operated by a demand-side management provider or flexibility aggregator. Similarly, while large-scale batteries used for frequency regulation may be owned by private investors, the operation of such systems is likely to be the responsibility of the transmission system operator as part of the pool of assets that provide spinning reserve. Policy and project considerations This handbook lists the major policy and regulatory changes that could help promote energy storage markets and projects. For example, in most countries that operate ancillary service markets, frequency regulation products have historically been designed with the technical limitations of large power stations in mind. However, in 2016, a new ancillary service known as “enhanced frequency response,” with a sub-second response time that could be met only with the help of batteries, was launched in Europe. Similarly, in some countries, the provision of frequency regulation is mandatory for developers of large wind farms, to reduce the need for increased spinning reserve from conventional power plants. As with most projects, it is important to capture the risks and challenges in undertaking a typical battery energy storage project. This handbook outlines the most important risks and challenges from a project execution perspective. It also provides a guide for building a financial model for such projects, including popular investment metrics such as the levelized cost of storage. Contents Chapter 1: Energy Storage Technologies This chapter provides an overview of commonly used energy storage technologies. It looks into various factors that differentiate storage technologies, such as cost, cycle life, energy density, efficiency, power output, and discharge duration. One energy storage technology in particular, the battery energy storage system, is studied in greater detail together with the various components required for grid-scale operation. The advantages and disadvantages of different commercially mature battery chemistries are examined. Go to the chapter. Chapter 2: Business Models for Energy Storage Services There are various business models through which energy storage for the grid can be acquired, including service-contracting without owning the storage system to outright purchase and full ownership. This chapter presents the general principles for owning and operating a battery energy storage system through various options. Go to the chapter. Chapter 3: Grid Applications of Battery Energy Storage Systems This chapter provides technical considerations and requirements for grid applications of battery systems and some use cases. Go to the chapter. Chapter 4: Challenges and Risks This chapter examines key issues from a project implementation perspective, such as battery price and safety, deployment, subsidies and incentives, industry standards, and carbon emission impact. Go to the chapter. Chapter 5: Policy Recommendations The business case for the installation of both large-scale and small-scale battery energy storage requires supportive energy policies. This chapter provides recommendations for select use cases. Go to the chapter. Appendixes Sample Financial and Economic Analysis Case Study of a Wind Power plus Energy Storage System Project in the Republic of Korea Modeling and Simulation Tools for Analysis of Battery Energy Storage System Projects Battery Energy Storage System Implementation Examples Battery Chemistry Comparison of Technical Characteristics of Energy Storage System Applications Summary of Grid Storage Technology Comparison Metrics This summary was adapted from Asian Development Bank’s Handbook on Battery Energy Storage System. Resources Asian Development Bank. 2018. Handbook on Battery Energy Storage System. Manila. Ask the Experts Dae Kyeong Kim Former Senior Energy Specialist (Smart Grids), Sustainable Development and Climate Change Department, Asian Development Bank As Senior Energy Specialist (Smart Grids) of the Sustainable Development and Climate Change Department, his main roles involved operations support and knowledge of developments in smart grid technologies. He has end-to-end experience in smart grids, including expertise in smart grid standards, policy, and regulation. Asian Development Bank (ADB) The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.