battery storage

Storing away for a rainy day, pt 1

How the charge cycle of lithium-ion batteries forms the basis for a feasible business model.

The technology behind battery storage

200 years ago Italian physicist Alessandro Volta proved that electricity could be generated chemically. This led others to conduct similar experiments which eventually resulted in the development of the field of electrochemistry and electrochemical storage. Skipping ahead, nowadays we get in contact with batteries constantly through all kinds of portable electronics such as laptops, mobile phones, and the good old TV remote.

Batteries have also been widely deployed in large-scale systems such as ‘Uninterruptible Power Supplies’ to secure critical infrastructure from grid instabilities caused by the integration of renewable energy sources. They have also played an important role in the development of microgrid systems, typically in places without a reliable electric grid or even without any grid connection. McKinsey predicted that the share of energy consumption from electricity will rise considerably from 19% to 30% by 2050, with renewable energy sources dominating from 2030 onwards. To integrate these renewables, battery storage will play a central role in a market that is going through the roof in the next decades.

The installation of a 5MW/1.25MWh battery system in Portland, USA is often regarded as the first utility-scale (grid-scale) installation in the world. The last decade witnessed a sharp increase in the deployment of large battery storage systems to support the grid in countries around the globe. The biggest battery installed and operating currently is located in California with a rating of 300MW/1200MWh, which shifts excessive solar output from daylight to nighttime. The UK is following suit with the construction of a battery storage project with a 320MW / 640MWh lithium-ion battery, and China plans to deliver 21% or 153 GWh of global cumulative battery storage capacity by the end of the decade.


Things are changing

However, only a small fraction of total stored energy stems from charged batteries. Energy can be also stored as water at hydroelectric facilities, which still makes up the majority of the total global storage capacity of 170GW. But things are about to change, as renewable energy sources need the flexibility offered by battery storage to meet demands more efficiently. Due to increased production quantities and technical innovations, battery storage prices have fallen sharply in recent times, and are now becoming economically viable.

Cumulative global energy storage deployments, source: Wood Mackensie
Wood Mackenzie’s latest report shows global energy storage capacity could grow at a compound annual growth rate (CAGR) of 31%, recording 741 gigawatt-hours (GWh) of cumulative capacity by 2030.


There’s rarely a day that doesn’t have another announcement for the planning of an even bigger battery system, so before you are too afraid to ask, let’s get into why this technology will be a major player in the future.


The battery’s charge cycle

Batteries are extremely flexible when it comes to cycling. A charge cycle is a process of charging a rechargeable battery and discharging it to power a load. The number of cycles is typically used to specify a battery's expected life, as it affects life more than the mere passage of time. A lithium-ion battery can reach from 5,000 to 7,000 full charging cycles, which equals to many years of operation in most applications. Each battery is affected differently by charge cycles, but the rule of thumb is that the number of cycles for a rechargeable battery indicates how many times it can completely charge and discharge until it fails or its capacity deteriorates faster.

Batteries are able to store energy for a certain time without any significant capacity losses, but start to lose capacity when cycled once or multiple times daily, as you probably know from your own smartphone. More than the initial cost, battery degradation becomes the key factor that determines the economic viability of battery assets, with some battery technologies being more dependent on the cycle profile than others. Lithium-ion dominates the market, despite its lifetime being heavily dependent on the cycle profile. This must be carefully considered when setting up the business model and the project calculation. Even a slight deviation from the planned cycle profile may lead to earlier degradation and can turn the whole business model unviable. A thorough discussion of warranty conditions is mandatory to avoid unpleasant surprises and sophisticated model validation is recommended.


The Lithium-Ion battery

Today, the overwhelming part of battery installations are made from lithium-ion technology without any real contender in sight. What sets those batteries apart from other types is that they can be charged and discharged very often and have a relatively high depth of discharge. In addition, they are relatively light and come in a small package size due to their high energy density. The high efficiency makes lithium-ion batteries costlier to produce, but this is offset by their longer service life of many years of operation. Even with the potential for overheating if you overcharge them, lithium-ion batteries are now found in most storage systems since they are more durable and efficient than alternative lead-gel batteries.

Saving up to 75 percent in weight and space due to their high energy density, lithium-ion batteries have been applied in e-mobility, mobile phones, and laptops for many years now. Their longevity also makes them the ideal match for photovoltaic systems to achieve a long operating life of the entire system. 

Technical advances and increases in production capacity have led to falling manufacturing costs, which in turn has opened up further areas of application in stationary and mobile power supply. In the e-mobility sector, the lithium-ion battery has made decisive leaps possible and has already become indispensable. With an ever-increasing recycling quota, it is about to be turned into sustainable and environmentally friendly technology. As the future of energy supply is closely linked to the rise of new battery technologies, we can expect even more groundbreaking developments in the upcoming years with a new trend towards longer-duration storage to open the window for alternative technologies such as flow batteries. 


Utility-size battery systems

Depending on if they are installed near a power plant, transmission station, commercial or residential building, battery storage systems can provide a certain set of functionality. But generally, the technical properties of all these battery storage systems contribute to a more stable condition of the entire grid. The smallest battery systems serve in residential homes, where they are again deployed alongside the energy generation of a home PV system, and systems of up to 1 MW can be found in industrial and commercial appliances. 

Battery storage systems of over 2 MW are typically connected to the distribution networks (Front-of-the-Meter) and moving upstream, systems of more than 10 MW are being connected directly to the transmission network. The biggest battery systems with over 50 MW are deployed near power plants, where they are not only vital for frequency and voltage control, but can achieve the biggest economic advantages if they are tuned to the plants’ energy generation and are utilized for trading electricity.

As we see, battery storage systems are used for many different applications being widespread in the power grids. Based on lithium-ion technology, these systems contribute to a more stable condition of the grid. This is especially relevant when it comes to integrating renewable energy sources into our grids. How this can be achieved and how you can even make a profit from it, we will cover in ‘Part II’.



We hosted two webinars dedicated to exploring the challenges and opportunities of the technology. Learn more about the rise of batteries and cross-market battery optimization.

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