The growing availability of renewable energy and efforts to reduce operational emissions are increasingly making battery storage a critical technology for commercial and industrial organisations.
Battery storage solutions can enable businesses to store electricity when demand is low and dispatch it when high, providing significant advantages and allowing businesses to operate more efficiently and sustainably.
Stored energy can be derived from different sources, including the grid during off-peak hours or from renewable energy installations such as solar panels or wind turbines, and can then be dispatched during peak hours to reduce energy costs, used as backup power during outages, and potentially even fed back into the grid.
An important component of battery energy storage systems (BESS) is smart energy management, allowing the systems to be programmed to optimise energy use based on cost, peak demand times, and the business’s energy needs.
Importantly, battery storage provides resilience and reliability with uninterrupted operations, which is essential for businesses that rely on a constant power supply, such as hospitals, refrigerated facilities, and manufacturers.
The three main types of BESS are pre-packaged battery modules (enclosed factory-connected batteries), a pre-packaged system (enclosed factory-connected batteries with other components, such as a charger control or inverter), and custom-made battery banks (individual batteries installed with other components and interconnected).
The main device that converts power between DC battery terminals and the AC line voltage – allowing power to flow both ways to charge and discharge the battery – is the bidirectional inverter or power conversion system.
The other primary device of a BESS is its energy management system, which coordinates the control and operation of all the system’s components.
Whether paired with renewable or non-renewable energy generation, battery storage can help reduce energy costs, reduce grid dependency, and enable frequency control.
Moreover, battery systems that are co-located with solar, wind and gas generation technologies can maximise land use and improve efficiency, share infrastructure expenditure, balance generation intermittency, lower costs, and maximise the national grid capacity.
A 2017 study by the University of New South Wales found that the return on investment for commercial battery storage systems in Australia could range from three to 12 years, depending on factors such as the size of the system, the cost of electricity, and the availability of incentives.
However, battery storage technology has advanced significantly since 2017, which will have only enhanced the benefits to businesses.
Australia’s battery storage market had a record- breaking number of installs in 2023 across the grid-scale, commercial, and residential segments – while the market is still dominated by utility-scale projects, the deployment of 402 megawatt-hours to commercial and industrial applications is still the most substantial growth yet.
Global consultancy McKinsey explained battery storage was an essential enabler of renewable-energy generation, helping alternatives make a steady contribution to the world’s energy needs despite the inherently intermittent character of the underlying sources.
McKinsey said: “The flexibility BESS provides will make it integral to applications such as peak shaving, self-consumption optimisation, and backup power in the event of outages, [and] those applications are starting to become more profitable as battery prices fall.
“More than US$5 billion was invested in BESS in 2022, according to our analysis—almost a threefold increase from the previous year.
“We expect the global BESS market to reach between US$120 billion and US$150 billion by 2030, more than double its size today.”
McKinsey has forecast a compound annual growth rate of 13 per cent for the global commercial and industrial battery storage segment, meaning it will reach between 52 and 70 gigawatt-hours in annual deployments by 2030.
The four subsegments of commercial and industrial battery storage are electric vehicle charging infrastructure; critical infrastructure such as telecommunication towers, data centres and hospitals; public infrastructure, commercial buildings and factories; and harsh environment applications such as mining, construction, oil and gas exploration, and events such as outdoor festivals.
McKinsey noted that public infrastructure and commercial buildings mostly use energy storage systems to help with peak shaving, integration with on- site renewables, self-consumption optimisation, backup applications, and the provision of grid services.
Notably, McKinsey suggested BESS had the potential to reduce energy costs for commercial and public infrastructure applications by 80 per cent.
Recent critical mineral oversupply and the subsequent drop in critical mineral prices – a result of mineral production exceeding growth in battery production – is expected to continue at least in the short-term, keeping battery storage costs competitive for the rest of 2024 and into 2025.
Nickel, lithium, and cobalt prices have fallen from their peaks by 60, 80, and 65 per cent respectively, while growth in battery production last year did not meet forecasts, despite the significant global uptake.
There are several kinds of battery chemistries used in BESS, with lithium-ion batteries such as lithium iron phosphate and lithium nickel manganese cobalt oxide the most common.
Lithium-ion batteries are popular due to their small and lightweight design, as well as high capacity and energy density, which requires minimal maintenance and provides a long lifespan.
However, while they can be rapidly charged and have a low self-discharge rate, lithium-ion batteries can be cost prohibitive and have specific risks such as inflammability and intolerance to extreme temperatures.
Lead-acid batteries are widely available, low-cost, recyclable, and can perform effectively in both hot and cold temperatures, but compared to lithium-ion technology they have a low energy density and are slow to charge.
Other battery chemistries that have emerging applications for commercial energy generation include molten salt-based sodium-sulphur batteries; flow batteries such as the vanadium redox battery; and zinc-bromine batteries, which were developed as an alternative to lithium-ion for stationary power applications of all sizes.
