Ultimate Guide to Battery Energy Storage Systems

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Battery Energy

What is the battery energy storage solution?

Battery energy storage systems are the rechargeable batteries that store energy from solar panels or the electrical grid and deliver it to the home or business when you need it most. During the day, the battery storage system is charged by clean electricity generated from solar or the wind energy; then, the intelligent battery software uses the algorithms to coordinate solar energy production, usage history, interest rate structures, and weather patterns to optimize when stored energy is used. Furthermore, energy is discharged from the battery storage system during high usage, reducing or eliminating costly demand charges.

Opportunities for battery energy storage systems:

  • This market will grow at the compound annual growth rate of approximately 10.5% during the forecast period 2022-2027.
  • It is driven by two primary drivers, the lower cost of energy storage technologies and the advantage of providing the grid flexibility.
  • The lithium-ion battery type is the expected to dominate the market during the forecast period due to its good chemistry and the low average cost of energy storage.
  • The explosive growth of renewable energy projects in the country is India’s most significant opportunity for battery energy storage systems. India has set a target of reaching around 500 gig watts of renewable energy by 2030.
  • Government initiatives to promote energy storage deployment in India are likely to drive the market to a great extent.

Roadmap for energy storage system in India between 2019-2032:

  • The India Smart Grid Forum (ISGF) led the effort to develop a roadmap for India’s energy storage system for 2019-2032 (up to the 15th Five-Year Plan period).
  • The primary objective of this roadmap will be to estimate the requirements of the ESS to support the grid for integrating renewable energy into the grid – both in extra high voltage transmission networks where large solar and wind farms are connected and in medium voltage distribution networks where rooftop solar is connected panels and other renewable energy sources.
  • The ISFG has teamed up with the India Energy Storage Alliance (IESA) on this significant initiative, funded by the MacArthur Foundation in the United States.

The following are the primary project outcomes:

  • Energy Storage Roadmap for India 2019-2022, 2022-2027, and 2027-2032.
  • India Energy Storage Instrument (ESIT), a tool for conducting a cost-benefit analysis of different ESS technologies for other applications.
  • Guidelines for evaluating the hosting capacity of rooftop photovoltaic (RTPV) solar panels on low voltage distribution lines.

Main areas of energy storage applications:

  • Integration of renewable energy with transmission and distribution networks.
  • Establishment of small rural networks with varied loads or stand-alone systems.
  • Develop storage components for electric mobility plans.

Energy Storage Market:

The energy storage market can be broadly categorized into the behind-the-meter grid level market and the railways.

In the grid-level market, applications for battery storage could be in the wind and solar energy sector, ancillary services, ESS integration for distribution tools, and transmission delay.

Moving to the category beyond the meter, the applications can be divided into two parts: electrical and thermal, where the applications in the electrical sector are: rooftop solar, diesel replacement, backup inverter, backup UPS, telecom, and rural electrification. Rural electrification includes street lamps, solar home lighting systems, and micro and small grids.

Engineering procurement and construction

What are engineering, procurement, and construction contracts?

  1. Engineering procurement and construction: Companies in the renewable energy industry and the energy sector typically use EPC (or turnkey construction contracts) for complex infrastructure projects. This form of the contract defines the relationship between the owner and the contractor to provide professional or the technical services. Under the EPC contract, the principal or owner agrees with an EPC contractor, who enters into various subcontracts with subcontractors to perform specific parts of the work. As a result, they will be responsible not only for the engineering aspects of the project but also for the procurement of equipment and the design and construction of the facility, plant, or project.

For project owners, Engineering, Procurement, and Construction (EPC) contracts allow them to manage risk more effectively and enable contractors to customize and specialize in their work. This model is used where the owner concept design is more functionally dependent and needs someone to engineer the solution to produce that functionality. Under joint EPC agreements, contractors have complete control over the project’s design, supply, and construction from start to finish.

Many people refer to the EPC contracts as turnkey construction contracts because they allow the owner to “turn the switch” on when the project is complete so that the system is fully operational. In addition to delivering an entire facility or plant, contractors must have it at a guaranteed price and date. This guarantee means that the contractor, not the principal, will incur additional costs. The contractor may be held financially liable if the plant is not completed to the specified level upon completion.

EPCM stands for the Engineering, Procurement, and Construction Management. Here, the EPCM Contractor takes on a managerial role in the project’s engineering and design aspects. In addition, they manage the project as the owner’s agent and oversee the project.

Advantages and disadvantages of EPC contracts

An essential advantage of EPC contracts is that they allow the owner to deal with only one contractor, who will manage all relationships with subcontractors. This work assignment to the owner/manager can facilitate project supervision, and assessment of progress based on performance as the contractor implements the project. This contract arrangement also benefits contractors with greater control over the design and selection of subcontractors. As contractors accept more risk with design coordination, they can work more efficiently to reduce construction costs.

While managers can take advantage of the point of sole responsibility for project delivery, they lose out on involvement in the design process, adding potential risks if project design is critical. For example, managers must ensure that project milestone is carefully defined to easily avoid life-cycle costs and scope changes. Also, since the contractor does the design and construction, the usual checks and balances during these projects are not in place for the owner.

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