Growing pains for battery owners? Top tips to expedite future-ready BESS projects

For those following battery storage developments in Sweden, the word “boom!” is not an exaggeration.

According to a Ny Teknik publication earlier this year, battery energy storage system (BESS) capacity in Sweden will jump from about 100MWh in 2023 to approximately 600MWh by the end of 2024 (assuming planned projects become operational). That is just the tip of the iceberg. Another 47 battery parks totally 2 851 MWh are in the pipeline.

Given these boom times and high prices in the fast frequency markets, however, it is easy to cut corners. And cutting corners risks project delays, cost overruns and value erosion over time. How can asset owners ensure their battery installations deliver the desired benefits – both in the short term and over the lifetime of the asset?

At Flextools, we’re involved in dozens of mid- and large scale BESS projects in Sweden and across the Nordics. In this article, we share insights from working with professional asset owners and the battery value chain in the Nordics.

Position your BESS for success

In a previous article, we highlighted several factors that tend to delay BESS projects. Here we expand the list of considerations and share tips to position projects for success.

Controls hardware & prequalification

In our experience, missing/incorrect energy management controls and hardware components are not uncommon in project delivery. A lack of experience/planning in this stage leads to installation delays and adds costs in the form of purchasing new components and sending electricians to the site multiple times. It is also more time consuming to assemble the correct paperwork to ensure the TSO has all of the information necessary to assess and pre-qualify the asset for the frequency markets.

Ensuring that the hardware set-up is complete, with the right power and frequency metering and gateway, means that technical providers can streamline installation, acceptance and prequalification testing and document the installation in the correct format for the TSO (Svenska Kraftnät). This is especially important for the demanding, new dynamic FCR/FCR-D market. Tips to avoid/mitigate delays and streamline installation and pre-qualification include:

• Source EMS+/advanced BESS controls locally if possible
• Ensure that hardware is designed for Nordic weather conditions
• Ensure supplier/providers have a good hardware stock and extra components available
• Select a provider with a proven track record of delivering prequalification services (particularly for the new dynamic FCR requirements)
• Select a provider/service who provides transparency on project timeline and status
• Avoid “typkvalificering” (type qualification) of larger batteries (over 100kW). This practice is against TSO rules. It will increase risk and limit revenues over time.

Adequate local grid capacity to deliver value

A nightmare scenario for an asset owner is to purchase a BESS system only to realize that they cannot sell the full capacity to the market. Imagine, for example, buying a 4MW system only to realize the local grid supports a maximum of 1MW of capacity! Tips to avoid/mitigate these constraints:

• Ensure good dialogue with local grid company and identify any local/transformer constraints or restrictions prior to choosing the location and BESS size
• Work with a technical provider with experience in managing local grid requirements/constraints e.g., controls to manage consumption/production, schedule/avoid certain hours.

Heightened IT security

IT security of energy infrastructure is crucial given the heightened risk situation in Europe and Nordics. The European NIS2 cyber security directive will require energy companies to promptly report security requirements and comply with new regulations starting this year.

By extension, BESS owners will be impacted. TSOs including Svenska Kraftnät are increasing IT security requirements for BESS and assets that deliver critical energy services. One example: Svk will significantly restrict the volume of assets that do not meet strict new IT security requirements. To avoid/mitigate the risks associated with IT security related restrictions asset owners should:

• Ask service providers about whether their set-up is compatible with the new IT security requirements
• Ask their service partners about their operational uptime, IT security track record and whether they meet ISO 27 001 (Information security management systems certification).

Full transparency on BESS performance

Increasingly, professional asset owners seek full transparency on the performance of their assets. BESS is no exception. Especially when the owners’ core business is offering frequency and other flexibility services to the grid.

BESS owners need to ensure their systems operate within recommended safety ranges/parameters to promote safe operations and asset health. Further, owners want access to near-time/regular financial performance information and data to optimize the financial performance of the system over its lifetime.

When selecting a partner to operate/optimize the BESS, consider the following criteria:

• Access to real time data portal and insights on BESS performance, including state of charge, state of health, cycle counts, temperatures etc
• Ownership of data and access to data in easily portable formats e.g., API
• Real time notifications/alerts when BESS performance goes out or range,  connection/communication is lost
• 24/7/365 service desk set-up
• Near-time/regular reports on bidding, financial performance and revenues per market
• Settlement/invoicing on a regular, monthly basis.

Optimizing your commercial set-up

Beyond transparency, it is critical to shop around for the right commercial set-up. Often, we see that asset owners get locked in to a sub-optimal commercial arrangement.

Historically, many asset owners have worked with technical aggregators. Aggregators take a significant cut of the revenue. In addition, asset owners that work through aggregators add an administrative burden as they must deal with multiple parties. Since only BRPs can conduct trading operations, not aggregators, it can be unclear which party must address technical issues, by when, and who pays for the downtime.

The good news? There are good alternatives for BESS owners today.

More balance responsible parties (BRPs) are offering competitive, turnkey solutions for large asset owners. In these arrangements, the BRPs streamline the whole process including onboarding and prequalifying assets, market access and trading, and regular financial settlement. Tips for asset owners seeking greater transparency and revenues in their commercial arrangement include:

• Ask about full transparency on the BESS performance, bidding performance and near-time/regular financial performance
• Check how often financial data/reports are available to support cash flow analysis and financial reporting
• Ensure ownership/access to asset-level data analytics and data sharing via APIs with other IT systems
• Check that there is a clear counter-party and response time defined in contracts in the event of technical issues e.g., lost connection
• Maintain ability to reserve the BESS for certain hours for other purposes e.g., peak shaving, addressing local grid issues
• High revenue share, ideally split revenue with only one counter-party.

Conclusion

In this hot BESS market, it is easy for asset owners to miss opportunities. At Flextools, we are thrilled to work with some of the leading value chain partners and BESS asset owners and happy to share our insights.

Don’t hesitate to contact us to discuss your BESS projects and how you can gain the most value over the lifetime of your assets.