BESS allows renewable energy to be effectively stored and supplied to the grid when necessary.
FREMONT, CA: Modulation is a major challenge in the energy transition process. Can we power our homes and businesses when the sun isn't shining and the wind stops blowing?Battery energy storage systems (BESS) portray a potential solution.
BESS allows renewable energy to be effectively stored and supplied to the grid when necessary. This enhancement of energy output to the grid implies that renewable energy projects can provide power at peak and non-peak times, stabilizing the distribution network. This also enables investors and stakeholders to produce more revenue and power providers to limit waste and reduce consumer costs.
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Supply, demand, and pricing
Greater storage capacity and the speedily declining battery unit cost drive global demand growth. Bloomberg forecasts that by 2030, demand for lithium-ion (Li-ion) battery capacity will have increased to 9,300 GWh globally — over ten times the present demand.
Global cumulative storage deployment is awaited to increase tenfold over the next decade.
Li-ion batteries have a wide variety of applications. They can be used at a grid-scale, to power phones and electric cars, or for energy storage at residential and commercial properties.
The versatility of these systems has been essential to their global uptake.
The two main metrics driving the adoption of BESS are cost and efficiency. Li-ion batteries lead the pack, offering significant capacity, relatively low cost, efficient storage, and lengthy lifespans.
Need for standards
The sharp climb in demand in recent years has brought more attention to possible risks, some of which have led to costly insurance claims. Especially concerning to underwriters are battery fires, thermal runaways, contractor errors, and machinery breakdown events. In addition, there have been approximately 25 Li-Ion BESS fires over South Korea, several major fire events in the US, and explosions in specific cell phones.
The quick development of battery storage technology and the extensive use of these systems will inevitably bring new challenges. Insurers generally use historical loss and performance data to calculate losses' chances.
But the relative deficiency of standardization and the emergence of prototypical and developing BESS technologies presents numerous unknowns for insurers and makes it difficult for them to keep pace. The insurance industry is constantly learning as new products upscale in capacity, technology continues to advance, and global demand surges.
Likewise, regulatory frameworks must also adapt as the industry continues to develop. For example, an increasing number of codes have been introduced to ensure safety and a degree of standardization in the installation and operation of BESS. Still, these must keep pace with the technological advances in the industry to ensure that growth and innovation aren't hampered by overregulation.