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Battery Energy Storage: How it works & why it's important

In the transition towards a more sustainable and resilient energy system, battery energy storage is emerging as a critical technology. Battery energy storage enables the storage of electrical energy generated at one time to be used at a later time. This simple yet transformative capability is increasingly significant. The need for innovative energy storage becomes vitally important as we move from fossil fuels to renewable energy sources such as wind and solar, which are intermittent by nature. Battery energy storage captures renewable energy when available. It dispatches it when needed most – ultimately enabling a more efficient, reliable, and sustainable electricity grid. This blog explains battery energy storage, how it works, and why it’s important.


At its core, a battery stores electrical energy in the form of chemical energy, which can be released on demand as electricity. The battery charging process involves converting electrical energy into chemical energy, and discharging reverses the process. Battery energy storage systems manage energy charging and discharging, often with intelligent and sophisticated control systems, to provide power when needed or most cost-effective. The components of a battery energy storage system generally include a battery system, power conversion system or inverter, battery management system, environmental controls, a controller and safety equipment such as fire suppression, sensors and alarms.


For several reasons, battery storage is vital in the energy mix. It supports integrating and expanding renewable energy sources, reducing reliance on fossil fuels. Storing excess energy produced during periods of high renewable generation (sunny or windy periods) helps mitigate the intermittency issue associated with renewable resources. It also provides grid stability and resilience, as it can respond quickly to grid demand and supply changes.

Here are some of the more prominent reasons that make battery energy storage critically important:

Enabling Renewable Energy

As mentioned, renewable energy sources such as wind and solar are intermittent, producing energy only when the wind blows, or the sun shines. The periods when these sources generate energy do not always align with when energy demand is highest. A battery energy storage system (BESS) allow storing energy when production is high, which can then be used later when demand is high. Integrating renewable energy with storage enables a more significant proportion of energy to come from renewable sources.

Grid Resiliency and Reliability

As we shift to a renewable energy future, our electrical grid must adapt to handle increased variability and decentralization. A BESS can help stabilize the grid by absorbing excess power during periods of high production and releasing it during periods of high demand. Utilizing a BESS in this way can help reduce blackouts and enable a more consistent grid power supply. This resilience is especially crucial during extreme weather events, which we see more of worldwide.

Reducing Emissions from Peaker Plants

Peaker plants operate only when there is a high demand for electricity, or “peak” demand. These plants usually run on fossil fuels and are less efficient than other power generation sources as they emit more greenhouse gases. A BESS can reduce reliance on these plants by storing energy during periods of low demand and supplying it during these peak demand periods.

Supporting Electrification

The electrification of many industries currently powered by fossil fuels is needed to achieve a zero-emissions future. These industries include transportation and heating, moving away from internal combustion engines and gas boilers to electric-powered equivalents, such as electric vehicles and heat pumps. The transition to electrification will increase electricity demand and put further strain on the grid. A BESS can help manage the increased demand and smooth out consumption, enabling the integration of these electric loads into the energy mix without significantly expanding power generation capacity.

An installation of a 100 kW / 192 kWh battery energy storage system along with DC fast charging stations in California

Energy Independence

On a more localized level, a BESS allows homes and businesses with solar panels to store excess energy for use when the sun isn’t shining. Using a battery energy storage system in this way increases energy independence. It reduces reliance on the grid, reducing emissions associated with energy production and transmission.

Battery energy storage is essential to enabling renewable energy, enhancing grid reliability, reducing emissions, and supporting electrification to reach Net-Zero goals. As more industries transition to electrification and the need for electricity grows, the demand for battery energy storage will only increase.


A battery energy storage system (BESS) offer several compelling benefits that make them an increasingly important part of our energy landscape. These include:

Grid Stabilization

A BESS can absorb or release electrical power almost instantly, providing valuable services in balancing power supply and demand, stabilizing the grid, and maintaining a steady frequency.

Renewable Energy Integration

A BESS can store excess energy produced from renewable energy sources like wind and solar when production exceeds demand and then release it when demand exceeds production, such as when the sun is not shining, or the wind is not blowing. This helps deal with the intermittent nature of these energy sources and makes them more reliable and usable.

Peak Shaving

By storing energy during low-demand periods and releasing it during high-demand periods, a BESS can help to reduce electricity demand on the grid during peak periods. This ‘peak shaving‘ can reduce the need for peaker plants, which are expensive and often powered by fossil fuels, leading to both cost and environmental benefits.

Energy Arbitrage

With the capability to store energy when prices are low and dispatch it when prices are high, a BESS facilitates energy arbitrage, potentially creating significant financial savings or generating additional revenue streams.

Backup Power

A BESS can provide backup power during a power outage, increasing energy resilience and reliability for homes, businesses, and critical infrastructure.

Grid Independence and Self-Consumption

A BESS enables greater energy self-sufficiency for homes and businesses with their own renewable energy generation (like solar panels on the roof). They can store excess power generated from on-site sources for use when needed, reducing their reliance on the grid and allowing more efficient use of the generated power.

Support for Electric Vehicle Charging

With the rise of EVs, a battery energy storage system integrated with charging stations can ensure rapid charging without straining the power grid by storing electricity during off-peak hours and dispensing it during peak usage. Adding a BESS to an EV charging station installation can also stretch the available capacity and help drastically reduce demand charges.

Utilizing a BESS represents a solution to many of the challenges facing the current energy mix today.

An explainer video on how battery energy storage systems work with EV charging


There are several types of battery technologies utilized in battery energy storage. Here is a rundown of the most popular.

Lithium-Ion Batteries

The popularity of lithium-ion batteries in energy storage systems is due to their high energy density, efficiency, and long cycle life. The primary chemistries in energy storage systems are LFP or LiFePO4 (Lithium Iron Phosphate) and NMC (Lithium Nickel Manganese Cobalt Oxide).

A lithium-ion based containerized energy storage system

Why Lithium-Ion is the Preferred Choice

Lithium-ion batteries have a high energy density, a long lifespan, and the ability to charge/discharge efficiently. They also have a low self-discharge rate and require little maintenance. Lithium-ion batteries have become the most commonly used type of battery for energy storage systems for several reasons:

High Energy Density

Lithium-ion batteries have a very high energy density. The high energy density means the batteries can store a large amount of energy in a small space footprint, making them ideal for applications where space is at a premium, such as in electric vehicles or energy storage systems.

Efficiency and Charge/Discharge Rates

Lithium-ion batteries are efficient at both charging and discharging, and they can handle relatively high rates for both processes. This makes them excellent for applications where energy must be rapidly discharged or put into storage.

Long Lifespan and Cycle Durability

Lithium-ion batteries have a relatively long lifespan compared to many other battery technologies. They can handle a lot of charge-discharge cycles. This long cycle life makes them cost-effective over their lifetime.

Proven Technology

Lithium-ion technology is mature and well-understood, which makes it a less risky choice than newer, less-proven technologies.

Despite these advantages, lithium-ion batteries have some challenges, such as sophisticated battery management systems to prevent overheating and maintain optimal battery health. Choosing the right supplier when looking at lithium-ion-based energy storage systems is important. EVESCO’s battery energy storage systems utilize an intelligent three-level battery management system and are UL 9450 certified for ultimate protection and optimal battery performance.

Lead Acid Batteries

Lead acid batteries are a mature technology that has been around for a very long time. They are often used in applications where the battery isn’t cycled frequently, such as starting cars or emergency backup power.

They are reliable, relatively inexpensive, and widely available. They can also deliver high power. However, lead acid batteries have a lower energy density compared to lithium-ion batteries and a shorter usable lifespan, particularly under deep cycling use. They also require regular maintenance to maintain performance and can harm the environment if not properly recycled.

Power Sonic lead acid batteries being utilized in a battery energy storage system

Lead Carbon Batteries

Lead carbon batteries are a type of lead acid battery but include a layer of carbon in the negative electrode that enhances their performance.

They combine the high C rate capabilities of lead acid batteries with the super-capacitive properties of carbon, enabling them to deliver or absorb bursts of energy quickly. Adding carbon also helps mitigate the detrimental effects of the partial state-of-charge operation, improving the cycle life compared to traditional lead acid batteries. They can be affordable for grid-scale energy storage systems, which are not restricted by space, due to their lower cost and deemed acceptable performance characteristics.

While they offer improved cycle life compared to traditional lead acid batteries, they still don’t match the lifespan of lithium-ion batteries. They also share the environmental concerns of lead acid batteries, requiring careful disposal to avoid lead contamination. Additionally, while including carbon improves their performance, they still have lower energy density than lithium-ion batteries.

Flow Batteries

In flow batteries, rechargeability comes from two chemical components dissolved in liquids inside the system. The most common type is the Vanadium Redox Flow Battery.

Flow batteries can store large amounts of energy and are less sensitive to temperature variations. They have a long lifespan, and their energy capacity (kWh) can be easily increased using larger electrolyte storage tanks. Flow batteries are more complex and expensive to install and maintain than the likes of lithium-ion. The rarity and price volatility of vanadium can also be a concern.

Vanadium-redox Flow Battery A vanadium-redox flow battery is a type of rechargeable battery that uses vanadium ions in different oxidation states to store energy. It is commonly used in large-scale energy storage applications and offers long lifespan and scalability.

Sodium-Sulfur (NaS) Batteries

Sodium-Sulfur batteries operate at high temperatures and are capable of daily deep cycling. They can typically used for grid storage applications. Due to their high operating temperatures (typically around 350°C), they require significant safety measures and thermal management systems. Due to their size and complexity, they are more suitable for large-scale applications (multiple MWhs) rather than smaller-scale commercial or residential use. NaS batteries are not currently a widely popular choice in the market.

Solid-State Batteries

Solid-state is an emerging battery technology that utilizes solid electrodes and a solid electrolyte instead of the liquid-based electrolytes found in other batteries. They promise significantly higher energy density, improved safety (due to the non-flammable solid electrolyte), and longer lifespans. They also have the potential for faster charging times. However, as of now, they are still in the early stages of development and are yet to be commercially available on a large scale. The manufacturing process is also currently complex and costly. 

Differences between solid-state batteries and conventional lithium-ion

Each of these battery types has its advantages and disadvantages. The best choice of technology will depend on the specific needs of a given project, including factors like cost, required capacity, discharge duration, and physical space available.


Battery energy storage systems can be found in applications across residential, commercial, and utility scales. Each with different needs, capacities, and applications.

Residential Battery Energy Storage

For individual households, residential battery storage usually ranges from 5 to 15 kWh – enough to offset peak usage periods or provide backup during power outages. They’re typically paired with rooftop solar installations, allowing homeowners to store excess solar power for use during the night or cloudy days. A residential battery energy storage system can provide a family home with stored solar power or emergency backup when needed.

Commercial Battery Energy Storage

Commercial energy storage systems are larger, typically from 30 kWh to 2000 kWh, and used in businesses, municipalities, multi-unit dwellings, or other commercial buildings and applications. These systems can reduce energy costs by lowering demand charges (fees based on the highest rate of energy use during a billing period), load shifting (from high on-peak electric prices to lower cost off-peak prices), providing backup power, and allowing businesses to participate in demand response programs. An example is EVESCO’s 500 kW 500 kWh battery storage system installed at Power Sonic in Nijkerk, The Netherlands, which can integrate with on-site solar and intelligently manage energy use across the building and commercial loads, reducing peak demand and generating energy cost savings.

A containerized 500 kW / 500 kWh battery energy storage system installed at Power Sonic in The Netherlands

Utility-Scale Battery Energy Storage

At the far end of the spectrum, we have utility-scale battery storage, which refers to batteries that store many megawatts (MW) of electrical power, typically for grid applications. These large-scale systems can provide services such as frequency regulation, voltage support, load leveling, and storing excess renewable energy for later use. A prominent example of this is the Hornsdale Power Reserve in South Australia. This 150 MW/194 MWh installation has brought stability to the region’s grid and saved millions in grid maintenance costs.

Hornsdale Power Reserve battery energy storage installation

A battery energy storage system’s capacity and specific applications can be customized to fit the user’s needs, whether a single-family home, EV charging stations, or a national electric grid.

Forecasts suggest massive growth ahead for battery energy storage installations as emerging technologies and markets converge. One estimate sees the installed grid-scale battery storage capacity expands 35-fold between 2022 and 2030 to nearly 970 GW. With their immense potential for enabling renewable energy and strengthening grids, realized battery storage systems will only grow in significance for a cleaner and more electrified future.


As the world’s largest generator of wind and solar energy, NextEra Energy Resources has earned a reputation for excellence and best-in-class development skills. With our expertise, scale, size and scope of services, we have become a leader in energy storage.

Energy storage is a promising way to store electrical energy so it's available to meet demand whenever needed. Very simply, energy storage systems work by charging and discharging batteries, and are safe and reliable.


Battery Energy Storage: How it works & why it's important

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