Battery Energy Storage System – The Future Backbone of Energy Infrastructure?
- Hasan
- 2 days ago
- 5 min read
Introduction to the Current Energy Market:
The global energy system is undergoing a transformation unlike any in its history. As governments, markets, and corporations advance toward decarbonisation, one key challenge has remained difficult to solve: renewable energy is intermittent. The sun does not always shine, and wind patterns fluctuate without a mechanism to store surplus electricity and release it on demand; renewable energy struggles to replace fossil fuels reliably. Battery Energy Storage Systems (BESS) have emerged as the solution to this constraint. No longer peripheral, BESS is rapidly becoming foundational energy infrastructure—the linchpin that enables clean, flexible, and reliable power systems.
What is a BESS?
A Battery Energy Storage System is a large-scale rechargeable battery installation that stores electricity when supply is abundant—such as during midday solar peaks—and discharges it when demand rises or renewable output wanes. Most grid-scale systems today are built from modular, containerised lithium-ion battery units, often using lithium-iron-phosphate (LFP) chemistry for stability and durability. Their defining advantage is speed: unlike gas or coal power plants, which require minutes or hours to ramp, BESS can respond in milliseconds, providing instantaneous support to stabilise grid frequency and voltage.
This responsiveness allows BESS to make renewable energy dispatchable—meaning it can be delivered precisely when needed. Batteries shift solar power into evening peaks, reduce the need for fossil-fuel peaker plants, support backup during extreme weather conditions, and smooth out short-term power fluctuations. Put simply, BESS bridges the gap between renewable supply and real-time electricity demand, turning variability into reliability.
How are Global BESS Growing, and who is investing in them?
Deployment of energy storage has scaled at an extraordinary rate. In 2023, according to the International Energy Agency, the world added 42 GW of new battery storage, making it the fastest-growing power technology globally. [1] Bloomberg predicts that growth will continue to accelerate from 2025 onwards, projecting 94 GW (247 GWh) of new storage capacity in 2025 alone. [2]
In the United States, installed battery capacity reached ~16 GW by the end of 2023, with developers planning 15 GW more in 2024. [3] China added 42.4 GW (101 GWh) of storage in 2024 alone. [4] Global investment in storage surpassed $50 billion in 2024, representing a more than 100% increase from the previous year. [5] Looking ahead, the IEA estimates that the world must reach 1,200 GW of storage by 2030 to stay aligned with net-zero emissions pathways. [6]
Why are BESSs Growing So Rapidly?
One of the major forces driving rapid growth in battery energy storage systems (BESSs) is the global expansion of renewable energy generation. In 2024, the world added approximately 585 GW of new renewable energy capacity, bringing the global total to 4,448 GW. Solar and wind technologies accounted for 96.6% of all new additions, according to the International Renewable Energy Agency’s 2024 capacity report. [7]
However, while solar and wind are central to decarbonisation, they are inherently variable by nature — solar power peaks during daylight hours, and wind output fluctuates based on weather conditions. To maintain grid reliability, electricity systems need storage technologies that can capture excess generation and release it when renewable output drops. This balancing role is where BESSs have become indispensable.
A second key factor is the dramatic decline in battery costs over the past decade. In 2024, the average price of lithium-ion battery packs fell 20% to $115/kWh, the lowest level recorded to date. These cost reductions are primarily driven by the scaling of global manufacturing and widespread adoption of lithium iron phosphate (LFP) chemistries, which offer lower cost and improved safety. [8]
As costs have fallen, the economics of energy storage have shifted: pairing solar + storage is now competitive with, and in many regions cheaper than, constructing new natural gas peaker plants. This economic tipping point has moved BESS from a niche grid asset to a mainstream generation alternative.
The final driver is policy and capital alignment. In the United States, the standalone Storage Investment Tax Credit (ITC, Section 48) was finalised in December 2024, providing long-term revenue certainty and reducing financing risk for storage developers. [9]
In the United Kingdom, the government has announced £500 million to accelerate the deployment of domestic energy storage as part of its clean energy investment program. [10] Meanwhile, China is scaling storage nationwide as a core part of its grid infrastructure, integrating BESSs directly into system planning and large-scale renewable hubs. [11]
What Does This Mean for the Energy Transition?
The rise of BESS is fundamentally changing how electricity systems operate. Storage is enabling renewables to function like traditional dispatchable resources. Grids are less dependent on fossil-fuel backup to meet evening peaks. And power systems are becoming more resilient to climate-driven heatwaves, storms, and extreme demand events. This shift moves the grid from a fuel-based reliability model (burn more gas when demand spikes) to a flexibility-based reliability model (store when cheap, discharge it when needed).
BESS is the technology that turns renewable energy from intermittent to dependable—the core requirement for decarbonising power systems while keeping lights on.
Potential Challenges and Risks That Could Slow BESS Scale-Up:
Despite extraordinary growth, key obstacles remain:
Revenue volatility is a significant concern: in the UK, grid frequency response revenue for batteries decreased from approximately £110,000/MW/year in 2022 to around £30,000/MW/year in 2023 due to market saturation. [12]
Technically, most BESS today provide only 2–4 hours of discharge, insufficient to handle multi-day renewable droughts. [13]
Grid interconnection queues are severely backed up—with ~2,600 GW of renewable and storage projects waiting for approval in the U.S. alone. [16]
Community and safety concerns have gained visibility following incidents such as the Moss Landing BESS fire, which led to temporary evacuations. [17]
Whilst these challenges do not weaken the case for BESS, they dictate the pace and shape of its deployment.
What are the implications for the Legal and Advisory Sector?
As storage becomes core grid infrastructure, the legal, regulatory, and financial frameworks surrounding it are being rewritten in real-time. Energy, infrastructure, and regulatory lawyers will increasingly handle:
Revenue stacking & market participation agreement structures
Permitting, zoning, and environmental review complexities
Supply chain and trade policy compliance
Grid interconnection negotiation and dispute resolution
M&A, infrastructure fund investment, and portfolio acquisition transactions
Storage is transitioning into a strategic, regulated asset class, and firms positioned early in this domain will shape the market's function.
Final Thoughts
BESS is not just another clean energy technology — it is the structural foundation of the future grid. It enables renewables to scale, stabilises power systems under stress, alters how electricity markets operate, and shifts the strategic influence of key actors in the energy sector.
The question is no longer whether storage will reshape the energy system. The question is which regions and organisations will adapt fast enough to lead.
Great explanations and diagrams to support